[Updated] The recently released financial statement show the Government’s revenue for the year ended 31 March 2012 was around $914 million, while total expenses were around $1.26 billion — a deficit of around $343 million.
The expenses decreased from the previous year [2011 = $1.3B] as did the revenue [2011 = $996.7M]. The Government’s biggest earner for the year ended 31 March 2012 was payroll tax at $344.7 million, followed by Customs Duties at $180.6 million.
These figures come from the Audited Financial Statements of the Consolidated Fund, which were tabled in the House of Assembly on Friday [Feb 8] by Minister of Finance Bob Richards.
The Auditor General’s report recently referred to the $2.4 billion “net debt”, which caused some question as to why that number is so much higher than the general debt numbers often used.
The discussion of debt normally centers around the “public debt” — the amount the Government has actually borrowed and is paying interest on. The $2.4 billion “net debt” number the Auditor General used refers to both what the Government has borrowed as well as liabilities such as the Pension Fund.
The recently tabled Financial Statements for the year ended 31 March 2012 show that the “public debt” was around $1.23 billion, while the “net debt” was around $2.4 billion.
The net debt numbers are generally included in Financial Statements. The previous set of financials [PDF here] for the year ended 31 March 2011 net debt was listed at around $2.1 billion, whereas the public debt was listed at around $1 billion. The 2010 financial statements listed net debt at around $1.75 million, and public debt at around $969.5 million.
In response to our query, Financial Secretary Anthony Manders said, “The ‘net debt’ number in the Financial Statements of the Bermuda Government Consolidated Fund [which the Auditor is referring to] includes items such as the liabilities of the Government Pension Funds and other government liabilities. The $1.4 billion refers to the funds that government has actually borrowed from lenders.”
The Government Loans Act 1978 defines public debt as “debt owed or guaranteed by the Consolidated Fund, but only if and when, and to the extent that, the guarantee obligation becomes due and payable by the Government.” The Act limits public debt [net of sinking fund assets] to $1.45 billion, which was raised from $1.25 billion in March 2012.
The financial statements released on Friday indicate the Government paid around $67.6 million in interest on the public debt — or around $185,000 per day. This is an increase from the prior year, with the 2011 statements showing around $55.3 million was paid on interest on the public debt.
The full 64-page Financial Statements of the Consolidated Fund are below [PDF here]:
Update Feb 11, 11.56am: We asked the Auditor General for additional information on the net/public debt, and she said, “In layman’s terms, the Net Debt is a result of Government’s spending exceeding its revenues over time and it represents the extent to which future revenues [and future generations] will be required to pay for past transactions [including the unfunded liability relating to pensions payable to Government employees and Ministers and Members of the Legislature].
“At the end of 2003/04, the net debt stood at $522.2 million. Four years later in 2007/08, it reached $1.1 billion and five years later at March 31, 2012 it stood at $2.4 billion.”
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