Bermuda’s debt limit is expected to be raised by $150 million in an attempt to tackle the financial hit from Covid-19, the House of Assembly heard yesterday.
Curtis Dickinson, the Minister of Finance, warned the island could face an “economic catastrophe” and predicted likely job losses, fewer retail sales and a fall in government income.
The emergency financial plan was announced as the coronavirus threat forced some private schools to shut.
The Bermuda Hospitals Board also suspended non-
urgent surgery and churches introduced precautions to limit the spread of the bug.
Bermuda had no confirmed cases of Covid-19 yesterday with six test results awaited at press time.
David Burt, the Premier, said that test kits for the virus were expected to be in Bermuda “later this week”.
He added: “Your government is responding swiftly as circumstances require.
“If Covid-19 does arrive in Bermuda, an action plan is in place to contain its spread.”
Mr Burt said that the decision to require all who entered Bermuda to self-quarantine had been difficult. He explained: “It essentially shuts down our borders and our tourism industry, but controlling community spread of Covid-19 and preserving the safety of our Bermudian people is paramount.”
Mr Dickinson explained that the Ministry of Finance’s crisis plan included a variety of measures.
He said: “To provide financing to supplement reduced revenues, the Government is taking the necessary action to secure emergency liquidity lines of credit with local financial institutions.
“The required discussions have been held with all relevant parties, to gain the necessary approvals, including an associated $150 million increase in the debt ceiling.
“This will bring the debt ceiling to $2.9 billion. These facilities will be used only when it is absolutely necessary.
“The ministry will provide additional funding for the unemployment fund to further assist Bermudians who are unemployed.
“Lower-priority expenditures will be curtailed to ensure that spending needed for Covid-19 matters can be maintained.
“To that end, over the next three months, Government will delay the start of any capital projects that have not commenced, institute an immediate freeze on posts that are not required to address Covid-19 or to protect Bermuda’s national interests, continue the ban on non-essential government travel and reduce all discretionary spending including training, materials and supplies, clothing and uniforms.”
Mr Dickinson insisted that there would be no cuts to spending that would “jeopardise the health, safety and security of the people of Bermuda”.
He added that the ministry had “very productive meetings with the Bermuda Bankers Association” and was in regular contact with unions, representatives of key employers and other public agencies.
He said: “We have sought their input in fine-tuning contingency plans in the event of a severe downturn in Bermuda’s economy, while also having discussions with them in relation to appropriate actions they should take to assist the people of Bermuda during this challenging time.”
Mr Dickinson told the House: “The future is not clear, but we do anticipate that there will be economic and fiscal consequences for Bermuda stemming from Covid-19.
“The implications for Bermuda will likely include a downturn in visitor arrivals, a reduction in consumer spending, retail sales may slow further in 2020, slower growth in the overall Bermuda economy, a rise in unemployment and reductions in government revenues.”
He added that the ministry would assess the probable economic scenarios, which could mean more short-term emergency measures if needed.
He was speaking as he tabled the Government Loans Amendment Act 2020, drawn up to allow the public debt limit to increase from $2.75 billion to $2.9 billion.
Michael Dunkley, a One Bermuda Alliance MP backbencher, asked if the minister would return to the House to explain how any additional money would be spent.
Mr Dickinson said: “One of my responsibilities is to protect the fiscal purse of this country, a responsibility that I take very, very seriously.
“However, we are in a situation where we can face an economic catastrophe.”
He added that he was not focused on the amount of debt needed “to provide the necessary support to citizens”.
Mr Dickinson said: “People come first.”
He told MPs that he was “impressed” by the support from Patricia Gordon-Pamplin, the shadow finance minister, and Craig Cannonier, the Opposition leader, at a time when he hoped legislators would unite in a bipartisan effort to confront an “issue of national emergency”.
Ms Gordon-Pamplin asked the minister to highlight how the funds would be made available.
Mr Dickinson pointed out that the Government collected money from payroll taxes every February 15.
He said: “Do I foresee an immediate need to draw down on the lines of credit that we’re putting in place to deal with this crisis? The answer to that is no.”
Mr Dickinson added: “This is a preventive measure, funds are not going to be drawn unless they are absolutely needed. I foresee that we have sufficient liquidity at the moment to deal with current needs.”
Mr Cannonier challenged the banking sector to “show up” to help Bermudians.
The plea came as HSBC Bermuda, followed by Clarien and Butterfield banks, announced they would lower base lending rates for business and retail customers [see separate story in the Business section].
MPs also passed the Public Health Amendment Act 2020, which allowed the health minister to close schools, churches and other meeting places to stop the spread of diseases when the Chief Medical Officer believed there was “an immediate risk of an outbreak”.
Senators also passed the legislation after it was fast-tracked through Parliament.
Covid-19, which originated in China, had spread to more than 150 countries by yesterday, with a death toll of more than 7,100 people.
Justin Trudeau, the Prime Minister of Canada, announced yesterday that the country will close its borders to anyone not a citizen or a permanent resident, or a US citizen.
The Bermuda Government’s Novel Coronavirus webpage showed that, at midday yesterday, 17 people were quarantined — the separation from others of those “reasonably believed to have been exposed to a communicable disease but do not have symptoms”.
Monitoring was in place for another 17 people — cases where the individuals had a high-risk travel history or contact. Health personnel will be in touch with affected people at least once a day.
There were another 55 people with relevant travel history or contact, which was not high-risk, self-monitoring with public health supervision.
Health workers in those cases provided a plan for people to assess themselves and staff will keep in touch with them over the monitoring period.
Six people were in isolation at noon yesterday, those with relevant travel history or contact and symptoms of respiratory illness.
The government website explained: “The isolation can be at home or in hospital based on the severity of symptoms.”
• To read a ministerial statement delivered on the subject by Curtis Dickinson at the House of Assembly, click on the PDF link under “Related Media”