Video: Premier & Minister Press Conference

[Updated] Premier David Burt and Minister of Finance Curtis Dickinson are holding a press conference this afternoon [March 1] regarding the 2021-2022 Budget. We will have additional coverage later on and in the meantime the live video is below.

Update: The live broadcast has concluded and the 44-minute replay is below

Update March 2, 9.10am: Minister Dickinson’s remarks:

Good afternoon and thank you for joining me here today.

Last Friday, I delivered the budget statement for the fiscal year 2021/22. This is a budget that is pragmatic, recognizes the times we are operating in, is transparent and designed to best position Bermuda for the future as we recover from the impacts of the COVID-19 pandemic.

This budget seeks to address the serious issues facing our country with the overall aims of taking care of our people, diversifying our economy, growing our workforce, and improving our fiscal situation with a target of a balanced budget by 2023-24 and consequently reducing our national debt.

For fiscal 2020/21, the Government’s financial performance has been severely impacted by the COVID-19 pandemic; a pandemic that has had significant health, economic and social impacts on people and countries around the globe. This Government took vital steps to address the serious threat to the safety and welfare of our residents, and is estimated to have spent $127.2 million in unbudgeted COVID-19-related expenses, including:

• Unemployment benefits [$56 million to 10,000 workers];
• PPE;
• Testing, quarantine facilities and vaccination services;
• Embodying of the Royal Bermuda Regiment;
• Enhanced cleaning contracts;
• Funding for the BEDC Business Sustainability & Continuity Funding Programme; and
• Honoring the airport minimum revenue guarantee with Skyport.

The COVID-19 pandemic impacted almost all of the Government’s revenue sources, with the primary impacts being lower payroll tax receipts, lower customs duty and the loss of most tourism-related taxes and levies.

The headline numbers for the 2021/22 National Budget are a revenue target of $998.9 million; total spending of $1.124 billion which includes current expenditure excluding debt service of $903.0 million; debt service of $127.8 million; capital expenditure of $92.9 million; and a projected deficit of $124.7 million.

Given the sustained impact of the COVID-19 pandemic, the revenue estimate for 2021/22 is $998.9 million, $123.3 million or 11.0% lower than the original estimate for the previous year and $38.3 million or 4.0% higher than the revised budget for 2020/21. The most significant decreases will be in relation to the continued impact of the COVID-19 pandemic on the global economy through the lack of cruise and air travel, and some softness in customs duty and payroll taxes.

In support of those who have been adversely affected by the pandemic, the Government will continue providing the following concessions that will impact revenues but provide continued support to certain secotors or our economy:

• Payroll tax relief to troubled sectors will be continued through 31st March 2022;

• The ‘Tax Incentives to Grow Jobs’ programme will be continued through 31st March 2022;

• The Retail Shops [Temporary Customs Duty Relief] Act 2008, which provides a zero rate of customs duty on imported capital goods intended for renovation and refurbishment of retail shops, will be extended for a further five years through 31st March 2026; and

• The 2015 land valuation list will remain in force for a further ten years, and as such, there will be no increases to land tax, and the bands will remain as is.

In an effort to further strengthen the regulatory oversight undertaken by the Registrar of Companies [“ROC”], and to support the digitisation of the functions of the ROC to meet changing international obligations and increase efficiency, there will be increases within the fee structure of the ROC which will take effect in the coming fiscal year. There are no other meaningful increases to the cost of government services or additional fees and taxes.

The national budget allocates $1.124 billion in total spending. This level of spending represents an $18.6 million or a 1.6% decrease over the 2020/21 original estimates, and an $82.7 million or 6.9% decrease over the 2020/21 revised estimate.
Normal operating expenses are expected to be 5.3% lower than the original budget accomplished by initiatives such as:

• A freeze on the funding of vacant posts;
• A ban on non-essential government travel;
• Reductions in discretionary spending; and
• Temporary payroll or government employee overhead savings.

The current account balance, after interest, is budgeted at a deficit in the amount of $31.9 million. This represents a decrease in the current account surplus of $97.1 million compared with the 2020/21 Budget, but a $142.5 million improvement over the revised budget estimate for 2020/21.

The Government’s capital expenditure plan is a combination of maintenance, remediation and new works intended to preserve the integrity of the government estate, encourage infrastructure improvement and to provide a measured economic stimulus in times like these.

The capital plan for fiscal 2021/22 is set at $92.9 million and will achieve these broad intentions playing a vital role in economic recovery. The highlights of the plan include:

• The development of a shore side facility to support a new fishing cooperative;

• Renewed grants to community clubs and community organisations;

• Desperately needed upgrades to the physical plant of the Mid-Atlantic Wellness Institute, consistent with this Government’s approach to the importance of mental health; and

• Long-awaited upgrades to the Marine & Ports workshop and the Department of Public Transport’s HQ, both of which address longstanding concerns around worker safety and working conditions.

Given the above, the Government plans to run a budget deficit of $124.7 million in 2021/22, which is $120.8 million less than the revised estimate of a $245.5 million deficit for 2020/21.

The Government has no plans to borrow in order to finance this fiscal year’s deficit. Instead, as I have previously advised, the deficit will be financed using a portion of the proceeds raised in our August 2020 financing that had been deposited in the Sinking Fund.

As of 31 March 2022, it is estimated that gross public debt will remain at the same level as 31 March 2021, at $3.35 billion, and debt, net of the Sinking Fund, will be $3.2 billion.

As I mentioned during the course of the Budget Statement, the Government has developed an economic recovery plan. The Economic Recovery Plan has been a whole-of-government effort and included the input of key stakeholders including the Economic Advisory Committee, Financial Policy Council and the Fiscal Responsibility Panel. We will be releasing more details on the plan in the coming weeks.

The development of the plan has been guided by six key principles

• 1] Combatting COVID-19 as a priority;
• 2] Reducing the cost of living;
• 3] Fairness and equity;
• 4] Financial viability;
• 5] Fiscal prudence; and
• 6] Timeliness.

We will execute this plan mindful of the two key commitments. Firstly, that Bermuda will return to a balanced budget in three fiscal years once tourism has fully recovered from the pandemic. Secondly, that Bermuda will maintain the current ceiling on total government debt.

As I said on Friday, this is not a time to be timid. This is a time to be bold.

I believe the challenges we face are solvable. We can successfully execute our Economic Recovery Plan and build an economy that all can participate in – an economy that works for all of us.

I want to thank the Ministry of Finance team for their stellar work in putting together this budget during an incredibly difficult period.

Thank you.

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