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Richards: Govt debt rising faster than anticipated

Shadow Finance Minister Bob Richards has again criticised Government’s handling of the economy saying budgeted expectations were “not even close” to actual figures.

Last week, Auditor General Heather Jacobs Matthews issued a qualified opinion on the audited accounts for the Consolidated Fund, based on her opinion that there were serious deficiencies in internal controls in the management of certain capital development projects. It was the fourth year in a row that she issued a qualified opinion.

Her report also revealed that Government drew down all $200 million of a term loan it got from Butterfield Bank last May and in addition, Government upped its borrowing at the end of last year, extending and increasing overdraft facilities with both Butterfield and HSBC Bermuda, totalling some $80 million.

At a press conference this morning, Mr Richards said: “First let’s start with the obvious. This is the fourth consecutive report that has not received a clean audit from the Auditor General, meaning that there remain serious questions about the integrity of the numbers. These questions, these doubts and uncertainties about the handling of the people’s money have become the norm for the government. It is disgraceful.

“The figures themselves would make any Bermudian wonder what is the point of the whole budget process because actual results differ so much from budgeted objectives.”

He said that:

* Revenues were $62 million less than forecast, while cash expenses were $67 million more than forecast.

* The Current Account deficit which was forecast to be $67.5 million turned out to be a deficit of $128.7 million. “That’s not just a miss, that’s a big miss a 90 percent difference, or $61 million,” said Mr Richards.

* The overall government cash deficit was $164.6 million

Mr Richards also said that expenses continued to be out of control, saying:

* Employee costs were 16 percent over budget

* Healthcare was 19 percent over budget

* Financial assistance was 30 percent over budget

* Interest on debt was 50 percent over budget.

“In the corporate world this type of financial planning would get the planners fired. Voters will get that chance soon,” added Mr Richards.

“Debt continues to rise at a faster rate than anticipated. Despite giving itself $200 million more room for borrowing by changing the definition of Public Debt last year, government debt may be on the verge of piercing the Island’s official debt ceiling of $1.25 billion.

“The stark debt situation explains the government’s eagerness to get its hands on $62 million from employees’ pension contributions to fund its day-to-day operations. Without this diversion there would have been no way to avoid raising the debt ceiling before the election. It may still be unavoidable.

“Government is using employees pension contributions to avoid this embarrassment at this politically sensitive time because even though the $62 million is essentially borrowing from the future, it will not be classified as debt.

“So why should everyday Bermudians care about government budget numbers? Because they have a direct impact on your lives. The deeper the hole the government digs for Bermuda, the deeper it’s going to reach into your pockets to make up for its mistakes.”

OBA press conference: ET Bob Richards on Government financial results.(Photo by Akil Simmons)

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Published February 20, 2012 at 11:46 am (Updated February 20, 2012 at 11:46 am)

Richards: Govt debt rising faster than anticipated

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