Government suffers $43.3m deficit in first half of year
A $43.3 million deficit was recorded by the Government in the first half of the financial year, the finance minister revealed yesterday.
Curtis Dickinson told MPs that the “all inclusive” deficit, which included capital spending and debt service, compared to a projected deficit of $135.8 million for the whole of the previous financial year.
Mr Dickinson added that the Government’s current account deficit – which covers day to day spending and revenue – was much improved and had logged a $21.1 million surplus compared to a $71 million deficit in 2020.
He said the improvement had come in part because of a boost in Customs duty, which was $26 million higher than the same period in 2020 and seven per cent higher than budgeted.
Payroll taxes and stamp duty receipts were also higher than expected.
But Mr Dickinson said all other receipts lagged behind, with “negligible” income from tourism-related taxes.
He added current expenditures, excluding debt service, were $50 million, or 11 per cent, down compared to the same period in 2020.
Mr Dickinson said expenditure on salaries and wages had fallen by $17.1 million, four per cent, below budget while employer overheads were down by $7.4 million or 11 per cent below budget.
He revealed that the Government spend on Covid-19 related expenditures of $20.7 million had already “exceeded the total estimated funding for the whole of this fiscal year”.
Government has also spent $1 million in consultancy costs for the Morgan’s Point resort after the Caroline Bay development collapsed and the Government took it over.
Mr Dickinson highlighted that deficits had been financed through an additional $1.35 billion in debt raised in August 2020 at lower rates than existing debt.
He said the cash was supposed to provide funding for the Government and its anticipated economic recovery over the next two to three years.
But he added: “It is imperative that the budget deficit target for fiscal 2021/22 is not exceeded, given the current high level of public debt.
“The Ministry of Finance regards any breach of the deficit target to be a serious issue as continuous increases in the deficit and debt levels will likely negatively impact Bermuda’s credit rating and the cost of refinancing government debt in the future.”
Mr Dickinson said: “In this regard, we would again note that over the next 24 months nearly $1 billion of debt will have to be refinanced.
“Therefore, it is important that we continue to ensure that fiscal matters are managed in a prudent and considered way, and that we adhere to our commitment to balancing the budget by 2023/24.”