The Bermuda Monetary Authority recorded a budget deficit of $1.76 million last year, its sixth annual shortfall in the past decade.

It has previously covered budget shortfalls from its general reserve, and last year the reserve shrank by $2 million to $19.75 million. There was an almost identical decrease in 2017 when the budget deficit was $1.63 million.

The BMA increased its staff numbers by nine during 2018, to end the year with 196. A year ago it estimated it would need a further 39 full-time staff by 2020 to fulfil its role and expanding mandate.

The authority’s total revenue improved 1.97 per cent to $48.62 million, mainly due to a $2.12 million increase in revenue from supervisory and licensing fees.

However, its annual expenses were $50.3 million, about $900,000 higher than in 2017. Salaries and employee benefits increased by about $2.2 million. The authority has previously projected its annual operating costs will hit $61 million by 2020.

Last year, the BMA said that after the global financial crisis of 2007-09, its fee increases had been moderated or not applied in certain years to reduce the impact on the island’s financial-services industry.

With assistance from an international management consulting firm, the authority undertook a review that studied peer jurisdictions, comparing fees that were charged for comparable services and activities of the BMA, and looked at staffing levels that were needed to effectively perform those activities.

It said the review had found the authority’s human and financial resources “below expected levels given the organisation’s continually expanding mandate and what it will need to achieve in the future”.

In November, the Bermuda Government approved wide-ranging fee increases by the BMA, which are to be phased in over a three-year period. Among those affected by the charges will be insurance and reinsurance companies, banks, corporate service providers, trusts and credit unions.

In its 2018 annual report, released last month, the authority listed its achievements for the year, which included preparations for the Caribbean Financial Action Task Force’s review of the island’s anti-money laundering and antiterrorist financing framework; created regulatory sandbox and innovation hub, and legislative framework for digital assets; and replaced its corporate registration portal with a new system called Integra.

Jeremy Cox, executive chairman, writing in the report said 2018 had been “a year of multifaceted ground-breaking initiatives that challenged the BMA to its core”, and that the authority had risen to the challenge.

He also said: “A key element of meeting challenges today is not to lose sight of our role as regulator and to keep our eye on the ball — which is not as easy as it sounds, given the pace, complexity and the ever-changing dynamics sweeping across all sectors, domestically and internationally.”