Finance Minister Curtis Dickinson held a news conference on Monday (Nov 1), to highlight a recent statement published by Moody’s Investor Service (“Moody’s”), announcing the completion of a periodic review of the Bermuda Government’s ratings.
“In general, their review sheds a positive light on Bermuda, and the efforts made by this Government to navigate the country through the current pandemic and to build for the future,” said Mr Dickinson.
“Their report echoes the same sentiments as their annual credit analysis, published earlier in the summer, which also speaks favorably of the Government’s stewardship during these turbulent times. This marks the second time in three weeks that I have been able to announce encouraging news from a credit rating agency after having reported on October 12th of the favorable assessment by Kroll Bond Rating Agency’s (“KBRA”),” he added.
“The stable outlook reflected their assessment of policymakers’ continued commitment to a prudent fiscal stance that will contribute to stabilizing Bermuda’s debt burden in the next 2 – 3 years, following the significant economic shock experienced in 2020 as a result of the coronavirus pandemic.
“The Moody’s analysis specifically spoke to the fact that the Ministry of Finance released the Economic Recovery Plan in March 2021 to boost economic growth and equity in the island, and that the plan shapes Bermuda’s fiscal and economic priorities. Continuing their commentary on the economy, it was reported that “Bermuda’s low-tax regime and a business-friendly environment, enhanced with a robust regulatory framework of international standards, contribute to its status as an important global insurance center.”
The report also mentioned that “the development of hotels such as St Regis, which opened in May 2021 and has so far employed over a hundred local hospitality workers, will increase room capacity on the island and boost overall tourism performance in the years to come”.
In relation to the Government’s fiscal strength, the Moody’s analysis states: “The current Progressive Labour Party government has maintained fiscal consolidation, which allowed Bermuda to keep debt metrics relatively stable.”
Minister Dickinson added: “The public should take note that this was accomplished despite significant economic contraction and higher crisis-related spending adding increased pressure on Bermuda’s debt burden. The report further emphasizes that Bermuda’s debt burden continues to be in line with that of A-rated peers, and it is also expected that Bermuda’s fiscal performance will remain stronger than that of related peers.”
The Minister also noted that Moody’s October 2021 periodic review “repeats many of the same statements that were written in the agency’s July 2021 annual credit analysis”.
“It highlights the strength of Bermuda’s institutions and governance, reflecting a strong institutional framework, and a fiscal policy track record that built credibility by arresting the deterioration of the government’s finances in the context of adverse economic conditions,” said Mr Dickinson.
“Overall, both reports reflected positively on Bermuda and the fiscal management approach being taken to shape the direction that our country is heading.”
On that note, he said: “It is gratifying to see that similar themes have been highlighted in the rating agency reviews that have been published this year on Bermuda, whether by S&P, Moody’s or KBRA.
“These rating affirmations will help allow Bermuda to continue to have access to capital at relatively favorable rates.
“The assessment by Moody’s further affirms the Government’s approach to the management of fiscal matters and its future program in that regard. We look forward to progressing Government’s plans to, in a fiscally prudent and considered manner, strengthen the economy; reduce our debt; assist our people; and create employment opportunities,” he added.
“Although the pandemic may continue to present challenges in our recovery efforts, the Government is determined to position Bermuda to prosper in the long run.