PLP: ‘Downgrade Should Serve As Wake Up Call’

May 16, 2013

Today’s downgrade and negative outlook by Moodys should “serve as a wake up call to the OBA”, and the new negative outlook is a “likely result of the OBA’s lack of a credible plan of action to address Bermuda’s deficit,” Shadow Minister of Finance David Burt said this afternoon [May 16].

Moody’s downgraded Bermuda’s government bond rating to Aa3 from Aa2 and placed a negative outlook on the rating. In addition, the foreign currency bond ceiling was moved to Aa2 from Aaa and the foreign currency bank deposit ceiling was downgraded to Aa3 from Aa2. Furthermore, the local currency bond and deposit ceilings were moved down to Aa2 from Aaa and Aa1, respectively.

A statement issued by the ratings agency said, “The downgrade was prompted by the steep rise in government debt and the lack of an economic recovery from the downturn at the time of the crisis. Government debt has risen from 5.9% of GDP at the end of the 2007-08 fiscal year to an estimated 28.1% at the end of 2012-13.

“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 over 30%,” said Moody’s.

They also said the Aa3 rating “is supported by the island’s very high per capita income, its strong institutions, and its still moderate level of government debt in relation to similarly rated sovereigns.”

Mr Burt said, “Today’s downgrade and negative outlook by Moodys Investors Service should serve as a wake up call to the OBA. Moody’s reiterated what they said last month 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%.”

“Despite the local media praise for the OBA Budget, the PLP and independent international observers are concerned with the increase in spending and the record deficit contained in the first OBA Budget. This spending increase followed 2 consecutive years of disciplined spending reductions under the PLP.

“Moody’s new negative outlook is a vote of no confidence in the new OBA government and is a likely result of the OBA’s lack of a credible plan of action to address Bermuda’s deficit. We again point the OBA to the ideas raised in the PLP’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, soundbites and photo-ops. Tomorrow, the House of Assembly is back in session. I expect that the Minister of Finance will address this downgrade, address this negative outlook, and tell the people’s representatives exactly what he plans to do to reverse this trend,” concluded Mr Burt,

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  1. sonso says:

    “Moody’s new negative outlook is a vote of no confidence in the new OBA government and is a likely result of the OBA’s lack of a credible plan of action to address Bermuda’s deficit. We again point the OBA to the ideas raised in the PLP’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, soundbites and photo-ops.

    please expand?

    • Hudson says:

      Here – let me expand… The PLP got Bermuda into this mess, argued that the deficit was not a problem (even up until November election) and argued that the deficit was actually smaller than other nations our size, was being managed in a fiscally sound manner, was a necesity in keeping Bermudian jobs and building infrastructure blah blah blah…
      So here we are 6 months post election. As the OBA warned, we have been downgraded. As the OBA warned, it will take a lot to turn this ship around, an as the OBA promised, there are many people working hard to do exactly that. The PLP know that nothing can be fixed overnight – fourteen years of mess can not be cleaned up in one year with a flick of a switch or a tick of a box. Bermuda, we are in a mess and the only way we can get out of it is to work hard, play together and stop the deflection game. It’s a collective process, not a PLP OBA one… that mindset has got to go as it’s the mindset that helped to get us here in the first place. Please PLP, the voters are smarter than you think they are. The people get it – we are now waiting on the PLP to get it too…

  2. Victor says:

    Burt, this is really pathetic, after fourteen years of PLP nouveau riche extravagance on the people’s tab.

  3. David Cameron says:

    Wow, this is unbelievable.

    The PLP criticizing the OBA for a downgrade? This is ENTIRELY your doing Ewart and Paula, and all your new cronies.

    • TellME says:

      So pointing your finger is the plan to move Bermuda forward? That’s the same strategy the OBA uses which equates to a whole pile of nothing.

    • collins says:

      Everest, why don’t you have paula and ewart on your show ? the way you made off about our Premier today was disgusting…..have you ever listened to your so called english language ?

  4. here's a thought.... says:

    SERIOUSLY? the PLP is trying to blame the OBA for this???? that is hilarious. they are more delusional than i thought. can’t IMAGINE where we’d be or how far we’d be downgraded if they got back in! WOW.

    • @ here’s a thought…says. Yes they,(P.L.P/Mr.David Burt)have some, grande bola’s! If not mistaken, it’s due to the short sighted dealings of the former Government the Progressive Labour Party that we here on the Island are faced with yet, “more threats”

  5. Triangle Drifter says:

    I am not an economist but I do know that organisations such as Moodys do not operate in real time.

    It takes time to compile the numbers, analize them them & produce a report. What we are seeing is the results of the PLP ineptitude, Coggenomics if you will. It will take time for the OBA policies to gain traction. Then we shall see a shift in outlook from Moodys.

    Until them the fallout from the PLP will continue to plague us.

    • LaVerne Furbert says:

      Triangle Drifter, I bet organisations such as Moodys operated in real time when the PLP was in power. If only I had the time to do the research and see your comments back then.

      • Triangle Drifter says:

        Laverne ….um …ah …well …um…oh why waste the time?

        Go back to talking to your friend, The Fool on the Hill. You are way out of your league here.

        • only8peoplelikeyou says:

          I figured Senator 8 votes would add her two cents. As usual, nothing worth listening to.

      • troof says:

        Nope, they still took time to compile the data. Did you not notice the economy improved after the PLP took power. Then as PLP’s regressive policies kicked in the economy began retracting. Oh and don’t blame the US economy. We could have fared much better with better management of the public purse. Look at Canada and also note Bermuda is one of very few countries that are in their fifth consecutive year of economic decline.

      • Franklin jr says:

        willfully ignorant spiteful trolling as usual…

        No they didn’t operate in real time, it’s on what, maybe a 6-12 month lag? PLP in power 14 years… so downgrades from a few years ago would relate entirely to the PLP tenure – nice try, deflect deflect deflect

        By the way (since you LOVE that phrase!) how are those BIU finanical statements coming?

      • BendEm Like Beckam says:

        Laverne, REALLY!!! You of all people are talking about real time. The roort itself said the report was compiled from figures up til the end of last year. The PLP was in power up until LAST year!

        And you of all people making a comment about this. If you spent less time on talk shows, writing letters and blogging all day, then prhaps BIU wouldn’t have fallen 10 YEARS BEHIND with its audited statement.

  6. Second says:

    What’s the going rate for a PLP spokesperson to make an — out of him/herself?

  7. Verbal Kint says:

    What a freakshow Bermuda politics has become.

  8. watcher says:

    Sweet Jesus, David the Moodies down grade, is almost wholly down to the crippling levels of dept facing the government. Now unless i’ve missed something the current gov’t have been in power for 5 months and i don’t believe they’ve been spending money like its going out of style that will have been your party and as junior minister of finance shouldn’t you have been aware of that?

  9. Steve says:

    Did this idiot actually read what Moody’s actually said? Mr Burt, please retire, you are not very intelligent. Note the dates that Moody’s quote.

    What is it with the idiots on this island?

    • collins says:

      Steve. these idiots listen to a show called”the people’s show”….this host is an… and I think Mr Perry needs to get rid of him …….

  10. oblivious says:

    the amazing thing is that the authors of this release have a huge following.

  11. O'Brien says:

    I guess Mr Burt missed this passage under ‘rating rationale’:

    “The downgrade was prompted by the steep rise in government debt and the lack of an economic recovery from the downturn at the time of the crisis. Government debt has risen from 5.9% of GDP at the end of the 2007-08 fiscal year to an estimated 28.1% at the end of 2012-13. ”

    This can hardly be blamed on the OBA. To be fair though, it is clear that the rating agencies don’t believe that Mr Richards went far enough in his first budget.

    So perhaps a fairer assessment would be this: yet more bad news for Bermuda, neither party emerging unblemished.

  12. Al says:

    Unreal. David Burt promised to keep spending constant for 3 years if the PLP were elected, so in-effect he promised to get Bermuda downgraded and promised to keep the downgrades coming.

  13. LaVerne Furbert says:

    Moodys was on the money when they downgraded Bermuda under the PLP Government, now they’re a questionable rating agency. Give me a break!!

    • CBA says:

      No, that’s not the issue. The issue is that the PLP actually has the audacity to say this should be a wake up call? The damn PLP put this country in debt and they want to warn the OBA about it? PALEASE. This is seriously unbelievable. The PLP will not be in government for a long time if this continues.

      • longtail says:

        Actually Burt is quite correct – this SHOULD be a wake-up call… for the hear-no evil and see-no evil PLP stalwarts! The rest of us woke up some time ago thank you.

    • Sandgrownan says:

      Laverne, you are an idiot.

    • Franklin jr says:

      yes, the big bad cyber klansmen at it again! holding the poor black “natives” of the island down

      get a grip

    • Mad Dawg says:

      No LaVerne. Nothing wrong with Moody’s. Just the f..#.ng morons who got us in this mess.

    • Billy Mays says:

      Shush laverne. Adults are talking. You wouldn’t understand.

  14. Jokes for DAYS says:

    David Burt, March 21st 2012:

    “Debt is a tool that is used by governments, by families and by business. It is a necessary tool in times of crisis. It is a tool that we chose to use, and we value our people over our bottom line,” continued Senator Burt.”
    http://bernews.com/2012/03/senator-burt-investment-in-our-peoples-future/

    David Burt, Today:

    “Despite the local media praise for the OBA Budget, the PLP and independent international observers are concerned with the increase in spending and the record deficit contained in the first OBA Budget.”

    Double standards are HILARIOUS

  15. Kathy says:

    Yikes! I smell a form of income tax or wealth tax!

  16. Spittal pond skink says:

    Honestly, you lot really need to get a mirror down there in Alaska Hall and try looking in it and keep a straight face when say this utter trash. The Titanic was sunk in minutes and would take ages to try and refloat. The sinking you all did to this beautiful country over the last 14 years will take the OBA a llot longer than 5 months to fix.
    What you all should be doing is hanging your heads in shame and shutting up. You would appear more intelligent to others if you behaved in that manner.
    Go start successful companies and run them properly if you really want to help this island. You can earn the right to criticise in about 25 years.

  17. SoMuchMore says:

    The pee l pee is still moaning omg. Burt and the cronies need to take a chill pill

  18. Ringmaster says:

    The OBA should have done the right thing and sacked 4,000 Government workers on January 2 and stopped the borrowing. However, the PLP legacy is so bad that couldn’t happen and more borrowing had to occur.
    The PLP are hilarious in their accusations. So sad Bermuda will suffer for years for their incompetence.

  19. A. Little says:

    Mr Burt, the OBA got their ‘wake up call’ on Dec. 17, just like the PLP did ….. RIP….

  20. jt says:

    Each Burt press release demonstrates how the PLP managed to get us in this cock-up in the first place. What an ignoramous, and clearly speaking for the party – so by extension………

  21. blankman says:

    Lets see if I understand. The Moody’s downgrade is a result of the crippling levels of debt the OBA inherited and the fact that they’ve admitted that because of that things will get worse before they get better and that’s somehow the OBA’s fault? Apparently the previous 14 years had nothing to do with the debt or the state of the economy.

    Nice to know.

  22. Swan Song says:

    @Ringmaster, you sound like a total fool. So you think the answer is for the government to sack it’s ENTIRE work force? Do you really think that’s logical or practical? You get an A for stupidity.

    • Ringmaster says:

      @swan song. You are clearly the fool. The PLP grew the Government to over 8,000 people. The cost is not sustainable which is why the first order is to cut the cost by 15%. The PLP suddenly say the OBA is at fault for the debt. The debt was incurred by the PLP and cannot be cut overnight. Of course you can’t sack 4,00 people but that is what it will take to stop the borrowing. You must be David Burt for not understanding this simple fact.

  23. Not a Mooncricket says:

    Plp have the nerve to talk about photo ops! You couldn’t walk into any goverment offices with out seeing pictures of them every where

  24. Huh? says:

    this is a joke right? David Burt cant actually be serious. the OBA has been the government of the day for 5months now, parliament hasn’t even be in session for most of that time to even pass through the changes the OBA has promised. this downgrade is rooted in what happened more in the past 5 years of failed leadership, then in the 5 months of new leadership.

    furthermore a reminder to many out there that the changes the OBA were promised were for over an elected term. they didnt come in an say these are the changes we are going to make over the next 2 weeks, it was an agenda for the next 4-5years. how you can be attacking a government for not having something implemented before its first year, heck even before its first 6 months is beyond me. especially when such promises from the PLP like free buses for all (which is very easy to implement and only requires bus drivers to not collect the fare and let people on) were promised for almost 10 years and never delivered. have several seats mr burt.

  25. Navin Johnson says:

    Burt and Zane make their outrageous statements solely for the benefit of the few remaining fools who believe in them….Laverne,Betty,Rhonda,etc.etc.etc….

  26. Swan Song says:

    @Ringmaster, in one breath you say I must be a fool, in the next breath you agree with me that you can’t sack 4000 people. That was my entire point. Your figures seem to be a bit off, but if they are correct in your first comment you asked for a 50% cut-not 15%. By the way, I totally agree the PLP totally screwed up things but I wish people would stop blaming the government workers. They are voting taxpayers just like you and aren’t responsible for the mess we’re in. Take a look through the blue pages of the phone book at the various government services we all use and tell me just where we should start the trimming. When all the services you rely on are gone, or short staffed, everybody will be making noise and complaining. I swear Bermudians are the most fickle people on earth.

    • Mad Dawg says:

      Under the PLP the civil service doubled to 8,000. If they don’t take a pay cut, why should we keep the ones we don’t need? We can’t afford them. Even Burt seems to want austerity.

      • Ringmaster says:

        Swan Song. I said sack 4,000 – that is 50%. You said ENTIRE.
        My comment was sarcastic. After hailing debt as being good, the PLP want the OBA to reduce debt within 5 months. One quick and easy way is to sack 4,000 of the 8,000 Government people. Not practical though, so they are starting at 15% cuts in expenses. I’ll bet though that if you went through the Departments, as SAGE will do, you will find examples such as more paper pushers in the Dept of Education than teaching staff. Plus layers of managers managing mangers. Instant cuts there.
        By the way the majority of Government workers are not in fact taxpayers. They are paid by taxpayers and then return some of the tax as tax. You may as well not tax them and pay them the Net amount. There’s a quick sleight of hand to reduce costs, odd the PLP didn’t spot it.

  27. OMG says:

    Burt must not have read the report as if he did he would see where the finger was pointed and for what period.

    No wonder he is the Shadow Minister of Finance – he works in the dark (and also has not a farging clue what he is talking about)

  28. Common Sense says:

    Let me get this straight. The Moody’s statement points out that Government debt rose from 5.9% of GDP at the end of the 2007-8 fiscal year (I believe that means as of 30th April 2008) to 28.1% at the end of the 2012-13 fiscal year. That surely means as of 30th April 2013. By my rather poor maths our debt rose from 5.9% to 28.1% in exactly 5 years. By my reckoning during that 5 year period the PLP Government were in power for 4 years and just over 7 months, while the new OBA Government has been in power for a little less than 5 months.

    Can someone, anyone please explain how we can now blame the new Government that has been in power for barely 4 1/2 months for this downgrade?

  29. Vulpes says:

    Mr. Burt, you neglected to mention that the PLP in government slept through their own wake up call, and that is mainly why our children will inherit this mess.

  30. John E. Thorne says:

    The PLP and only the PLP are to blame for this downgrade. Anyone who thinks otherwise needs there head examined!

  31. Swan Song says:

    You are saying the PLP hired 4000 people over the course of 14 years? Wow where did you get those figures from and which departments do all those people work in? I’m not saying you’re wrong, that just sounds like a heck of a lot of jobs. In any event, if 4000 people were let go, like Ringmaster first suggested, the government will have to shell out millions in redundancy packages. That will also mean 4000 jobless people (who may have to rely on govt assistance) and thousands of people unable to pump money back into the economy. We need to get people spending again, not spending less which will only depress the economy further. My point to Ringmaster, and others who think like him, is to stop the silly notion that people need to lose their jobs. A pay cut (as you suggested) would make a little more sense but its pure stupidity to suggest more people be put out of work. I don’t have all the answers, nor do I profess to, and I really don’t envy our leaders who have this mess to clean up .

    • Mad Dawg says:

      If they take a pay cut, maybe. If they don’t, why should we keep employing the ones that aren’t needed? We can’t afford it. We have no money to pay for people we don’t need. Even Burt seems to want spending and borrowing to reduce.

  32. seriously says:

    Thanks PLP for the mess missing your own wake up call

  33. Jason Semos says:

    “Government debt has risen from 5.9% of GDP at the end of the 2007-08 fiscal year to an estimated 28.1% at the end of 2012-13.”

    The three fingers pointing back. There’s no room to play the blame game here.

  34. Bermudian says:

    Oh, I definately woke up and voted you OUT! The nerve to point fingers at the PLP.

  35. LOL (original TM*) says:

    If this is Burt’s understanding of the countries economics I’m glad he is not at the helm……….

    LOL

  36. Joonya says:

    I am dumbfounded by their arrogance. The PLP need to humble themselves real quick. I am embarrased for them..

  37. Moonbeam says:

    This economic mess (and many more) can be laid directly at the feet of the PLP Government. Why are they now nit-picking over THEIR failures ? They need to put their efforts into helping, not hindering the future of our Island. Where on earth is their intelligence ????????????!!!?

  38. Bermuda Boy says:

    The downgrade was necessary because of PLP mismanagement. Funds disappearing and a finance minister who couldn’t count.

  39. Enough says:

    Every time David Burt opens his mouth noting but blame comes out. Take responsibility for the damage the PLP caused to Bermuda and then you might start getting some respect and people will care about what you have to say. The PLP turned Bermuda’s economy on it’s head and have left the OBA with the mess to clean up. Increasing the debt is no surprise given the misguided management of the PLP and the false debt they provided us with in the first place.

    “This spending increase followed 2 consecutive years of disciplined spending reductions under the PLP.” – You are living in some realm on reality that is laughable David Burt!!! Get a grip or shut up.

    Rather than knocking every single thing the OBA does try and get behind them and stop your moaning just for the sake of it.

  40. Familiar says:

    All the Moody’s rating change does is prove that we are still experiencing the repercussions of years of bad governance.

    For anyone to suggest that it is the OBA’s fault for the downgrade when they have only been in power for a few months only demonstrates their lack of knowledge concerning economic and rating matters.

    Dare I say ‘no big surprise’.

  41. swing voter says:

    David Burt, you are a total disappointment. You are too smart to be trash talking. Don’t you know that anyone with a brain can read through your bull shyte? then again, you words were designed to appeal to the brainless blind and gullible

  42. Keepin' it Real...4Real! says:

    Do you people actually think that we are recovering..?? We are still on our way down…we haven’t struck “rockbottom” yet!…then we have no alternative than to rise once again, OR stay there. So for all you fancy talkers that obviously are oblivious to what is still to come i just shake my head. While you all are distracted kicking this Political Football around, The Power behind the Powers that be, don’t get distracted from their goals…and the last i heard, was that NONE of us were included.
    Anyway i just included a little link to see if any of you can put this into perspective…https://www.youtube.com/watch?v=LofnJGrA2ec

  43. James Rego says:

    Mr. Burt may I suggest that you sit back and learn from successful business-men how to run a business. If you have something useful to contribute, then I am sure the OBA are willing to hear you out, otherwise, sit back and learn!