Auditor urges sound financial management
Sound management of the public purse during the fiscal strain of the Covid-19 crisis has long-term importance, the watchdog of government finances has warned.
Heather Thomas, the Auditor-General, has repeatedly warned the Government of the dangers of its mounting debt burden. “But, I recognise that the Covid-19 crisis is different to anything that most of us have faced in our lifetimes and that extraordinary measures are necessary,” Ms Thomas said in a statement. “Indeed, it is a time where people around the world are looking to their governments for strong leadership.”
Ms Thomas warned: “After we emerge on the other side, one of the legacies of this extraordinary period will undoubtedly be the longer-term impacts of the interventions by the Government.
“While I recognise that those who need assistance need it quickly, I wish to point out that there is still an essential need for strong public accountability and transparency and it is important for decision makers to have up-to-date financial information, in order to understand the available capacity for future interventions, both during the pandemic and in the long term.”
As in many other countries, the Government is battling to contain the virus and protect the country's citizens and has made moves “to alleviate the anticipated financial hardships of its citizens”.
She added: “There will be significant amounts of taxpayers' money spent on the Government's Covid-19 response over the coming months.
“I appreciate that sound business practices may not be top of mind right now, but sound financial management is essential during this unprecedented time. It is too early to tell exactly what the impact will be, but it will be profound.”
The Government had recognised that the economic impact would put pressure on the 2020-21 Budget, in terms of increased spending and reduced revenues, she added. And she was pleased to see measures to reduce expenditures not related to the crisis.
Curtis Dickinson, the finance minister, said on April 15 that he had identified capital spending, a hiring freeze, training and supplies as areas to make cost savings. The debt ceiling has been raised to $2.9 billion, leaving the Government with more than $200 million of borrowing capacity remaining.
“I strongly encourage the Government, over the coming months, to develop a long-term plan for reducing the expended deficit and associated public debt,” Ms Thomas added.
She noted that rating agency Standard and Poor's had dropped the outlook on Bermuda Government debt to negative from stable. A drop in debt rating would mean that investors would demand a higher interest rate to lend to the Government.
“I do want to stress that the need for the Government to practise strong financial planning and management, has never been more important to help alleviate the ongoing economic impacts,” Ms Thomas said.