Bermuda’s Auditor General today urged the Government to develop a formal plan to get a grip on the island’s multi-billion dollar debt.
In her report released today, Heather Thomas said debt servicing costs were taking a bigger bite out of Government’s ability to meet financial obligations.
Topping the list of several concerns cited in the latest audits of the Consolidated Fund’s financial statements for the years ended March 31, 2013 to 2016 was Bermuda’s current debt situation.
The report notably states that there is no long-term plan in place to reduce the public debt, the unfunded liabilities of pension plans, or the size of taxpayer indebtedness,, “all of which continue to grow unsustainably”.
“In my view, Government should make getting to grips with the debt and the deficit its highest priority and provide realistic expectations and timelines with respect to desired outcomes,” said Ms Thomas.
“The indicators of financial condition set out in my report demonstrate a level of unsustainability and impaired flexibility for the Fund, which Government must make every effort to address.”
As of March 31 this year, Government’s net debt stood at more than $2.4 billion, with projections indicating a deficit of nearly $90 million at the end of March next year.
Bermuda’s mounting debt is just one of the “matters of special importance” highlighted in the report, which also described the need for summary financial statements for the whole public sector. Without them, the Auditor General said essentially, the Government decisions without the benefit of knowing its combined financial position.
And on that note Ms Thomas said Government is also failing to provide the public with the analytical information to help them understand financial statements and the financial condition of the public purse.
“Consequently, the resources available to carry out Government programmes effectively are predictably being impacted by increasing debt servicing costs,” said Ms Thomas.
“Government needs to be clear about how its goals and priorities will be affected by fewer resources and needs to ensure that the reduced resources are aligned in a way that maximises their effectiveness and has the least impact on the quality of its service delivery.”
She also stated that she was “extremely concerned” that most of the matters of special importance have already been raised by her predecessors.
“Each year of inaction exacerbates the problems, and must be addr
essed with a sense of urgency,” she said.
“There have been discussions and communications with respect to these matters but no formal plan of action has been developed to date.”
She also called on the Government to make it clear whether or not it accepted recommendations by both the Commission of Inquiry into the Auditor-Generals reports for the fiscal years ended March 2010, 2011 and 2012, and the Spending and Government Efficiency Commission.
Ms Thomas also urged the Government to set out a timeline for the implementation of those recommendations.
“The Commissions’ reports contain a wide range of recommendations focusing on governance, high-level policy, accountability and administration,” she said.
“I recommended that the Government should indicate clearly the extent to which it accepts the Commissions’ recommendations along with the rationale if there are any recommendations not accepted; set out a plan and a timeline for their implementation, and report out periodically on the status of the recommendations’ implementation.”
She also noted that the next report, for the fiscal year ended March 31, 2017, will be ready to be tabled before the House of Assembly before the end of this fiscal year.
♦ The Report can be viewed online at https://www.oagbermuda.bm/organisation-reports.php
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