It is important to put Monday's story on Standard & Poor's ratings decision on Bermuda into perspective.

S&P and other ratings agencies provide ratings on the creditworthiness of companies and countries as a matter of course, having done intensive research on the subjects.

When it comes to countries, the ratings are used by lenders to determine whether they can or should lend to countries and on what terms.

Bermuda has traditionally had very good debt ratings, both because of the ongoing strength of the economy and because of its low level of national debt as a proportion of the Island's overall gross domestic product.

S&P has maintained that rating, which is to be welcomed and is very important.

What is worrying is that it has changed its outlook for the rating from positive, which means the Island could look to improve its rating in the future, to stable, which means that is unlikely.

What it does not mean, at least at this stage, is that Bermuda's rating may be lowered.

Nonetheless, it does mean that the agency is putting Bermuda on warning that it is being watched and that there are areas that give rise for concern.

Most importantly, S&P is worried that public spending, and the possibility of budget deficits, is rising, and that the recent promises in the election campaign could put additional pressure on the Island's budget.

This newspaper shares those concerns, since the Government has provided so little detail on how much programmes like more affordable health care for seniors will cost, or how they will be funded.

Finance Minister Paula Cox – in whom the ratings agencies have a good deal of faith – noted on Monday that the platform promises are for the whole of the Government's term in office, and that means heavy increases in spending may not occur immediately. That may give the S&P some comfort, although it may not offer seniors much relief.

S&P's other major area of concern centred on the lack of transparency in Government finances, and in particular, delays in audits for such high cost programmes like the Hospital Insurance Plan (HIP) and the Contributory Pension Fund. The most recent accounts that have been audited for those funds were for 2003.

It is hardly surprising that S&P should be concerned about that, because expenses for health care and pensions are rising much faster than inflation due to the high cost of health care and the growth in the population over the age of 65.

And no doubt the agency is wondering how a prudent and cost effective health care plan for seniors can be developed when the existing programmes catering to seniors cannot keep their books up to date.

Still, it is important that this move by the S&P (and it will probably be echoed by other agencies like Moodys) be seen for what it is.

It is not a ratings downgrade, and the S&P acknowledged that Bermuda's rating remains among the best in the world.

But it is a warning that it is watching the Island and wants some care taken both on spending and on accountability.

That's good advice, and it should be taken.