’2020/21 Deficit Estimated At $295.4 Million’

The Ministry estimates that revenue yields for 2020/21 will contract by about 18.5% or $208.1 million, unbudgeted Covid-19 expenditures have been approximately $125 million for this fiscal year, so the revised deficit for 2020/21 is estimated at $295.4 million.

This was from Minister of Finance Curtis Dickinson speaking during yesterday’s [Dec 16] press conference, where the Minister said, “Preparing the 2021/22 Budget will be challenging given the unprecedented uncertainties in the context of the Covid-19 pandemic.

“As highlighted in a recent Ministerial Statement that I made in the House of Assembly, in fiscal year 2020/21 the Government has taken and continues to take unprecedented policy actions to redirect existing resources towards health and social support measures.

“These actions have required unbudgeted Covid-19 expenditures of approximately $125 million for this fiscal year. Covid-19 has also had a significant impact on Government revenues and the Ministry estimates that revenue yields for 2020/21 will contract by about 18.5% or $208.1 million. After factoring in the impact of Covid-19, and various austerity measures taken by the Government, the revised deficit for 2020/21 is estimated at $295.4 million.

“Other factors which will impact the framing and composition of the 2021/22 Budget include:

• Continuing deficits, high debt levels and the debt ceiling;

• Government’s 2020 General Election Campaign Platform and the 2020 Speech From The Throne;

• Economic considerations;

• Taxation sensitivities;

• Continuation of Zero Based Budgeting that will include a Public Service Value Assessment to provide for a better-quality portrayal of the range of services delivered by the Government of Bermuda;

• Feedback from the Pre-Budget Report in advance of fiscal year 2021/2022;

• Risks facing the country; and

• The implementation of the Government’s fiscal strategy; which is to reduce net debt and balance the budget by 2023/24.

“Like most small states and territories, Bermuda’s economy is highly vulnerable to external events, underlining the need for financial and fiscal prudence. This vulnerability is compounded by our continuing budget deficits and Government indebtedness. This vulnerability has now materialised in a far more rapid and powerful form than anyone could have expected with the onset of COVID-19.

“The Government has to take a number of actions to address the problems the island faces, and it is important that stakeholders and citizens understand these vulnerabilities, have the opportunity to give their views, and are aware of the factors driving the Government’s fiscal policy decisions.

“Therefore, in keeping with our pledge on openness and transparency, we will continue with the process of releasing a Pre-budget Report [PBR] as part of the preparation process for the 2021/22 budget.

“The objective of the PBR is to increase public awareness of a government’s fiscal and budget policy objectives, and to establish a benchmark for evaluating the conduct of fiscal and budget policy.

“This will continue to ensure that our budget process is clear and transparent and our Pre-budget report will explain the factors driving the Government’s fiscal policy decisions while also giving everyone the opportunity to make their views known during this period of uncertainty.

“I can confirm that the Pre-Budget Report in Advance of the 2021/22 fiscal year will be released before the end of the year and we welcome all key stakeholders including you, the People of Bermuda, to fully participate in the process after the report is released.“

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