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Dickinson ‘reluctantly’ raises debt ceiling

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Legislation was passed by MPs on Friday to raise the debt ceiling by $600 million to $3.5 billion.

Curtis Dickinson, the Minister of Finance, said he “reluctantly” increased the limit earlier to cover costs related to the Covid-19 pandemic.

He told a virtual sitting of the House of Assembly: “It is important to note that incurrence of additional debt from long-term borrowing will only be incurred when absolutely necessary.”

The Government Loans Amendment (No. 2) Act 2020 provided the authority to increase the maximum value of public debt.

Mr Dickinson explained that the Progressive Labour Party Government took on a net debt of almost $2.4 billion and a debt ceiling of $2.5 billion after it won the General Election in July 2017.

He said: “We were elected with a commitment to prudently manage the country's finances on behalf of the people of Bermuda and committed ourselves to a strategy of not increasing the debt ceiling.

“We were successful in honouring that commitment in the 2017-18, 2018-19 fiscal years and were on track to do so again fiscal 2019-20.”

But the finance minister said that the Government's guarantee for the stalled Caroline Bay development at Morgan's Point meant the debt ceiling was increased to $2.75 billion in 2019.

It rose by another $150 million in April this year so that funds were available to cover public health costs and emergency financial measures to support the island during the Covid-19 pandemic.

He added that proceeds from a planned public bond issuance could be between $1 to $1.25 billion, depending on market conditions.

Money raised would, among other things, fund the deficits expected in the current and next two fiscal years, as well as refinance the credit facilities associated with the Caroline Bay development.

Patricia Gordon-Pamplin, the shadow finance minister, told the House: “You will know that I have spoken, and we on our side of the aisle have spoken, ad nauseam in respect of the failure of the Government to do anything positive to put additional significant funds into the economy.

“The raising of the debt ceiling is indicative of the result when we are not sufficiently robust to make sure that there's money out there to be able to meet our obligations under normal circumstances so we have to go to borrowing.”

Mr Dickinson said later that the smaller increase to the debt ceiling in April was done when the “devastating” economic impact of the coronavirus pandemic could not be forecast.

He added: “I'm the last person who wanted to raise the debt ceiling and I did it reluctantly but I have to be mindful that my own personal views around this issue cannot get in my way of doing what's right for the country.”

Members passed two Bills that would make amendments to the Trusts (Special Provisions) Act 1989.

Mr Dickinson said the first was intended to create a greater legal “firewall” for trusts to ensure that Bermudian law is used for Bermudian trusts.

He said international laws covering trusts have become increasingly complex, but the amendments would “strengthen and clarify” Bermuda's laws.

Scott Pearman, the Shadow Minister of Legal Affairs, said that any move to modernise Bermuda's trust regulations would benefit the sector and potentially create jobs.

The second amendment act approved by MPs would allow the settlor of a trust to decide how property is disposed among their children.

Wayne Furbert, the Minister for the Cabinet Office, explained that the move would “reconcile” Bermuda's position with other leading trust jurisdictions.

He said that it was believed the island lost “a substantial amount of business” because of an unintended consequence of a 2002 amendment to the Children Act 1998, which abolished the distinction between children born in and out of wedlock.

Mr Pearman agreed that restricting freedom of choice had resulted in a “very damaging effect” on Bermuda's trust business.

David Burt, the Premier, added: “This amendment allows a settlor to leave to whomever they wish, whatever they wish.”

Mr Dickinson told the House that the Insurance Amendment Act 2020 was designed to “facilitate more effective supervision of the insurance sector by enhancing the cyber reporting event framework”.

Ms Gordon-Pamplin said that the Opposition One Bermuda Alliance supported the Bill.

She said: “It's important to recognise that the issue of cyber challenges, cybercrime ... the negative impact that it has on business is serious.”

Curtis Dickinson, the finance minister (File photograph by Blaire Simmons)
Patricia Gordon-Pamplin, the shadow finance minister (Photograph supplied)

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Published July 27, 2020 at 1:16 pm (Updated July 27, 2020 at 1:17 pm)

Dickinson ‘reluctantly’ raises debt ceiling

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