HAMILTON, Bermuda, CMC – The Bermuda government says total revenue remains projected to be US$1.155 billion, which is on track with the original budgeted figure, and that the figure represents continued economic recovery, evidenced by expected increases in tourism-related revenues, payroll tax, and land tax.
The David Burt government has released a “Pre-budget Report,” indicating that the contents are being submitted for consultative purposes and no final decisions have been made.
“it is the aim of the Government to provide all these reports during the coming budget cycle and the 2024/25 fiscal year. In publishing this document and conforming to international standards of budget transparency, this Government reaffirms its commitment to good governance.”
It said that in addition to electronic communication, the Government will engage the public and stakeholders in January 2024 to discuss the principles laid out in this document and solicit public feedback.
According to the document, the total current account expenditure has been revised to be US$984.5 million, US$11.9 million above the original estimate of US$972.6 million. The projected increase is primarily due to a further US$16.4 million grant to the Bermuda Hospitals Board to support the hospital.
The Government said interest/guarantee management costs are projected to be $130.4 million, which is on track with the originally budgeted figure as there are no unbudgeted or one-time associated costs this fiscal year.
It said capital account expenditures are projected to be US$85 million, US$11 less than the original estimate of US$96. These expenditures include additional funding for stabilizing the Tynes Bay Waste to Energy Facility and US$4.3 million in grant funding to Bermuda Housing Corporation to bring more affordable housing online.
“This anticipated underspend in capital account expenditures is mainly due to the availability of construction resources and supply chain challenges,” the document added.
It noted that the revised budget deficit for 2023/24 is US$44.4 million, slightly less than one million dollars more than the original budgeted figure of US$43.5 million.
|This projected deficit is relatively on track with the original estimates despite unbudgeted costs associated with the cyber attack on the Government, the funding boost for the hospital, and a negotiated increase in salaries and wages for many public officers.”
The Government said the balance of the Sinking Fund as of September 2023 was US199.2 million and that it aims to maintain a balance of US$100 million in the Fund and “therefore, after funding the projected deficit for this fiscal year, making the US 50 million debt repayment, and with a balanced budget projected going forward, the government expects to achieve its objective”.
Earlier this year, the Ministry of Economy and Labour conducted a detailed review of current economic development initiatives, an in-depth analysis of Bermuda’s industries and growth opportunities, and a review of other plans and strategies of relevance.
The Ministry said it considered feedback from stakeholders and subsequently produced, in collaboration with the newly formed Bermuda Economic Development Advisory Board, the Economic Development Strategy that guides the work of organizations involved in economic development activities in Bermuda.
It said that the new Strategy builds on the work of the 2021 economic recovery plan and that the policy initiatives are advancing well, with over 80 percent of them on track, some of which have already demonstrated positive results,
“The Economic Development Strategy sets a roadmap that provides a clear path to guide Bermuda to sustainable economic growth and development. The Strategy seeks to build an economy that creates greater opportunities for the people of Bermuda, supports entrepreneurship and small businesses, supports farmers and fishermen, and embraces new The Pre-budget Report” examines some of the risks facing the Bermuda economy, noting that In its 2022 report, the Fiscal Responsibility Panel highlighted several risks to Bermuda’s economy. It said these risks, among others, underscore the need for financial and fiscal prudence, and the Government said it will consider them when framing 2024/25. According to the document, energy and climate change are among the risks, and “of particular concern to Bermuda is rising sea levels from melting ice caps, with a recent study based on satellite imagery warning of minimum sea level rises of 27 centimeters from Greenland alone. “Together with the possibility of increasingly intensive hurricanes, storm surges could threaten more frequent and extensive flooding over wide areas of Bermuda,” the report said, noting “also of concern would be changing North Atlantic currents and, in a worst case, loss of the Gulf Stream to Bermuda. Bermuda has been critical in setting up and leading the Sargasso Sea Convention, which will help raise awareness of these and other issues internationally.
The document states that in light of the financial constraints facing Bermuda, the focus should be on improving resilience to climate change in terms of reducing Bermuda’s vulnerability to extreme weather events, sustainable development, improving coastal and ocean management, and leveraging the opportunities offered by Bermuda’s ocean location, natural mangrove and seagrass carbon sinks, and insurance capabilities.
The Pre-budget Report also looks at the issue of immigration and labor in the British Overseas Territory, warning that Bermuda must focus on growing its working-age population to support economic growth and boost tax revenues in the short-term, address the challenges of an aging population, and improve the solvency and sustainability of public pension funds and healthcare over the long-term.
“Economic growth in Bermuda has averaged just 0.4 percent over the last five years. Even in the five years leading up to 2019, before the pandemic and when Bermuda was recovering from a protracted downturn following the global financial crisis, growth averaged less than one percent per annum, and the reported output level changed little from the boom year 2008.
“Over the last decade, the number of jobs in Bermuda has fallen from about 35,400 to 31,300—a decline of about 12 percent; the number of jobs filled by Bermudians fell by a similar proportion. This in 21 turn translates to lower output and tax revenues, undermining the finances of the Government as a whole, as well as the pension and health systems,” the Pre-budget Report added.
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