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Bermuda Auditor General Warns Of Future Challenges

Tuesday, February 9, 2010

Bermuda’s Auditor General, Heather Jacobs Matthews, has released comments following the qualified audit of the Bermuda government's 2008/09 consolidated fund financial statements, comparing the results with previous years.

In her comments, Matthews warns of “significant financial challenges going forward,” including “a weakening cash position as evidenced by a substantial bank overdraft, expenditures significantly outstripping revenues, increasing long-term debt and, by extension, a growing deficit and public debt.”

Government expenditure has consistently outpaced revenues for the past five years, fueling increased borrowings to carry out the government’s programmes. To support the increasing debt, the Public Debt Legislated Limit was increased from BMD375m (USD375m) in 2008, to BMD1bn in 2009.

The salient findings of the analysis of Bermuda's financial situation include:

  • Net Debt, at the end of March 31, 2009, rose to BMD1.45bn, up BMD321.2m from March 31, 2008, and an increase of BMD970m compared to fiscal 2003/04.
  • At March 31, 2009, the Accumulated Deficit – the differencial between the Consolidated Fund’s total liabilities and total assets – stood at BMD719.9m, up BMD102.4m from March 31, 2008.

Subsequent to the year end the government has negotiated further borrowings of BMD160m and BMD15m respectively. In addition, the government entered into a BMD200m guarantee with the Bank of Butterfield. These subsequent events effectively increased the Public Debt by BMD375m to in excess of BMD850m.