Government To Meet With Potential ‘Investors’

June 19, 2012

[Updated] The Bermuda Government issued a statement saying they will be “meeting domestic and international investors to provide an update on economic/fiscal developments in the Country, and also as part of its process of evaluating market conditions and potential funding opportunities to address its borrowing requirement…”

Shadow Finance Minister Bob Richards said, ”The Government has released a two-paragraph statement announcing its intention to get together with money lenders for help in meeting its budget needs this year.

“Just what the Government’s budget needs are is a big question. Suffice to say they involve Bermuda borrowing more money to keep things running and, in the process, deepening the debt hole it has dug.”

Mr Richards said that Bermuda already pays approximately $115 million a year servicing its billion-dollar-plus debt, which works out to more than $300,000 a day.

“The Government’s debt situation is a major issue for all Bermuda and a major challenge going forward. The Government needs to be clear with the people what it is asking for from international money lenders because it will have a lot to do with the future of this Island,” said Mr Richards.

The full statement from the Ministry of Finance is below:

The Bermuda Government will be meeting domestic and international investors to provide an update on economic/fiscal developments in the Country, and also as part of its process of evaluating market conditions and potential funding opportunities to address its borrowing requirement as announced in the National Budget Statement for fiscal year 2012/2013.

“This press release does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities, or constitute an official confirmation of any transaction, or form the basis of any contract or commitment whatsoever.

The full statement from the OBA’s Bob Richards is below:

The Government has released a two-paragraph statement announcing its intention to get together with money lenders for help in meeting its budget needs this year.

Just what the Government’s budget needs are is a big question. Suffice to say they involve Bermuda borrowing more money to keep things running and, in the process, deepening the debt hole it has dug.

In its Budget Statement, Finance Minister Paula Cox said her government would be running a current account deficit of $95.9 million. We disagreed with that estimate, believing it would run closer to $255.2 million. Interestingly, in the same Budget statement, the Finance Minister raised Bermuda’s debt ceiling to $1.45 billion from $1.2 billion, an increase of $250 million.

What Bermuda needs to know now is how much money is the Government asking for.

Also, we believe the Government should tell Bermuda how it plans to pay down its debt. We ask that question because the Government’s debt reduction plan may well influence the interest Bermuda has to pay on the money it intends to borrow. If the Government does not put forward a plausible debt reduction plan, lenders will more than likely set their interest charges higher.

Bermuda already pays approximately $115 million a year servicing its billion-dollar-plus debt. That’s more than $300,000 a day. When you wonder why Government cuts programmes such as Mirrors or reduces its commitment to charities such as the Sunshine League, look no further than the cost of its massive debt.

The Government’s debt situation is a major issue for all Bermuda and a major challenge going forward. The Government needs to be clear with the people what it is asking for from international money lenders because it will have a lot to do with the future of this Island.

Update 8.24pm: The Ministry of Finance issued another statement, saying the initial release was sent as part of the Government “efforts to be transparent.”  The Government said that “assertions this evening in response to the release by certain sectors are unfounded and false”, and that “false reports and mis-statements in the media do no one any good and are counter to ethical behaviours.”

The additional statement from the Ministry of Finance is printed in full below:

In response to media queries regarding the “Investor Meeting” press release sent last Friday, please be advised that the Ministry of Finance is re-issuing the press release which stands as is.

Furthermore, assertions this evening in response to the release by certain sectors are unfounded and false.

It was clearly stated that last week’s release was sent as part of the Government of Bermuda’s efforts to be transparent, signalling that discussions were being held.

As a further note, false reports and mis-statements in the media do no one any good and are counter to ethical behaviours.

The Ministry of Finance has advised that there will be no further comment on the matter.

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Comments (44)

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  1. RUFKM says:

    Interesting how Bob Richards and the OBA have no plan....

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    • Pastor Syl says:

      Any party that puts itself forward as a contender for government has to have a plan, otherwise they are just engaging in silly season antics.

      There are far too many knowledgeable people in the forefront of the OBA, whether they are 'newbies' or seasoned politicians, for any reasonably intelligent person to really believe they have no plan. Isn't it more logical to assume that they are doing what the PLP did for years when it was an Opposition party - refuse to reveal their platform until the election is called. This prevents the ruling party from hi-jacking their ideas, putting them in place and then taking credit for them.
      That is what the UBP did back in the beginning of party politics, until the PLP learned to play their cards closer to the vest.

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      • Soooo says:

        And learned to modify the UBP's plan, putting it to the electorate as their own..... (still waiting for the free ferries and busses)

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    • Mike says:

      Even funnier is the idea that the PLP have a plan, other than the ongoing one of needing more money to pay for salaries and the bloated civil service.

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      • say it like it is says:

        totally agree with you Pepper. Some people just can;t beleive that another party can run this country better, PLEASE!

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    • pepper says:

      rufkm.the oba did not cause this problem....so why would you
      want them to fix it ? Paula Cox allowed Brown to spend all of our money.....so she needs to have a plan !!!!! and I guess she is looking to borowing more money
      Rumours have it that Burgess and Desilva may try to get her removed !!! God help us if these two ever get control of this Island.....Paula needs to get rid of Zane as she did with Burgess.
      I think Paula has some of her dads genes, and she needs to act upon then NOW !!!!!!!!!

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      • george says:

        @pepper, why would zane Desilva try to get her removed of all people in the plp

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        • pepper says:

          Boy Geeorge,wake up!!!!!!!!!!Zane is reported to have said at a meeting with the PLP that he was the head n%$ger in charge... remember his words..this man is worse than Brown....he has an agenda....and it is all about himself....
          and guess what he will be on the "peoples show "tomorrow and the host of this show will kiss ass again ......Everest needs to retire.....but Rick R

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        • street wise says:

          Keep drinking the Kool Aid, dude! "Gov has already cut spending." Don't make me laugh. Where...? Oh yeah, the Sunshine League and Mirrors. Good choice.

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      • RUFKM says:

        Problem, since when did borrowing money become a problem. I missed that lecture in Finance 101.

        Every govt borrows money from time to time. You weren't complaining about the debt when the government was bailing out butterfield!

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        • 32n64w says:

          Exactly how much money has the taxpayer lent Butterfield Bank? If I recall correctly their public offering was significantly oversubscribed.

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    • pepper says:

      are you fkm, , why should the OBA have a plan to get the PLP out of their financial mess ? Bob Richards has more brains than our minister of finance will ever have,so I will vote for the OBA...Cox has put us in the situation we are in now....and God help us if Burgess or de silva are going to run this Island....remember Zane... his best friend is Doc Brown !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

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      • Tired of the bull says:

        Stop talking crazy pepper i don't think bob has any financial or economic smarts, how could he criticize the government for seeking investors when they clearly!!!!! i mean clearly!!!!! just unveiled a new tourism plan so dumb dumb bob obviously couldn't put the two together (so much for his financial intellect).... there is no way the plp would be seeking investors to fulfill their budget needs (consumption) those investors are being sought to help with capital projects (investment)….. but don't be fooled people the plp done plenty for human rights before they became a government, but so quickly do we all forget once they took power.

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        • street wise says:

          What Tourism Plan was that?! All I saw was a brief PowerPoint presentation print out. It was NO PLAN that's for sure, just regurgitated ideas that won't work. Gotta take the politricks out of Tourism if we are to ever succeed.

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        • navin johnson says:

          and what is that new tourism plan exactly? dumb dumb bob? yes the plp done plenty...

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      • Cindy says:

        Pepper - that is Brown's door to returning - again, using people and people allowing themselves to be used.

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    • Truth (original) says:

      @rufkm- interesting how you didn't address the issue of our massive debt but instead attack Bob Richards and the OBA.

      That's a PLP favorite.

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      • RUFKM says:

        What issue is there to address. You call it massive like you are scared of it or something. Seems like (unlike you) I understand debt, and I have some of my own, it's called a mortgage.

        If Bob Richards says its a problem, then he should have a "plan"; Problem is he doesn't have any plan except, wait for it, suspend term limits! That's not a plan folks. What Bob won't say is what Bob really wants to do, cut gov spending more to cause MORE pain in the econmy

        Gov has already cut spending. You all were kicking up last year when budget cuts were biting everyone, you think we should do that again? Get f-in real.

        This isn't playground, this is government, Bob know's better than to put out statements that say nothing and may cost everyone in Bermuda more money because of it.

        All governments have to borrow money from time to time, the PLP have, and if they win, so will the OBA!

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        • More with less says:

          Yes, and guess what happens when you can't make your mortgage payments? The BANK take sit back. Guess what happens at a company when you screw up the financials? You get fired for doing a piss poor job. Why is the debt okay again?

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        • street wise says:

          "You call it massive like you are scared of it or something." I am scared! At $300,000.00 interest A DAY - EVERYONE should be alarmed!! Our children will be paying for this for years!

          And what's gonna happen when the Government defaults on it'a $2 billion deficit cuz nobody is gonna rescue them. And the PLP have no idea or plan how they are gonna pay it all back.

          Stop spending more than you receive in revenue, PLP, then cut the Civil Service.

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          • say it like it is says:

            that's the trouble with people like you RUFKM, you can't see the financial hardship that your children and grands will have to endure because of who? The PLP.

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        • Truth (original) says:

          @RUFKM- I know a thing or two about debt as well. I also have a mortgage. Here are some basics for you. If your expenses exceed your revenues, you need to either;

          1. raise revenues or
          2. cut expenses or
          3. both.

          That's would you would seeing as though you have a mortgage or your creditors would take the assett.

          The Govt logic goes like this

          1. We don't have enough revenues and
          2. The expenses are balooning.

          The solution is obvious. If you can't increase revenues (through taxes) then you have to cut expenses but they are not doing that. What they are doing is borrowing MORE MONEY, CREATING MORE DEBT that we are all going to be saddles with. Debt in an of itself is not a bad thing. There is such a thing a good debt.

          The Govt is rackign up bad debt at hig interest rates with no plan to increase revenues (other than taxes) to pay it back.

          You wouldn't run your house like that and it is certainly not sustainable to run a country like that either.

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          • RUFKM says:

            Try reading what I wrote. Here is where you are wrong, the government HAS cut spending and cut staff. You want them to do more, austerity won't work, its harmed us enough. We should have NOT cut spending last year, our debt would have worse, but our economy would have been in better shape.

            Austerity doesn't work people, in times like this gov should spend more not less!

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            • Truth (original) says:

              @RUFKM- this wil be my last post to you. You're not as smart as you think you are and you won't listen. That's a recipe for disaster.

              The government has NOT cut expenses nor staff. The expenses in the annual budget year over year has gone UP not down, which means that they have not cut spending. As a matter of fact, we are wasting money to service the debt that we have taken on ......to the tune of around 200'000 a day. That money could be better spent actually investing in Bermuda. That isn't happening.

              In short, if you ran your house finances like how the Govt is running the Country's, you would be technically bankrupt. You can't borrow money to get you out of debt. If you can't understand that principle than hopefully this explanation can help someone else.

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    • Chart says:

      Ah, PLP apologists. You have a lot to apologise for.

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    • say it like it is says:

      Yes, he does, just not sharing it right now, and who could blame him, there's an election coming dumb a..

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  2. media says:

    The story says they are going to meet with them. They have already met with some of them last week.

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  3. M.P.Mountbatten JP says:

    We should've been in a position to lend other countries money with all the money this government have gone through . Instead , with hat in hand we go about begging .

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  4. terry says:

    Typical villiage.
    The children are where.

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  5. Truth is killin' me... says:

    This Government is Cucking Frazy!!!

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  6. all clogged up says:

    Next stop for our broke azzes is the IMF....Jamaica went begging hat in hand to the IMF decades ago.....IMF will dictate to our govment what it can and can't do...you can kiss the 'good ole days' goodbye cuz IMF will devalue the dollar, devalue real estate and crash our economy....go ahead Paula Brown, make my day!

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    • RUFKM says:

      You all are so clueleSs. IMF, really. Devaluation, get F-in real. This country is rich, and more than able to meet its obligations.

      Find me a government that doesn't borrow money and I'll find you a huge pot of gold in a sea of oil.

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      • Bermyman says:

        Find me a country that has 60,00 people, 25 sq miles, no tangible export and no currency of their own and is $1.45 m in debt? Do you know what sort of debt ratio that is per head???

        The country is not rich. It has no natural resources like oil and gold. The money that comes through the Island is entirely generated by foreign sources.

        Private sector workers and businesses pay taxes so that the over sized, unionized, PLP backing Civil service can take, take, take.

        For every person working in the private sector it is a +1 to the economy for every person working for the civil service it is a -2. Hence why we have the hole we are in. It is not sustainable and it is the result of bad economic principles that have been allowed to play out over the past 12 years.

        This poor Island has no idea what is going to hit it when the Government's ability to borrow more money down the road disappears (which it will!) and the civil service jobs start to get slashed. Where are these jobless people going to work and get paid in line with their currently inflated salaries?

        The cost of living goes up on this Island every day, what has the government done to control that and what are they going to do when companies like Belco hike prices year in year out?

        DON'T VOTE THIS GOVERNMENT BACK IN!

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      • More with less says:

        Koo-aid is very strong today.

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      • street wise says:

        "This country is rich, and more than able to meet its obligations." You must be kidding, right?!! Keep drinking the Kool Aid, RUFKM! Your rhetoric ain't helping us to get real.....

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      • navin johnson says:

        The island is not rich....it has a lot of rich people but the island itself is not rich....if you define rich by what you have after subtracting your debts from your assets we are certainly not rich.....we are sinking deeper into debt with income declining on a steady basis.....but Paula will not go to the IMF she will first go to the people of Bermuda to do their patriotic duty and buy bonds....bonds so that she can pay the civil service ...bonds to buy votes.....clueless RUFKM? look in the mirrow for an idea of clueless..you should call yourself IHNFIDEA....

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      • Truth (original) says:

        @RUFKM- If you Govt is "more than able to meet its obligations" why are we borrowing money?

        You don't appreciate the financial position that Bermuda is in. We are borrowing money to pay EVERYDAY EXPENSES ....not capital investment, not investing in our people. Borrowing money to keep the lights on.

        You need a reality check.

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        • Sara says:

          Bingo, this is totally the big point here!!! The "we invested in infrastructure" and now have to borrow to pay every day expenses doesn't make sense because by borrowing to cover every day expenses YOU ARE CRUMBLING THE INFRASTRUCTURE. So does it make sense to the brainwashed that one would invest in infrastructure only to crumble the infrastructure? Definition here from Wiki:

          Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise,[1] or the services and facilities necessary for an economy to function.[2] It can be generally defined as the set of interconnected structural elements that provide framework supporting an entire structure of development. It is an important term for judging a country or region's development.

          The term typically refers to the technical structures that support a society, such as roads, water supply, sewers, electrical grids, telecommunications, and so forth, and can be defined as "the physical components of interrelated systems providing commodities and services essential to enable, sustain, or enhance societal living conditions."[3]

          Viewed functionally, infrastructure facilitates the production of goods and services, and also the distribution of finished products to markets, as well as basic social services such as schools and hospitals; for example, roads enable the transport of raw materials to a factory.[4] In military parlance, the term refers to the buildings and permanent installations necessary for the support, redeployment, and operation of military forces.[5]

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      • say it like it is says:

        That's easy the UBP.

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      • say it like it is says:

        Something is wrong here, I am trying to respond to RUFKM, and it's ending up somewhere else, what's going on Bernews? I said that's easy the UBP had an abundunce on money when they left infact it was $53 million. What you gotta say now?

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  7. Argosy says:

    Why is anyone surprised?

    You started it in November 1998 and it's rolling along down the hill to its predictable demise.

    Look south at our "associate" brothers & sisters in Caricom. We are following their shining example.

    How much aid has Jamaica received in the past 20 years? And most of it from the UK!!

    Jokers....

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  8. Liars! says:

    RUFKM ....your the one that lives under the sea, your the ignorant fool that doesn't SEA whats coming. The fish are starting to smell and you still want to steal money through your connections in the Party of the day..The PEE L(for loser) PEE!

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  9. The nitty gritty says:

    Prime example of Government being the least qualified to engage in controlling and directing the economy. They should make the Island more conducive to International Business as well as Small Business and let those entrepreneurs do what they do best and frankly BETTER than the elected.
    Last thing a competent business person wants to hear now is what those who spent us into billion dollar debt has in store for us now!
    The economy is running on emotion now and we want security, now and into the next 50 years.
    They are trying to give a feeling of security from now to the election, after that all bets are off...again! No future there PLP.

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  10. I gotta be me says:

    "process of evaluating market conditions and potential funding opportunities to address its borrowing requirement " This should have been done BEFORE all the excessive borrowing... the horse has already bolted! Bye this govt couldn't run a bath nevermind our Country.

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