Debt interest burden soaks up Government finances
Finance Minister Bob Richards has emphasised the immense amount that the Government is spending on interest for debt as the House of Assembly's debate on the 2014/15 Budget continued.
Delivering his budget brief for the Ministry of Finance, Mr Richards said the $113 million spend in interest payments every year is a burden that must be addressed.
“Interest payments now exceed spending in all Ministries except The Ministry of Education and Economic Development, The Ministry of Environment and Planning and the Ministry of National Security,” Mr Richards said. “This is funding that cannot be spent on educating our children or upgrading our infrastructure.”
He said Government hopes to decrease the cost of the Island's deficit over time by both growing the economy and continued cost containment.
Mr Richards said that Bermuda has made a conscious effort to borrow now for multiple years given the current ultra-low rates — a move which he said would save the country millions in the coming years.
The Minister also noted positions had been budgeted that were not filled, describing it as a long standing issue he and the Ministry has been working hard to resolve.
“I made some political hay on that same issue, but there is a long term practice in the Government of having established posts and having them funded even if no human being remained working in the post,” he said. “This doesn't happen in the private sector.
“I can assure the House that my staff are working diligently to eradicate this from the budget. A lot of it has been rectified already, but it's still there.”
He said that some of the savings in the budget were achieved by cracking down on the habit, but more work still must be done to fully eliminate the problem.
Shadow Finance Minister David Burt questioned the reasoning for a predicted increase in the Island's GDP, reiterating his concern that the $70 million reduction in Government spending would make it more difficult to improve the GDP.
Mr Richards responded: “One can't get really concerned about that based on the assumption that all other things are equal. All other things are not equal.”
Mr Burt also proposed dropping one of the three ratings agencies that review the Island as part of the cost-saving effort, but Mr Richards said that while the Government currently spends $165,000 annually on the agencies, there are investors that value each of the agencies.