Bermuda has an elevated political risk due to the increase in public debt non-payment risk, according to a global firm’s assessment.Bermuda is one of 12 island nations to have attracted a “sovereign non-payment icon” on the Aon Risk Solutions 2011 risk map. Sovereign non-payment risk is defined as the risk that a foreign government will default on its loan or fail to honour other business commitments because of a change in national policy.Premier and Finance Minister Paula Cox condemned the Aon assessment as “without solid foundation” and said her Government does not accept it, as it goes against the findings of internationally respected ratings agencies.However, the news prompted concern from both Oppposition parties, who criticised Government over the level of Bermuda’s public debt. Aon measured the political risk of 211 countries and territories, rating them on a six-point scale from low risk to very high risk.A downgrade as in the case of Bermuda indicates that the severity of the risk has heightened, while an upgrade indicates that the risk is less severe.Bermuda was one of 19 countries downgraded on the 2011 map. Its risk category is now listed as medium-low, when it was previously listed as low.Other countries downgraded due to public debt non-payment risk include Antigua and Barbuda, Barbados, the Cayman Islands, Comoros, Dominica, Greenland, Antilles, St Lucia and St Kitts and Nevis.Quoted on the PR newswire service, Beverley Marsden, associate director of Aon Risk Solutions’ crisis management practice said: “The negative effects of the global financial crisis impacted the economies of nations with traditionally low levels of risk. Iceland this year became the first Western European country to be downgraded to medium.”Commenting on the news, Governor Sir Richard Gozney said: “Aon appear to have taken a generically broad brush to a series of small, island economies. It is axiomatic that small economies are likely to be more narrowly based than large economies.“I am not sure that we are hearing more than a reiteration of that axiom against the background of the international conditions, which are predicted. Like many others I follow the conclusions drawn by the credit rating agencies, Standard & Poor’s, Fitch and Moody’s. As far as I remember from their recent reports they have, at least so far, been quite reassuring on Bermuda.”In November, ratings agency Fitch affirmed Bermuda’s strong AA+ credit. A downgrade could have increased Bermuda’s borrowing costs.Premier Ms Cox said last night: “As reported, Bermuda is clearly being painted with a broad brush and the Aon assessment is without solid foundation. The Government does not accept this position as it flies in the face of internationally respected ratings agencies, especially considering that on November 22, 2010 Fitch concluded its rating action on Bermuda and affirmed Bermuda’s AA+ rating which is one notch below the highest rating of AAA.“Also on September 7, Standard & Poor’s reaffirmed Bermuda’s double-A rating and revised its outlook on Bermuda to stable from negative. The rating actions were made in these challenging economic conditions when many countries’ ratings were actually being downgraded.”However, Bob Richards, Shadow Finance Minister, said: “The Government is presiding over a serious weakening of Bermuda’s once-miraculous economy.“This is primarily due to its reckless spending driving public debt to more than a billion dollars, with interest charges now costing just over $100,000 a day. At the same time, the Goverment is taking in fewer tax dollars to meet the growth of its spending habits and debt obligations.“This situation reflects an economy that is no longer generating enough activity to keep people employed and the Government’s budget balanced, once the hallmarks of a proud and resilient economy.”He added: “Aon has looked at our situation and concluded that Bermuda is a riskier proposition than before. It is an outsider’s view of a declining economy that is costing people their jobs, shrinking their paycheques and making life seem much more uncertain than it needs to be. We are very concerned.”Michael Fahy, finance spokesman for the Bermuda Democratic Alliance said: “The assessment is simply another indicator of what many have been saying for some time. The tough times are yet to come. When a well respected risk management service such as Aon, which does insurance business in Bermuda downgrades Bermuda, then hopefully the voting public will ask when is enough actually enough?“The decision to borrow, borrow and borrow by the Government must be called into question. As we have said previously, unlike other countries where there is a wide tax base and a diversified economy from which to raise revenue to ultimately repay debt we only have two pillars. International business and tourism.”He urged Govermment to be honest about the state of the economy and cut costs in line with the public sector which, he said, may well mean wage freezes and redundancies are inevitable.