FRIDAY, JULY 27: The facts. Just the facts. Nothing but the facts. No deception. No spin. No lies. All truth.
Government Revenue in 2011/12: $870.0m (reported in the June Bond Prospectus).
Government Spending in 2011/12: $1,137.35m (reported in the June Bond Prospectus)
But spending was higher than revenue. So more money was required. That more money came from overseas lenders.
This is what had to be borrowed: [$1,137.4m spending minus $870m revenue = $267.4m shortfall]. Government goes overseas to borrow the bulk of this $267m shortfall and uses Overdraft Facilities at the local banks to plug any small difference. Most importantly, all of the $267m is borrowed.
Put it all together:
Revenue — $870m
Borrowing — $267m
Total reported spending — $1,137m
Keeping it all together: Government spends $1,137m. However, Government has only achieved $870m revenue. So Government borrowed $267m dollars in order to ‘spend’ $1,137m. That means that $0.23 (23%) out of EVERY dollar that Government spent in 2011/12 was borrowed. [267/1,137 = 23%].
In the plainest and clearest language, out of every dollar ($1.00) that Government spent in 2011/12, Government was borrowing $0.23. Every dollar that Government spent looked like this: $0.77 (came from us taxpayers) and $0.23 (came from overseas lenders) = $1.00 (the Government dollar that was spent in 2011/12).
That means that when a Cabinet Minister pocketed his or her monthly salary of around $14,000; only $10,780 came from revenue. The remaining $3,220 came from overseas borrowing.
When a Government employee (BIU or BPSU) collected their wages/salary of $1,500 a week; only $1,155 came out of revenue. $345 came from borrowings.
When someone turned up at Financial Assistance to receive financial help, and Government ‘gave’ them $1,000 in financial assistance; Government actually ‘gave’ them $770 from Revenue and Government borrowed the other $230 to make up that $1,000.
When a single mother was collecting her $800 a month in ‘free day care”; only $616 came from revenue. $184 was borrowed.
When a GP car got ‘filled up’ and the gas pump showed $80, only $62 came from revenue. $18 was borrowed.
When the monthly $38.43 GEHI Dental Premium was being paid to BF&M; $29.60 was coming from revenue and $8.83 was borrowed.
When Government ‘procured’ a packet of 500 sheets of ordinary white paper at $5.00; $3.85 came from revenue and $1.15 from borrowing.
Try running your personal or family or business finances with that kind of day-to-day borrowing. See how long you - your family, your business - will last. Understand that Bermuda has been in this spend/borrow mode since April 2004 - eight years.
In 2002/03, the last full year of Finance Minister Eugene Cox’s financial management, the Government actually spent only $0.96 out of every revenue dollar that it took in from taxpayers. Government was not borrowing any money. Instead, Government was using the leftover $0.04 (the surplus) to pay down the $160m Debt it had inherited from the UBP.
Beginning April 1, 2004, under a new Minister of Finance, Government began borrowing. In that first borrowing year, 2004/05, Government began borrowing about $0.03 (3%) out of every dollar ($3.00 out of every $100) that it had decided to spend. In just eight years, from 2004 to 2012, that percentage has rocketed up to 23% (that’s $23.00 out of every $100).
Do you see the problem? Do you understand the problem?
There seems to be a small but highly vocal coterie who seem either unable or unwilling to see or understand this real and actual problem. Curious isn’t it? It’s like not seeing the road you’re driving on.