Bermuda’s deficit almost $276 million
(CNS Business): Bermuda’s government spent nearly $276 million more than it raised in revenues in the fiscal year ending 31 March 2011 and drew down all $200 million of a term loan it got from Butterfield Bank last May, financial statements issued by Auditor General Heather Jacobs Matthews and tabled in Parliament yesterday revealed. The government also upped its borrowing at the end of last year, extending and increasing overdraft facilities with both Butterfield and HSBC Bermuda, totalling some $80 million. The finanacial statements reveal that the Butterfield loan had been “fully utilised” with successive drawdowns of $70 million, $50 million, $50 million, and $30 million, taking place in May, June, August and September of last year.
The Consolidated Fund statements showed on November 16 the Government signed a $50 million overdraft facility with Butterfield Bank that expires at the endof next month, with a daily charge of 1.2 percent above the bank's base rate of about 3.75 percent, the Royal Gazette reports.
And just over a month later, on December 29, Government increased its overdraft facility with HSBC from $20 million to $50 million, to also expire on March 31 and with daily charges on overdrawn balances of one percent above HSBC's base rate.
Premier Paula Cox blamed “an array of very challenging economic and financial circumstances” for the “short-term deficit peak”.
In his blog cmlor.com, offshore recruiting specialist Steve McIntosh notes that funding the additional interest on the resultant debt alone will mean finding an extra $14m in revenue each subsequent budget year till the sum is paid off. "No small beer," he writes.
"Not to pile on, but it’s worth noting that these results are just about a year old and that the economy seems unlikely to have improved in the last year given the continued job losses in the international business sector."
He noted a change in Bermuda's accounting policy that required the restatement of prior year numbers. "Far be it from this recovering accountant to cast aspersions on the motive for a change in accounting policy but let’s just say organisations with this much red ink on their books would be loath to agree to a change in policy that negatively impacted their bottom line.
"No wonder Premier Cox has come out all rhetorical guns blazing against an effort announced by the Cayman Islands to attract reinsurance companies, a sector traditionally dominated by Bermuda. The last thing the Bermuda economy needs is a slide in payroll tax revenue, the treasury’s life blood accounting for $423m, 42% of revenues for the fiscal year," McIntosh wrote.
Category: World News
"Holy Snikees!!" "Yikes!!" "Zoikes!!" What is Bermuda's annual revenue?
Geez them too? It appears our finances are in worse shape than our politicians.
Good for Butterfield, they could use the interest XXXXXX. Hopefully good for Cayman, we'll take whatever we can get, including taking shares away from our 'cousins'.
Note they did not go to some tinpot outfit in New York to borrow money and be so naive as to believe the lenders could cap the interesr rate. Then again no doubt the financial statements of the Bermudan Government could be relied on, unlike ours which are far more "qualified" than our politicians!.
Actually if you read the gazette piece you'll see that the Bermuda financials are every bit as "qualified" as ours. The Auditor General has qualified them the last four years running as a result of internal control defeciencies. Errr, sounds familiar!
Add to that the fact that they changed the accounting system and that these figures are almost a yeard old. Might be even worse than it appears!
$276m! Had no idea it was so bad there. The deficit claimed to have been inherited by our present government was $81m by way of comparison and Bermuda has already used its available revenue sources including property and payroll taxes.
Have no fear, McKeeva will take up the challenge and produce a bigger deficit than our competitor by the end of his term.
Actually McKeeva can make deficits disappear just like that – poof! Anyone who can make an $81deficit turn into a $20+m surplus over the course of two years in the middle of a recession is a financial wizard. We could raise revenue by hiring out the services of our expert Finance Minister to Bermuda, Greece, Spain, Ireland and the rest of them.
"Financial wizard" or simply a spouter of terminological inexactitudes?
I trust you appreciated the irony of my post.