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Burt: Debt an unavoidable part of economic life

Senate approved legislation to increase the debt ceiling to $1.45 billion, despite the objections of members of the Opposition.

Junior Finance Minister Senator David Burt told the Upper Chamber that Government was committed to prudent fiscal planning, but One Bermuda Alliance senators Michael Dunkley and Michael Fahy said the increase was needed because of the Government's inability to rein in costs.

Detailing the legislation, Sen Burt said the move would bring Bermuda's debt to gross domestic product (GDP) ratio up to 24 percent.

He described debt as a natural and unavoidable part of economic life, but said that the money had gone towards $1.2 billion of capital projects which would continue to improve the quality of life for Bermudians for years to come.

Opposition Senate Leader Sen Dunkley said while he understood that a certain level of debt was acceptable and appropriate for capital investments, the Government has repeatedly gone over-budget, both in capital projects and in the annual Budget in general.

“I'm still waiting for the Government to convince the people that this debt is sustainable or manageable,” Sen Dunkley said.

“This Government has not been able to control the spending. Every year we heard the justifications. Now we are up to 24 percent and now they are saying 'it's sustainable, it's manageable'.

“The problem that we face is clear. We underestimated expenses and we overestimated revenue.”

Sen Dunkley also asked how Government planned to pay back the growing debt, saying he was concerned the debt was being racked up without any plan on how to bring it back down.

Progressive Labour Party senator Jonathan Smith responded that while Government had explained why it believed the debt was sustainable by looking at the debt to GDP ratios of other countries, the OBA had not said where it believed the debt ceiling should be.

Sen Fahy replied: “We made it very clear that we never would have made it to this level in the first place.”

He said he felt the debt ceiling would have to rise again in the near future and that whoever won the next general election would be left explaining difficult choices because of the current situation.

Independent senator James Jardine said he was also concerned about how Government intended to pay back the growing debt.

“I'm concerned about how it is going to be repaid and I'm concerned about how future generations will have to repay this debt,” Sen Jardine said.

Government senators Kim Wilson and Vince Ingham both expressed their support of the increase to the debt ceiling.

Sen Wilson said that if the Government had reduced spending to match the level of revenue, the effects on the economy would have been devastating, while Sen Ingham said he felt the new debt level was sustainable.

Closing the debate, Sen Burt defended Government spending, saying: “Not once has any one said what we would have done differently, what we wouldn't have provided, what we wouldn't have built.”

Senator David Burt

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Published March 26, 2012 at 9:00 am (Updated March 26, 2012 at 9:52 am)

Burt: Debt an unavoidable part of economic life

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