Economist warns to expect deficit of $30m

  • Upbeat overall: Peter Everson (File photograph)

Bermuda should expect a deficit of more than $30 million in the next financial year, an economist has warned.

Finance minister Curtis Dickinson announced in last Friday’s Budget Statement that the Government planned to spend $19.8 million more than it takes in during 2020-21.

However, Peter Everson predicted the figure could end up being much higher.

He pointed out that in last year’s Budget the Government estimated a $7.4 million surplus for 2019-20 but now expected to have a $14.6 million deficit instead.

Mr Everson, a businessman and former president of the Chamber of Commerce, said: “It is notable that the current year outcome is $22 million worse than the Budget.

“Given the current weakness of the domestic economy, we should expect next year’s deficit to exceed $30 million.

“The reality remains that until we have substantive reform in the following key areas there will be no improvement on our downward path: immigration, public education, healthcare.”

Last Friday, Mr Dickinson said he was disappointed by the revised estimate, which he said was partly due to the Government’s financial commitment to the stalled Caroline Bay development.

He also highlighted lower than expected stamp duty on house sales, a drop in hotel occupancy taxes and fewer fees for sale of land to non-Bermudians.

Mr Dickinson added that extra cash was also spent to secure winter flights from New York and Boston and on subsidy funding for the Bermuda Hospitals Board.

The projected $19.8 million deficit would take Bermuda’s debt to almost $2.68 billion.

Budget surpluses of $7.7 million and $21.1 million are projected for 2021-22 and 2022-23.

However, Mr Everson took an upbeat view of Mr Dickinson’s Budget overall and praised ideas such as boosting the Government’s IT network and plans to create a green energy fund.

Mr Everson, an economist, said: “He must be given credit for doing as well as he can under difficult circumstances.

“Bermuda is very lucky to have Mr Dickinson as our Minister of Finance. He is the most qualified person to lead us through these difficult times.

“Many of the initiatives are thoughtful and targeted at well- defined problems and I hope that the delivery will be effective.”

Mr Dickinson announced that significant investments would be made in IT to make “Government work better and be more responsive to the needs of our citizens”.

Mr Everson said: “Paper- based systems are labour intensive and are not user friendly. They are governed by hierarchical systems, which are inflexible.

“We now live in an information-based world and, to manage effectively, the Government needs access to timely data presented in a joined-up manner.”

Mr Dickinson also explained that the green energy fund would be set up with international companies “to provide capital to deploy solar installations throughout the island”.

Mr Everson said: “Moving to renewables makes economic sense as well as contributing towards greenhouse gas emission reductions. As stated it will also increase employment.”

He said his only concern about the Budget Statement was Mr Dickinson’s claim that Bermuda had been unable “to shed the constraints of a global economic downturn that started in 2008”.

Mr Everson added: “This is a prop used by many parliamentarians to cover up for their inaction.

“Sadly, the ailments that we currently face are all self-inflicted.”

He said that term limits on work permits “really started to bite” between 2008 and 2010 and “sent many talented people overseas to work for our competitors and to take our secret sauce with them”.

Mr Everson added: “We now have knowledgeable, credible and well-resourced competition in many more countries.”