Government admits $65.9m budget deficit
The Bermuda Government incurred a $65.9 million deficit in its budget for the first three months of the financial year.
Financial figures released by the Cabinet Office show the Government is slightly astray of its projected full-year targets for revenues and expenditures
However, quarterly fluctuations on both parts of the balance sheet can give a distorted picture, and the figures may eventually end up on track over the course of a full year.
In the three months to the end of June, Government collected revenue of $233.2 million, up $10 million on the same period a year ago.
The main reason for the increase in revenue was an increase in payroll taxes of about $7.3 million, higher collections of customs duty to the tune of $1.3 million, and aircraft register fees coming in $1.3 million higher year-on-year.
These increases were offset by a more than $2 million drop in stamp duty.
When compared to the National Budget estimate of $996.9 million for the full 2016-17 financial year, the total revenue for the first quarter is tracking slightly lower.
On the expenditure side of the government's balance sheet, the total was $299.1 million for the quarter. This was about $15.5 million higher than the same period in 2015.
Current account expenditures, excluding debt service was $237.6 million, up $5.7 million compared with the corresponding period last year.
Government said this was due mainly to increases in various operational grants, increased overheads “due primarily to health insurance premiums”, the expiry of the partial suspension of matching contribution to the Public Service Superannuation Fund, and payment of insurance premiums.
Capital account expenditures were higher at $14.7 million, due to capital grant amounts particularly to Bermuda Housing Corporation in regard of Grand Atlantic, America's Cup, and Wedco's South Basin project. Debt service costs for the three months were $46.8 million, representing $32.2 million in interest payments and $14.6 million to the Sinking Fund.
Higher debt levels have resulted in the debt service cost rising $4.4 million year-on-year.
In a statement, Government said: “In general, current expenditures are presently tracking slightly above budget estimates. It should be noted that in certain instances expenditures are not made evenly over the year, which may distort actual figures when compared to budget.”
Government financed its deficit for the quarter by drawing funds from the Butterfield Loan Facility and with working capital.
During May, $30 million of private placement notes matured, which Government paid off by drawing money from the Sinking Fund. The expiration of the notes reduced interest expense by $2.09 million.
Government's estimated full year current expenditure target is $1.19 billion, which includes debt service. Its projected deficit for the financial year is $199.4 million.
At the end of June, Government's gross debt stood at $2.34 billion.