MPs passed legislation to increase Bermuda’s debt to about $2.75 billion on Friday.
Finance Minister Curtis Dickinson told his parliamentary colleagues that the Government Loans Amendment (No 2) Act had actually gone into effect on September 13.
Under the Provisional Collection of Revenue Act, 1975, he said the most recent legislation gives the Government room to cover the $165 million guarantee and related expenses for the Caroline Bay development at Morgan’s Point in Southampton.
The Minister stressed that the Government’s credit line of $200 million agreed with island banks did not amount to a loan.
It was “simply the flexibility to borrow up to that amount”, he said.
So far, the Government has drawn about $170 million to buy loans for the stalled development.
He noted that the Government decided to acquire the claims of the lenders, “as opposed to just paying up on the guarantee”, to put them in a stronger position.
Opposition MP Patricia Gordon-Pamplin, the Shadow Minister of Health, said the guarantee was essential for the development to proceed under the land swap agreement that moved the project to Morgan’s Point from Southlands in Warwick.
“There would never have been a project at that site” without the guarantee, in light of the contamination left by the former US base.
Overall, she said the Bill was “straightforward”, adding: “Certainly we understand the reason for the debt ceiling to be raised.”