Wed | Feb 19, 2020

Bermuda national debt climbs to US$2.5b

Published:Wednesday | December 6, 2017 | 12:00 AM

Bermuda's national debt rose to US$2.515 billion at the end of September, according to new government figures.

However, the rate of debt growth is slowing as the gap between revenue and expenditure narrows, officials said.

In the six months to the end of September, stronger than expected customs duty receipts and an uptick in payroll tax helped government remain on track for a full-year projected budget deficit of US$134.7 million.

In the first half of the 2017-18 fiscal year, government achieved a US$57.6 million current account surplus, excluding debt service deductions.

When debt servicing is factored in, the surplus vanishes to leave a six-month deficit of US$63.4 million, officials said. That is down from the US$100.2 million deficit incurred during the corresponding six-month period in 2016.

Revenues for the period were 6.3 per cent higher than a year ago, thanks to higher collections in customs duty, payroll tax and stamp duty.

In a statement at the weekend, the Ministry of Finance said these revenue boosts were offset by lower collections in passenger tax and civil aviation receipts owing to the privatisation of the airport and the transfer of the Department of Civil Aviation out of government.

The national debt stood at US$1.4 billion when the One Bermuda Alliance (OBA) government took the reins after defeating the Progressive Labour Party (PLP) in the 2012 general election, but the debt had already grown to US$2.4 billion by the time the PLP returned to power after ousting the OBA in July's general election.

The government has to repay a whopping US$500,000 a day to service the crippling national debt.

In 2008, 10 years after the PLP came to power, the national debt stood at only US$277 million but ballooned by more than one billion US dollars over the next four years. Three capital projects alone a wharf at the West End, a court building in Hamilton and a new school overspent by US$151 million on estimates.

The near meltdown of the global financial system in 2008 had a huge impact on the island, with its concentration of international financial services, as it lurched into recession in 2009, from which it only emerged in 2015.