Opposition parties blast Government’s rosy debt statements
Claims that Government's national debt is “manageable and sustainable” were called “misleading” and an attempt at “smoke and mirrors”.
The United Bermuda Party (UBP) and Bermuda Democratic Alliance (BDA) both criticised Junior Finance Minister David Burt for the statement.
He said in the Senate last week that Bermuda's debt level remained low compared to places like the Cayman Islands, Switzerland, United Kingdom, United States, Barbados and Bahamas.
Sen Burt said the net debt, excluding guarantees, stands at $964.4 million approximately 17.2 percent of Gross Domestic Product (GDP). The figure was low compared to countries like the US and UK, where debt compared to GDP is 94 percent and 84.5 percent respectively, he said.
Shadow Finance Minister Bob Richards said calling the Island's debt ‘manageable and sustainable' were “nice sounding platitudes, but the fact is [Government has] not managed this well to date”.
“They have let it get out of control so they have had to shift the goal posts to make it sound better for themselves. You will see this when they changed the definitions of debt so they do not have to come back to Parliament to increase the debt level.
“I think that anyone sees through that. If that is what they call managing the debt that is in my opinion doing smoke and mirrors to make yourself look good.”
He pointed out that Government has pledged to pay $200 million over the next five years into the Sinking Fund, which is used to pay off debt. However there are plans for Government to borrow nearly three-quarters of that in the next financial year according to the Budget, Mr Richards said.
“This coming year alone the Government will have to borrow $146 million of new money. That is the amount of money they are going to require to run the Government Budget we just passed.
“They are going to have to borrow that. There are no reserves. So while they are paying off money on one side, they are borrowing more money on the other.”
Mr Richards said Sen Burt's comments were an attempt to “make something that smells bad, smell nice. It's perfume, but it can't really cover up the real problem”.
BDA finance spokesman Michael Fahy said Sen Burt's comparisons of GDP ratios in other jurisdictions were “incredibly misleading”.
Mr Fahy said there were only three “real solutions” to dealing with Government debt pay it down, print more money or “default and start again or roll over”.
It terms of paying it down, he said the UK's debt was 60 percent to revenue, while Bermuda's was over 100 percent.
“This is far more indicative of how Bermuda's debt is above income with more money being borrowed in part to pay off some of the interest.”
He said a default was “the possible end result if spending continues as it has been without cutting expenditure”.
“More likely we will always roll over and leave the burden for future generations. Short-term political expediency leads to disaster long-term.”
He called the Senator's comments “spin” and claimed Government was playing ostrich by “stick[ing] their head in the sand” and hoping everything would be OK.
“News flash it won't. Shortly the Senate will approve the budget, which will put us further into debt. I implore every Bermudian to wake up to the economic realities.
“The Government has done a disastrous job managing this economy. If some radical approaches are not taken soon it will be too late to save our precious Island from financial ruin.”
Mr Fahy questioned where Sen Burt got his Bermuda GDP number and claimed figures for 2010 were expected to be worse than in 2009 “which could dramatically change his calculations”.
Sen Burt said it was hard to take any Opposition criticism seriously as they seemed to “invent definitions” or “use false statistics” to fit their arguments in a “desperate attempt to find some traction”.
“The only thing tiresome is the Opposition's repeated looseness with the facts. Before Michael Fahy starts pontificating, he may want to get his figures correct.
“Britain's revenue to debt ratio is 204.6 percent, not 60 percent as the BDA spokesman suggests, Bermuda's is 107 percent.
“It comes as no surprise that his criticisms are rooted in false claims as the Opposition continues to grasp at straws to attack what has largely been regarded as an excellent budget.”