Moody’s: Review Prompted By Steep Rise In Debt
[Updated with comments from the Finance Minister & Shadow Finance Minister]
Moody’s Investors Service said they have placed Bermuda’s Aa2 government bond rating on “review for possible downgrade,” citing the “steep rise in government debt since the global financial crisis and the prospect of further rises in the coming two years.”
This follows after Standard & Poor’s revised its outlook on Bermuda from stable to negative last week, in which they cited a “prolonged economic downturn” and “deteriorating fiscal performance.” The ratings agency did affirm its ‘AA-/A-1+’ long- and short-term issuer credit ratings [ICR] on the island, and said they expect Bermuda’s economy to stabilize and begin to modestly grow in 2014-2015.
In a statement released today [Apr 3] Moody’s said, “The review is prompted by the steep rise in government debt since the global financial crisis and by the prospect of further rises in the coming two years. In addition, the island’s economy remains in recession, making efforts to correct the fiscal deterioration more difficult.”
“Bermuda’s rating is supported by the island’s very high per capita income, its strong institutions, and its moderate level of government debt. At well over $80,000, per capita income is among the highest in the world.
“The country’s regulatory institutions have allowed the development of an important international business sector, especially insurance and reinsurance. Despite its recent rise, government debt started from a very low level and is still at a level only slightly higher than the median for countries in the Aa2-A1 rating range.
“The review for possible downgrade is prompted by the upward trend in government debt that has occurred since 2008, with the ratio of government debt to GDP rising from a low 5.9% at the end of the 2007-08 fiscal year to an estimated 28.1% at the end of 2012-13.
The statement from Moody’s continued, “Furthermore, the newly elected government’s first budget, introduced in February, projects a large deficit that will raise this ratio further in the coming year to well over 30%.
“Moody’s says that the rise in government deficits and debt was primarily due to a prolonged period of declining GDP, which began in 2009 and looks likely to continue through 2013. Moderate growth may resume in 2014, but the long-term decline in the tourism industry and less dynamic growth in the insurance sector could limit the pace of future growth.
“The rating review will focus on the new government’s plans to address the upward debt trajectory and to implement reforms that would boost economic growth. A downgrade could result if the review concludes that debt will likely continue to rise.”
Update 5.33pm: Minister of Finance Bob Richards said, “Although a possible downgrade is certainly not something we wish for Bermuda’s future, I was pleased to read in the report that Moody’s has recognized that the OBA is putting various initiatives in place aimed at economic improvement, as did the S&P report that was released last week. Government remains optimistic about future prospects for growth and will manage the economy accordingly.”
Shadow Finance Minister David Burt said, “The action today by Moodys Investors Service should serve as a wake up call to the OBA.
“Moody’s said, ‘the newly elected government’s first budget, introduced in February, projects a large deficit that will raise this ratio further in the coming year to well over 30%.’
Mr Burt continued, “Despite the local praise for the OBA Budget in the media echo chamber, the PLP and now independent international observers are shocked with the increase in spending and the record deficit contained in the first OBA Budget.
“This spending increase followed 2 consecutive years of spending reductions under the PLP. Though deficits are not new, the lack of any concrete action to reduce the deficit, by reducing spending and increasing revenues are alarming. We once again point the OBA to the ideas raised in our Party’s Throne Speech Reply and Budget Reply; These ideas will assist Bermuda in diversifying the economy and increasing our revenue base.
“Bermuda requires action; not committees and soundbites. We call on the OBA to produce a credible plan and take concrete steps to demonstrate the OBA’s commitment to maintaining our ratings during the upcoming review by Moody’s Investors Service,” concluded Mr Burt.
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The statement from Moody’s continued, “Furthermore, the newly elected government’s first budget, introduced in February, projects a large deficit that will raise this ratio further in the coming year to well over 30%.
Your point is?
Well duh. Thanks PLP.
How long you going to continue blaming the PLP. It was the OBA who introduced this budget with an INCREASE in spending. OBA been government for a while now. Time to stop talking about the PLP.
You can keep asking this question, but all it demonstrates is that you are an idiot. Look, the PLP over extended the county’s finances through poor fiscal management and idiotic schemes, while simultaneously reducing the attractiveness of Bermuda as a place to do business, reducing tax receipts and killing the real estate market stone dead via idiotic immigration policy.
It’s inevitable, that to deal with commitments already made, the new government has to raise the debt ceiling in order to pay our bills.
This is solely the PLP’s fault through their incompetence.
Why bother? People like that poster above just will never understand (and if they did they would never admit to it) the devastation that their beloved PLP brought upon our economic and financial standing. They think we only got to this dire point since December 18 2012. Zealots and zombies are an apt description of these individuals.
Bringing Bermuda’s finances to this point is in no way “standing strong for Bermudians.” This will affect ALL of us Bermudian taxpayers.
And wasn’t the OBA elected to CHANGE things? Please explain to me change when the OBA Increased spending and increased borrowing?
So you think that once the OBA discovered the TRUE nature (i.e. not PLP claims) of the state of our finances they should have enacted further cuts which would have deepened the PLP recession and hurt your fellow Bermudians who are already hurting from the mishandling of the economy by the former regime?
So you are not really about “standing strong for Bermudians” then?
Your knack for posing rhetorical questions knows no end.
Here are the facts:
OBA Said they would reduce the debt
OBA Introduced a budget with the largest deficit in History
Moodys called them out on it
Those are the facts.
The facts are that the PLP mismanaged the economy to achieve the dire state we are in now. The other fact is that you never once attempted to hold the culprits accountable and now have the nerve to blame the Party that inherited the mess and has one hell of a job to fix the mess.
OBA did not say when they would reduce the debt, and they still have a few years to do it.. Also, if they took measures to reduce the debt and not borrow, it would mean government workers not being paid. Sure there would be lots of posts about that.
Ok, so the alternative would have been to fire half the civil service until the debt burden reduced.
They have started to change things, immigration reform, property ownership for example, will help to reignite the economy. But it’s not going to happen overnight, you have to pay the bills.
You’ll get no argument from me, but this is the rub, that’s not what they said BEFORE THE ELECTION!
They said they would cut spening, and they raised spending.
They said they would reduce the debt and they gave Bermuda the largest Deficit in history.
Moodys called them out on it by saying,”the newly elected government’s first budget, introduced in February, projects a large deficit that will raise this ratio further in the coming year to well over 30%.”
We can argue Rhetoric all day, but the facts are the OBA’s irresponsible pre-election promises set purposely unrealistic objectives for political gain. They won, good on them, but they must be held to their word.
That’s the largest bit of cognitive dissonance I think I’ve ever seen. Do think time began on Dec 17th?
I wouldn’t argue with him, Sand. As you correctly stated initially, he’s an idiot!
Agreed. 100%.
(y)
@ Seriously
I have to forgive you as obviously you have no understanding of economics and obviously don’t realise that the OBA government had no idea how deep the former government had put us in debt.
I foregive you for not understanding what is obvious to the rest of us.
Seriously do you believe that anyone was going to wave a magic wand and erase years and years of deficit spending by the PLP??? And I suppose you believe in Santa Claus too????
Not at all, but I expect people to be frank when talking to the people of Bermuda. Don’t say you are going to reduce the debt, when you know full well it is NOT possible.
I think people are upset that Moodys called them out on it saying, “the newly elected government’s first budget, introduced in February, projects a large deficit that will raise this ratio further in the coming year to well over 30%.”
Your lack of comprehension skills is frightening.
Which part of “we can’t pay the bills” don’t you understand??? Wy do you think we can’t pay the bills?
Because they didn’t borrow more money.
Not the first time Bermuda has been in debt. In the early 90′s recession debt increased by 1000%. It happens.
If you want to pay the bills, make sure your financing is in order….
Funny thing is they said it in March… so you didn’t see this coming in Dec, Jan, Feb, all of a sudden in March its an issue.
You OBA followers may be more jaded than I think. Don’t let the facts get in the way/ If you don’t hold the OBA to account – just like you held the PLP to account what will you get?
Debt was at $160mn up until 2004/5. What happened after that?
Did you hold the PLP to account all those 14 years?
Thought not!
In the early 90′s debt did not rise by 1000%. i doubt you even know what it means.
Every time I see comments like this I wonder why no one mentions that we must have also have had a very poor opposition during the PLP reign as well.
Oh I see. Even the stupid stuff the PLP did while in power was the OBA’s fault.
Thanks for clearing that up.
until they admit it!
Well when are they going to stop pointing back to the UBP – a party no longer around. The OBA raised that debt because we have to pay for the initial debt the PLP laid us with. It’s really not hard to understand.
Do you realize we are paying for it twice now???
When are these PLP extremists going to get their damn heads out of the sand????????
The OBA didn’t budget an increase in spending, they just budgeted honestly for the first time in a decade. Previous budgets understated expenses and overstated incomes and weren’t worth the paper they were printed on by the time the end of the year rolled around.
Thank you, Al. Moody’s didn’t “call them out”, they noted an inescapable fact…that in order to fulfill the obligations left by the previous government, the budget had to reflect the reality of our situation, not the fantasy picture painted to conceal the abysmal state of our finances.
Instead of blaming the OBA for the situation they are trying hard to a)put the brakes on and b) turn around, why don’t you point the finger exactly where it belongs – at the previous Finance Minister who either didn’t know the true state of affairs, which makes her incompetent; or she did know, which makes her a liar, since she never once admitted how dire our straits are.
When it comes time for the next election, THEN you will be entitled to say (if it truth) that the present government did not reduce spending or the debt. There were unexpected obligations, such as the Heritage Wharf, which meant that spending increases were necessary.
Be reasonable, please!
“ditto” Sandgrownan.
Thanks PLP
I see you have failed to highlight the part where moody’s mentioned the “GLOBAL FINANCIAL CRISIS”, you know that one right?? The one that the PLP government from a 22 mile island sent the entire world into free fall because they issued Term Limits to the foreign workers coming into the island created.. Cheesh PLP just because you wanted to protect Bermudians from becoming an underclass in their own country that their forefathers help to build and a place their children would not be overlooked.. Why did you guys cause the entire world to get so bad?????
No surprise here.
OBA Campaign: “We will REDUCE GOVERNMENT DEBT”
Moodys: “Furthermore, the newly elected government’s first budget, introduced in February, projects a large deficit that will raise this ratio further in the coming year to well over 30%.”
OBA Movie should be titled, “Lies and the Liars who tell them”
See my response up thread. Look, the new government had to raise the debt ceiling to meet commitments left by the PLP. Their alternative would have been to fire half the civil service. Would you have preferred that?
I, for one, am happy we actually have adults in charge and hope that they can create a business friendly environment to get the tax receipts flowing again. In the short term, he debt ceiling has to be raised.
Hold up, so you are telling me that the PLP left 1 Billion worth of commitments?
and why are you talking about what the PLP left, wasn’t the OBA elected to CHANGE things.
All I’m saying, in my original post is the OBA said one thing and did another. Read Larry Burchall’s comments after the Budget – shocked with the rise is spending.
You can’t blame the PLP for the OBA hiking spending in their first budget, and guess what, Moody’s isn’t fooled either.
“You can’t blame the PLP for the OBA hiking spending in their first budget”
Ahh, yes you can. They didn’t create the situation we are in now, but do have to deal with it. But that’s the problem with zombies like you, you don’t hold the PLP accountable for any of thei ractions or mis-actions.
I bet the OBA wished they lost the election now.
You can blame someone else as much as you want to, but it was the OBA who put forward a budget that hiked spending when they promised to reduce spending.
Here are the facts:
OBA Said they would reduce the debt
OBA Introduced a budget with the largest deficit in History
Moodys called them out on it!
Don’t get mad at me, get mad at the OBA.
What was the alternative? How would we have paid the bills?
This is a direct result of 14 years of incompetence. Moody’s have “called out” the PLP to use your well worn vernacular.
Alternative is to do what governments do. Arrange financing and plan for the future.
Simple, don’t whine about doing your job, just do it.
That’s what they’re doing, Dumbo!
Oh simple….”arrange financing”.
And what does that mean exactly, dumbo?
Dear Seriously…in the words of Pee Wee Herman “I know you are but what am I?”
So would you rather they deep cuts in spending on social programmes, financial assistance or create a plan to reduce debt without severely cutting the social programmes and reduce the debt with a longer term plan. PLP before the election was tryng to instill fear in the voting populace saying t5hat they would make radical cuts to the social programmes. It looks like they didn’t make radical cuts to the social programmes so PLP got caught out on their lie there and now they are complaining about the fact that these weren’t cut without actually saying it. You can’t have it both ways you PLP Puppets
Someone here probably has a better handle on the numbers, but our tax receipts are down and our interest payments are up. There is no money in the Bank. In order to meet our obligations, we need to raise the debt ceiling. Either that or we default on our loans and get downgraded more. The cost of borrowing goes up and it’s a vicious cycle.
The OBA have two challenges. 1. Keep the lights on and 2. Create a business environment that enables tax receipts to grow.
The PLP lied to us about the true state of the finances repeatedly.
The PLP lied to the Bondholders too??
Where are the lawsuits?
C’mon at least argue facts.
The PLP lied. You know it. We all know it.
Mad Dawg, I’m assuming you were being ironic when you said to Seriously, “You know it.” Clearly, Seriously knows nothing. Certainly now how an economy works. Fools like that kept putting the ethically corrupt and fiscally irresponsible plp back in power, so really, it’s Seriously and other morons like him/her who are to blame by enabling the plp to drive Bermuda into this deep ditch. Now that clowns like this blame the OBA for the mess, why do we even listen to their uninformed opinions?
So you think they should have instituted greater austerity measures and deepened the recession which the PLP is largely accountable for? If they aren’t then name any similar jurisdiction or major trading partner which has experienced four consecutive years of negative GDP growth. Just one please. Bet you can’t. Minister Gibbons stated the other day that if they didn’t raise the debt ceiling in Februuary that they wouldn’t be able to make payroll in March because we are BROKE due to the incompetence (or something far more sinnister) of the PLP to be able to manage OUR finances in a fir and proper manner.
I bet if they (OBA) had known the true state of finances prior to the election the promise to reduce debt would have been tempered. It was your PLP that ran massive budget deficits over the last several years. It was your PLP government that had four qualified audits and counting and it was your Government that failed to produce the audited statements for the 2011/12 fiscal year which did not permit anyone to know the true state of our financial ruin. Premier Cox promised interim financial statements and failed to propduce them in September of last year because of their dire state and the fact that an election was on the horizon (which means they tried to hide them so you couldn’t see how poor they were).
Your zombie like following of the PLP just does not allow you to see or admit to the MASSIVE damage done to our finances. But thank God that you zombies are the minority.
Paula Cox is looking increasingly like the incompetent fool that we all reared she was, but hoped she wasn’t. What a legacy of failure.
Whats’s with the “fool” comment?? We all have our different views and opinions, but there is no need to call the former premier a fool. Mrs. Cox gave up a large amount of time to help Bermuda. She is a very bright lady, and probably could have had a much more lucrative lifestyle is she didnt offer her services to the island.. Please stop, your name calling is not helping.
Nah, she failed. Incompetent. Foolish. Weak.
Tale your pick
Fool is as fool does. She’s a fool.
Guess what Imp. There are thousands of PLP supporters that didn’t vote for various reasons. What’s mind boggling is that you feel that ALL supporters of PLP do not have the capacity to understand anything that is happening in this island. MINORITY?
Guess what IMP, that was my point. Many PLP supporters saw that the massive deficiencies in your Party and abstained from voting. Hence the zombie like supporters are the minority. Hence why the PLP lost the election. Not that hard to understand even for a zombie like imp such as yourself.
Here we go with the insults without any basis is fact.
1) I’m not zombie, I am true flesh and blood with a different opinion. Just because people don’t agree, doesn’t give you a right to attempt to belittle them or the people/party they support.
2) TRUE STATE OF FINANCES. Please tell me what was not known. Do you think the PLP misled bondholders when all of the governments financials were published? C’mon, you aren’t just talking about politicians, but high ranking civil servant of a highly rate sovereign. Also, “it was your Government that failed to produce the audited statements for the 2011/12 fiscal year which did not permit anyone to know the true state of our financial ruin.” Not true – the statements were produced and all relevant details were in the bond filing. So come with a better argument. The most ironic part of ALL is that the financial statements when tabled showed the Government revenues were $40 Million HIGHER than was expected, so if anything things were in a BETTER state!
3) When it comes to raising the debt ceiling, your definition of “Broke” then fits in with 98% of the sovereigns in the world. US is BROKE, Canada is BROKE, UK is BROKE, Germany is BROKE. You are broke when you default, not broke when you have to raise more money.
4) To your original statement, “So you think they should have instituted greater austerity measures and deepened the recession” NO I don’t think that, however that is what the OBA promised during their election campaign, that’s why I said above, “Lies and the Liars who tell them”. They knew FULL WELL they couldn’t reduce the debt, but that is what they said! Their campaign started our with “Balance the Budget” – which is realistic, but I’m guessing that didn’t poll well so they went on to “Reduce the Debt”.
Here are the facts:
OBA Said they would reduce the debt
OBA Introduced a budget with the largest deficit in History
Moodys called them out on it
Those are the facts.
Repeatedly stating that something is a fact doesn’t make it so.
repeatedly saying nothing does not negate my original assertion.
Where is that ‘economic rebound’ that Premier Cox said was just around the corner? Shouldn’t the economy be booming by now?
Or was she just lying to try to get re elected?
She was lying
I didn’t label you a zombie because we don’t agree.
I described you as a PLP zombie because prior to December 17 2012 you and your fellow supporters sat by idly and permitted the destruction of our finances because you viewed it as your team doing the damage.
When the likes of Mr. Burchall, Sir John, Bob Richards or any other commentator expressed their concern about the (mis)management of Bermuda’s finances people such as yourself attempted to denigrate the characters of such people as a means to try and paint them as simple partisans who were lying and being nothing but fear mongerers and trying to damage your “team.” Many of you even called such commentators Uncle this and Uncle that. Now that is name calling because their views didn’t aling with yours. Now all of a sudden you are referencing Mr. Burchall’s columns as evidence! How ironic and desperate.
So yes you were like a zombie prior to December 17 2012 that just followed the pack. And now that your “team” is now in Opposition all of you sudden you are concerned about our finances and the like. Amazing what one election could to do one’s psyche.
Rant on.
Excuse me, but you don’t know me. You don’t know what I say, and you don’t know what I do.
But I see you’ve lost the argument on facts so you are doubling down on your Zombie Attack..
Rant On then…
…you think the PLP did a good job managing Bermuda’s finances those 14 years?
IMHO – that makes you a PLP zombie!
BTW, in case you don’t get this also, most of us thought they did a p..s poor job and we kicked them out! You have obviously not grasped this fact, but then, you’re a PLP zombie….
Argosy – Nice Straw Man there..
“…you think the PLP did a good job managing Bermuda’s finances those 14 years?”
When did I say that? Let’s discuss Moody’s and the OBA Government, and not made up arguments which i NEVER put forth.
The OBA is the government, the OBA raised spending, the OBA just “found” 3 Million to pump into future care while the ratings agencies are concerned that their first budget shows no change in trajectories.
Focus on the matter at hand..
Consider this – The OBA has increased spending – do you think that will help or hurt Bermuda’s future. Rating’s agencies don’t have a bias.
The PLP got us in this position, while you and all the ither zombies allowed it. Were you on the take as well, like thebPLP elite?
Interesting how you want to continue to focus on the PLP. You may want to spend your time and energy focusing on the Government of the Day. The PLP is the opposition, they don’t spend the money now the OBA do.
Do you support the increase in spending by the OBA?
Do you support cuts that will deepen the financial quagmire we find ourselves in? Do you support massive cuts that will adversely affect the livelihoods of thousands of Bermudians?
Aren’t you part of a Party whose slogan is “standing strong for Bermudians?”
Dude, you have no Idea what I am a part of.
I will tell you what I don’t support. A Kenysian pipe dream of continued deficit spending to produce growth via increased aggregate demand. Hasn’t worked out so well for us thus far has it, why do we think it will work in the future.
Bermuda’s import reliant economy and monetary policy constraints reduce the effectiveness of such a response and thus we are seeing problems compounding.
What I support is a balanced budget, which will result from Increased government revenue and reduced government spending.
This means CUTS. Please remember the PLP Cut spending and were castigated for it. Everything from the inefficient sunshine league to getting rid of free Bermuda college. Thus far the OBA has shown NO compunction to do the same. That is what is needed political will.
If you think the we can improve our financial situation without cuts then I’ve got some junk bonds to sell you with a yield of 3%.
Did you support deficit spending when the PLP were in?
If you don’t support it now, you should be supporting the OBA government. It’s dumbos like Roban who bleat when 15 overpaid consultants don’t have their contracts renewed.
But you gladly support the PLP despite the hundreds of millions of dollars they wasted.
@ Seriously: It seemed to me that the cuts in spending instituted by the PLP were not in areas that needed cutting – the Civil Service payroll, the MP’s payroll (promised but never delivered), travel, to name just a few.
@Seriously. The 2013 Budget was the Budget prepared under the PLP. There wasn’t time for the OBA to prepare their own. Fact.
Not True, Even Bob Richards said they had time to change things. FACT
Hi Jason,
Your zombie comments are interesting based on what you are trying to defend. Please tell me the True nature of our finances that has been revealed since Dec 2012.
There are some that might believe you also to be a Zombie if you buy the OBA’s spin of ‘true nature’.
I am amazed at the zombies that follow the OBA and the PLP. Both would have to admit teh mis-steps of their group but somehow turn a blind eye in the face of criticism.
Both groups have lied and duped the people and instead of us standing and reaching accross the aisle from both sides to hold these groups accountable, we engage in insulting exchanges. Unbeleivable! If you don’t believe me, what the posts that follow this post.
I would love if all this energy could be directed into a collective effort in getting our country moving forward. We simply fall in line with the ‘rally the base’ tactics that both groups seem to have put above the direction of the people.
We know the PLP deceived the people and it doesn’t look like the OBA is fairing much better at this stage.
My urnest please is that we don’t alienate anymore but simply ask for good governance. No excuses, no further blaming, just a plan to get us out of this mess.
Hopefully that is not too much to ask for.
“Both groups have lied and duped the people and instead of us standing and reaching accross the aisle from both sides to hold these groups accountable, we engage in insulting exchanges. ”
AMEN!!!
they didn’t say they were going to reduce the debt within 4 months.
They did say that they would cut spending though! That hasn’t happened. If you can’t do that, you can’t reduce the debt, especially when giving away tax cuts.
@Sandgrownan Paula was definitely an incompetent minister who should have been expelled from the party for calling the election at an inopportune time.
Bermuda will soon join the third world….high debt, high crime, low education, no natural resources, expat productivity….just a matter of time before it is bankrupt.
Please forgive my typos ‘watch vs what’, ‘earnest vs urnest’. I am sure there are more and ask that you forgive me. I should have reread it. My apologies
everyone makes mistakes Good Governance….look how many times the Zombies voted for the PLP….
Hi Navin,
I hear you loud and clear but I think a broader view would be to look at how many times people blindly voted for the PLP, the UBP and in one way or the other, the OBA.
Once we recognize that there are a lot of blind followers out there, then we can move to the next step of why.
Once we look at the ‘why’ of the zombie/blind following and seek to understand it in full, we would then realize that most of us are trying to follow (vote for) a group that we feel best represents our interests.
The sad reality is that very rarely are the interests of the winning voting group fully served. It boils down to which group can convince you of the fact that the ‘other’ group won’t represent your interests as they can.
Again, I call for good governance and it doesn’t matter which party is in power. If we had good governance then we can all be assured that the interest of BERMUDA would be best served compared to the interest of a select few.
Agree. Too many people voting because they’ve always voted that way, too many people blind about what is really going on; too many people blinkered; too many people not able to give “the other” a chance; too much history (and not enough common sense); and too much corruption. All governments in Bermuda (whichever party) should be open and honest, and stop spinning absolute rubbish. It shouldn’t be about point scoring, who did what 10 or 20 years ago. They all need to get some integrity now and save Bermuda.
Grubster – Now you are talking sense.
So back to what was said by Moodys, don’t you think it troubling that the OBA have increased spending?
Isn’t it up to everybody to say, we can’t do that if we don’t have the money?
And the fallout of the failed PLP experiment continues. The OBA has inherited a steaming pile of PLP dung to deal with. What the koolaid drinkers fail to understand is that Government budgets are started to be worked on as far back as September. By December the budget is pretty much done except for the dotting of the I’s & the crossing of the T’s.
So why did Bob Richards say he had time to change things?
OBAers continue to say, PLPers did not hold the PLP to account….and now the country is where it is….let’s say that is absolutely true…. …. but then those say people say don’t hold the OBA accountable…
I wonder who is really drinking the Koolaid Triangle Drifter speaks of…
OBA did not cut spending for the same reason the PLP did not cut spending… the OBA is now hoping something gives in economy while, the OBAers are dunk of the spiked grape drink…
I suppose the 50k increase in the OBA’s travel budget is due to the PLP…
The PLP continue to believe in fairy tales. They criticize the OBA for not reducing spending and criticize the OBA for reducing spending by cutting consultants. They criticize the OBA for not reducing consultants and criticize the OBA when they do. What on earth can the OBA do in 3 months to undo the damage done in 14 years? If I was the OBA I’d call another election tomorrow and hope the PLP take over again.
that would be funny. Anyway, a genuine question as I really don’t know. How many of the current government ministers or any of the opposition MP’s have any qualifications or any experience in economics?
I know I’m a little slow, but how can certain people copy and paste part of a paragraph (and one that begins ‘furthermore’) without at least reading the first bit? The entirety of the statement on debt is:
“The review for possible downgrade is prompted by the upward trend in government debt that has occurred since 2008, with the ratio of government debt to GDP rising from a low 5.9% at the end of the 2007-08 fiscal year to an estimated 28.1% at the end of 2012-13. Furthermore, the newly elected government’s first budget, introduced in February, projects a large deficit that will raise this ratio further in the coming year to well over 30%.”
So unless you’d like to blame the OBA for the increases in debt before they even came into being much less power, you have to acknowledge that our debt situation has been built up over time. The ‘facts’ are actually:
1. When the PLP came into power, Bermuda had a very, very healthy debt, and often balanced budgets.
2. This continued right up until a very charismatic leader took over, at which point debt massively accelerated as expenditure rapidly overtook revenues.
3. In order to finance this expenditure, Bermuda had to borrow from various institutions, often at reasonably unfavorable rates.
4. We are and will still be paying back that borrowing for our forseeable future.
5. The final PLP budget released in 2012 was not adhered to, and the deficit was higher than forecast.
6. That was the situation the OBA inherited in December.
Now personally I’d love to see some serious austerity measures in Bermuda, but the fact is that the largest hindrance to us overcoming the economic hole dug out by the later years of PLP rule is the public sector that it allowed to grow out of control. And for purely political reasons, I don’t think that the OBA can realistically do what needs to be done.
To use an analogy, last year the PLP said the Bermuda ship was sailing okay, with one or two small holes in it that could easily be plugged. When the OBA actually walked aboard for the first time, they saw that the holes were more numerous and larger than the PLP had claimed. What is the OBA to do? Let the ship sink?
Relax Jason . The OBA have 4 years to pretend they know how to govern under the careful guidance of their UBP handlers. Did I say UBP?? Yeah….I did. Which of course, has been repeatedly shoved down our collective throats as been no more. Many will watch the entire mess unfold before our eyes as you and your cohorts continue to say in 2015 IT’S THE PLP’S FAULT!!!!!!
Chuckling,
You mean, like how the PLP was blaming the UBP for a lot of things, right up until the 2012 election – Cedarbridge, poor race relations, lack of infrastructure they “had to invest” in, etc etc – hmmm?
It is interesting that die hard OBA supporters will continue to blame the former PLP government for the state of Bermuda’s finances; but the question I ask who will step up and take the keys out of the hands of all those new home owners that benifited from the housing programs built by the PLP government? All the criticism over a so-called bloated civil service; but if the PLP government had not maintain this bastion of stable Bermudian employment the current recession would have been much worst. Bermudian government workers did not keep the money shops busy. Thier money or wages were spent right here in Bermuda’s economy. Maybe the anti-Bermudian OBA government is thinking in terms of how they
are going to cut the civil service without sparking massive civil unrest
which will surely come given that Bermuda is not Greece or Cyprus where you have more or less homogeneous populations with no large migrant worker presence while the nationals of those countries face ever large unemployment and thier government continue to call upon them for ever greater sacrifices. The current government calls for so-called shared sacrifice but make no mention of a shared sacrifice from the banks to the supermarkets. Keep pushing Bermudians up against the wall. history tell us that sooner or later you will get a reaction that will shock you.
Anti Bermudian OBA? Idiot
Te failure of the PLP is now glaringly obvious, an apology might be a start.
“shared sacrifice from the banks to the supermarkets” … is that when they go out of business because they’re losing too much money?
Always threatening violence Alvin. So sad but yet so predictable. Is that the extent of your debating capabilities?
If the “reaction that will shock you” is a general strike, bring it on, the sooner the better. Otherwise we’ll all hope you don’t intend to incite riots with such statements.
What “keys” are you talking about Alvin? The ones to Grand Atlantic? $60m wasted on a frikkin eyesore that no-one wants to live in?
Yes, people will “continue to blame the PLP for the state of Bermuda’s finances”. It doesn’t take a brain surgeon to work out why. They screwed up the economy and mortgaged our future, and generations to come.
I’m starting to think Alvin is one of the Betty Trump contributors – grammar, spellings and vocabulary are glaringly familiar.
The Bank of Bermuda increased my credit limit on my cards WITHOUT my permission and DECREASED the minimum payment amount about 12 years ago. They made it out like like look how much we appreciate and trust you – look how generous we are. Thank goodness I didn’t go crazy with spending and take them up on paying that ridiculously low minimum payment when I did use the cards.
With these business practices that try to act like a little extra debt is good, I’ll bet you every penny of my increased credit limit that EVERYBODY in the world has WAY more debt then they had 14 years ago.
When the African colonies gained their independence from the Europeans,of most of the leaders of the countries were generals or common man who lacked the proper understanding of politics and economics, and they put themselves into a (for lack of better words) s$%t state by poor financial management and corruption. They had good intentions at some point I’m sure but they executed their plans terribly. Same thing in Bermuda. But the problem with Bermuda is now, what can we do? What should we do? Implement politics and economics into the public school system so the next generations won’t be full of blind voters is a step. Accept the failures of a previous government, make them admit their failures, make the current government admit to being the racist government they once were. Put trust back within the people. At this point, we don’t trust our government now, and we don’t trust the one before because of dishonesty. You still have people apologising for slavery and that happened 400+ years ago. Apologise for the crap they put us in. Obviously our debt and the global financial crisis is not going to make a turn around anytime soon, they need to admit that to the people who don’t know that already. Bermuda is going to have to tread carefully for a while. Baby steps, people are expecting leaps and that’s not going to happen.
AMEN!
And you prevent a mess by holding the government of the day to account for their actions.
“Anti-Bermudian OBA” is the new race card
At present, every $ paid to a civil service worker is a negative to the economy regardless of where it is spent by that worker. Government revenues have to outweigh expenditures for Bermuda to recover its debt position. Where is that increase in revenue going to come within the next year or two or three and at the same time how do we improve that ratio by managing costs? Currently Civil service workers at large are overpaid and over compensated for the work that they do. The level of qualification is poor, the prerequisites for the jobs are almost nonexistent and if you know someone in the department that hires, you pretty much got hooked up on the spot with a nice fat paycheck and a free ride. We need the civil service for sure but in Bemuda we must have the highest civil servant wages in the world. PLP supporters will blame this on the cost of living because of IB, but that is incorrect, the cost of living rose when the PLP Government bloated the civil service and overpaid what should be low level, low earning jobs, the lower classes became artificially wealthy on borrowed money. They wanted their voters to be paid for their vote and taken care of. The public sector footed that bill, the real hard working Bermudian. The economy inflated, lower middle class people were putting non-essential items such as $3000 alloy wheels on their cars , sound systems etc., ferry workers were wearing $300 designer shades to name a few examples of the opulence. But this was all spent on Bermuda’s credit card and the false financing was unsustainable but no one wanted to cut back on the good times, whether they were borrowed or not! The PLP created a huge middle class that the nation could not afford. Classes exist because of an economic structure; the economy is relative to a nation’s income of foreign currency and trade. We have no export, only services and commerce. All of our money is USD and comes from outside. The OBA has no choice because we have no money to keep government services employed. Gradually the Civil service will have to be scaled down and privatized; we will need to increase revenues, whether it be through gaming or other sources. But the most important of all, is the Education of the next generation, as they will be the leaders one day and I hope they have a better understanding of Macro and Micro Economics than the previous government did.
I think your understanding of economics is deeply flawed.
“PLP supporters will blame this on the cost of living because of IB, but that is incorrect, the cost of living rose when the PLP Government bloated the civil service and overpaid what should be low level, low earning jobs, the lower classes became artificially wealthy on borrowed money.”
That is not correct, cost of living/inflation arises when too many dollars are chasing too few products. It was precisely the booms in IB in 2001 and 2005 that increased the cost of living the Bermuda. The increased deposits from the earnings of those persons allowed the banks to lend more money combined with the massive increase of rents earned by Bermudians is what allowed people to feel they could buy $3000 rims.
The reason for the downgrades lies in the message “Gaps in information” during the PLP term the financial data submitted to the rating agencies was late or incomplete(what a surprise) when the new Government came in an discovered that the finances of Bermuda were far worse than anyone was lead to believe the rating agencies knew why there were gaps…….we all continue to pay the price for the irresponsibility of the PLP Government and will do so for a very long time….if the finanical information was good the PLP would have rushed the statements out but knowing they were bad they delayed then and lied about everything else…..
Navin, now you are making stuff up. Do you even know what “Gaps in official information” represents?
Press 1 for yes and 2 for no.
I’m sure its 2.
The argument your are making above is false. it has nothing to do with financial data, it has to do with economic data. GDP etc…
If the Government, and its bankers (HSBC & Butterfield) Submitted incorrect financial information to our Bondholders we would all be sued. Please, stop making stuff up just to attempt to butress your arguemnt.
The OBA won the election, the PLP lost! Focus on what you can do to raise the country up.
“The OBA won the election, the PLP lost! Focus on what you can do to raise the country up.”
take your own advice and stop trying to tear the countyr down (even further) because your team (that brought us down) didn’t win. Act like a Bermudian for once as opposed to a simple PLPian.
Jason,
It is interesting how most of your responses go into attacks and do not deal with facts. Let me help you with some.
1) OBA Won the Election
2) PLP Lost the Election
3) OBA is the Government
4) The Government makes decision that affect all of us.
If the country is to be better than we must ALL (PLP, OBA, UBP, GLP) hold the government to account.
The voters did that on December 17 with the PLP, Do you really want to wait another 5 years before pointing our things that may not be the best for our future?
We cannot afford to increase spending. That is a fact. The OBA who you clearly support increased spending. That is a fact. Ratings agencies have put or rating on credit watch. That is a fact.
Let’s deal with facts!
. The OBA do not support increased spending.
But yet they increased spending!
Er, no. They raised the debt ceiling.
Go to http://www.gov.bm and download the Budget Statement. Go to page 21
Line 2: Current Spending up From $971,968,000 to $983,883,000
Line 7: Capital Spendin up from $74,833,000 to $84,609,000
That my friend is a spending increase. Don’t let the facts get in the way.
Sigh.
Whats the matter? Truth got your tongue?
I am so sorry Seriously how could I confuse financial data with Economic data….I suggest you go back to the S&P downgrade during the reign of Ms.Cox when they said “certain gaps in information” nothing made up there Dude….thats what they said….Gaps generally are not a good thing…..like giving that rating agencies unaudited financials that are at least a year behind……..(ask the Auditor General about that)…
facts do not play into his/hers argument…he will quote Moody’s about the OBA and say “see it is all their fault for the dire financial position we are in after being in power for 3 months or so…” But when you bring up the gaps in official data as quoted by S&P when Bermuda was ACTUALLY downgraded it is lies and taken out of context…you are more transparent (in your motives) then both Governments combined
Once again Straw Man…. “see it is all their fault for the dire financial position we are in after being in power for 3 months or so…” – When did I ever say that?
Again, what I find interesting is you all defending the OBA’s increase in spending. Yet if it was the PLP you would say it was the worst thing ever.
Approach the situation with balance!
PLP WAS government OBA IS government. When the GOVERNMENT makes a mistake it is up to the people to speak up!
They haven’t increased spending.
Go to http://www.gov.bm and download the Budget Statement. Go to page 21
Line 2: Current Spending up From $971,968,000 to $983,883,000
Line 7: Capital Spendin up from $74,833,000 to $84,609,000
That my friend is a spending increase. Don’t let the facts get in the way.
You want to look at why?
Seriously according to Dec 29, 2011 Bernews S&P downgrade said it considered “Monetary flexibility and Gaps in Official data as credit weaknesses for Bermuda” that sound good to you?
That is exactly what was said by S&P. However YOU are the one saying GAPS in official data are unaudited/late financial information. If that is the case, i ask you to prove it.
No where does S&P Refer to un-audited or late financial statements. They are referring to official economic data. If you work in the financial industry, and you have access to the FULL report and not the press release you would know that.
Ask one of your friends for the FULL report and get back to me.
I’ve read the full report….its available online….although no matter what it says you will only believe what the PLP tells you to believe….Gaps in official data can be a good thing right?
The 2011 full report is available online? Sure about that?
GAPS can’t be a good thing if they lead to a downgrade. However it was you who said that they were related to Late/Incomplete/Unaudited financial statements.
For the avoidance of doubt, let me share what FULL S&P report (not available online) did say: “The lack of a recent official estimate of Bermuda’s international investment position represents a material data gap.”
Nothing about late/incomplete/unaudited statements. Try not to make up facts to suit your argument.
OK here you go…On February 9, 2013 Auditor General Heather Jacobs Matthews said the “Government failed to adhere to international practice by producing late and incomplete 2011/2012 financial statements.. FOR THE FOURTH SUCCESSIVE YEAR, the Auditor gave a qualified opinion of the financial statements of the Consolidated Fund , which cover the year through March 31, 2012… Mrs. Jaqcobs Matthews noted that her qualified audit opinion of the statements of the Consolidated Fund was due to “SERIOUS DEFICIENCIES IN INTERNAL CONTROL over the management of various developement projects that occurred in the year ended March 31, 2009….. No matter how you slice it Mr Seriously the rating agencies rely on financial data submitted by the Government in the same fashion that they do with any business…a qualified opionion for four successive years is a Gap in Information….
Nice way to try and change your original argument. You were talking about Rating Agencies correct..
Now you are talking about something else…
OK Carry on!
Seriously, I think you are begging the question. International investment, should automatically be included in our financial statements(our economic data), which information would form a significant part of accounts to be audited,for which two successive Auditors General for 4 years straight (FOUR YEARS!!) have given qualified reports. Of course, those qualified audits were a major part of the criteria used by the Rating Agencies in their assessment of our credit worthiness. If they didn’t play a part, the rating would be worthless.
Seriously, Seriously! Certainly the OBA said they would reduce the debt but they never said they would do it with a PLP drafted budget AND TWO MONTHS after being Government! Get real dude!