Premier pledge on debt repayment
Government today promised to repay more than $200m of the country's debt by 2016.
Premier Paula Cox issued a statement in the House of Assembly covering the value of pension funds and the sinking fund - the amount Government puts aside to cover debt.
The statement said: “The Ministers and Members of the Legislature Pension Fund provides retirement pensions for the Ministers, Members and Officers of the Legislature of Bermuda in accordance with the 1975 Act.
“The ratio of pension assets-to-liabilities, or funding ratio for the plan was 37.4 percent in 2007. The public should note that although the Fund is currently in an unfunded position other vital fundamentals are relatively positive.
“For instance, the short-term cash flow position of the Fund will remain positive for the foreseeable future. In 2007 contributions exceed pension benefits and other Fund expenses by over $70,000. The value of assets in the Ministers and Members Fund on March 31, 2007 was just over $7.2 million, roughly 18 times more than the annual projected payout of some $394,125 in pension benefits.
“It should also be noted that progress has been made with regard to bringing the Ministers and Members of the Legislature Pension Fund financial statements up to date. The Accountant General has advised that the 2008, 2009 and 2010 accounts have been completed.”
It added: “Effective March 22, 1993, the Government Borrowing Sinking Fund was established as a separate legal entity for the repayment of Government borrowing under the provisions of the Government Loans Act 1978, as amended.
“The value of the Sinking Fund was $70,827,836 ($79,600,904 2009) as at March 31, 2010 representing nine percent (14 percent - 2009) of the total debt outstanding. This illustrates the Government's commitment to a sustainable debt management policy. What this means in layman terms is that the Government has put aside $70,827,836 to eventually pay down on outstanding debt.
“The Government Borrowing Sinking Fund is an important part of the Government's debt management policy as its primary purpose is to reduce or cancel public debt. The Sinking Fund balance will increase during the next few years and is projected to reach about $160 million in 2014. At this time it is anticipated that the Fund will be used to pay off $75 million and $45 million Senior Notes that mature in 2014. Further it is anticipated that most, if not all, of the $90 million Senior Notes maturing in 2016 will be paid off at that time. Therefore, it is the Government's plan to pay off $210 million in debt by the end of 2016.”