“We have repeatedly suggested that the PLP government should take ownership for the impact of its overspending which facilitated the huge mountain of debt,” UBP MP Kim Swan said last night.
Yesterday [June 26] Fitch Ratings downgraded Bermuda to ‘AA’ from ‘AA+’ citing “deteriorating fiscal and government debt ratios and lack of a credible fiscal consolidation strategy.”
Following that news was confirmation that the Bermuda Government borrowed an additional $180 million, spiking Bermuda’s net debt to approximately $1.4 billion.
Mr Swan said, “Whilst Bermuda’s downgrade returns to the AA rating that the PLP inherited in 1998, it was during the boom years that the PLP enjoyed the previous AA+ rating. The Fitch downgrade is also a reflection on Bermuda under performing economically in recent years against the financial position of the country at this point and time.
“Unfortunately, not heeding the recommendations of the UBP, during the boom years the PLP Government failed to save for a rainy day, spending more than it earned for several years. Today, it is important that the PLP Government appreciate that repeated deficit spending, the need to borrow to meet current account deficit and the huge debt has put Bermuda as a country in a negative position.
“The PLP’s justification for the huge debt is that it is an investment in our infrastructure, but that theory gets called into question when one looks at the impact of the plethora of poorly managed projects which led to multi- millions of overspending and untendered projects which have raised the concern of the Auditor General.
“By comparison, the United Bermuda Party government operated with current account surpluses and arguably we would have had Bermuda in a better position financially to cope with these tough times – during our tenure we also engaged in capital projects, building a Senior Secondary School and a Prison – but we operated with current account surpluses which included contributions to pay for capital projects.
“The difference between the UBP and PLP is most noticeable as the accelerated spending of the PLP without reserves is also adversely affecting government services. The Bermuda Government must find a way to balance the budget as a bloated government sector with no reserves has placed Bermuda at risk.
“The United Bermuda Party policy of fiscal prudence would have provided sufficient reserves from the boom years to address the serious financial needs of our people today affected by a prolonged recession.
“We have repeatedly suggested that the PLP government should take ownership for the impact of its overspending which facilitated the huge mountain of debt.
“To get Bermuda on track, we must look forward to returning to balancing our budgets and recognize the need for government to facilitate economic growth, but feel that economic growth must be driven by a rejuvenated private sector not by a further bloated government and a mushrooming debt,” concluded Mr Swan.