Simmons: get a handle on debt burden
Bermuda must do a better job of reducing its debt burden, a leading economic commentator told attendees at a construction and trade industry conference.
Craig Simmons, senior economics lecturer at Bermuda College, was speaking on a panel at “2020 Vision: Straight Up. No Chaser”, presented by recruitment and immigration consultancy firm The Catalyst Group Ltd.
Bermuda's debt will stand at $2.658 billion at March 31, the end of the current fiscal year.
In the Budget Statement delivered in the House of Assembly last month by Curtis Dickinson, the finance minister, said the Government budgeted for a surplus of $7.4 million in the 2019-20 fiscal year, but ended up with a deficit of $14.6 million due to “under-budgeted and/or unanticipated expenditures” such as those related to the Caroline Bay project.
For the 2020-21 fiscal year, the Government plans to run a budget deficit of $19.8 million.
“I was disappointed at the Budget because it didn't come in as a surplus,” Mr Simmons said.
“Of our risks, the No 1 is debt reduction. Unless we get a handle on debt reduction, we are heading for a not-good place.
“I liken it to a household that has maxed out its credit cards and is only paying the minimum.”
Mr Simmons noted that debt service costs for the current fiscal year are nearly $120 million.
He said: “We have to realise that it takes a lot more than $120 million annually, it will take upwards of $250 million to get to the targets that the Fiscal Responsibility Panel laid out for us, and which the Government has accepted.”
Mr Simmons added: “That we have kicked the can down the road for two years bothers me.
“The fact that we are not dealing with the No 1 risk, debt, concerns me.”
Looking ahead, Mr Simmons said: “The effect of the coronavirus will be to knock half a point off growth. At best, I expect no growth next year.”