1/27/2010 9:27:00 AM We have to borrow in order to meet the country's needs
* Photo by Kageaki Smith. Finance Minister and Deputy Premier Paula Cox
Paula Cox, Finance Minister
The sustainability of public finances and maintaining the appropriate balance between economic stimulus, the provision of vital public services, infrastructure spending and the debt level is critically important.
Striking the correct balance is a challenge always, but it also presents a golden opportunity to be dynamic and innovative in policy making and public finance initiatives. As Minister of Finance it is one of my priorities to keep people in the picture.
It is true that the pen is mightier than the sword but in the hands of an irresponsible and biased writer, it can become a misguided, misdirected and even a dangerous weapon.
Debt is a necessary tool in public finance. Around the world in 2009, government debt and fiscal deficits rose sharply in response to an extraordinary financial crisis and the widespread global recession.
In the U.S., the Congressional Budget Office projected the U.S. fiscal deficit to be 13 per cent of GDP in 2009. In the U.K., their fiscal deficit in 2009 was estimated at 12.4 per cent of GDP.
Indeed, the U.K. Chancellor of the Exchequer stated: "Allowing borrowing to rise - protecting services, helping people and businesses - is the right thing to do."
The fiscal deficit in Bermuda was in the range of 2.5-3.5 per cent of GDP in 2009.
Some may recall that in our 2009-2010 National Budget, Government's goal was to balance the long term requirement to invest in much needed infrastructure with the more immediate short term obligation to provide rescue measures for families, workers and businesses.
This was done and is continuing and is not without a cost to the public purse, namely the child daycare allowance, free tuition at the Bermuda College, free public transport for students, and financial assistance for those in need.
These measures constitute the essence of good public policy.
Government intervention helps to shore up key sectors of our economy and this is projected to be ongoing for some time.
You may be aware that to salvage a key tourism project, the Barbados Government has recently provided a financial guarantee to assist a hotel development project.
Financial cushion
The Bermuda Government under the aegis of the Ministry of Finance has entered into a Memorandum of Understanding with the hotel sector to provide them with a financial cushion so that they can sustain jobs while we navigate these tough economic times.
There are a number of payroll tax, customs duty and other concessions that the Government of Bermuda is providing as a form of bridging finance to a number of key sectors and stakeholders during these economic times.
As Minister of Finance I took the bold step of garnering Cabinet support for the government guarantee on the $200 million preference share offering by Butterfield's Bank last year.
It was necessary. It was right. It helped to maintain the stability of our banking system. It helped to preserve jobs and confidence. The guarantee will feature as a disclosed item under the statutory debt ceiling.
Bermuda's net public debt, excluding guarantees (which are contingent liabilities) amounts to about $679 million or about 11.2 per cent of GDP.
This debt is physically reflected in modernized school infrastructure, IT infrastructure, the public transportation system, government buildings and so on including the revamped Port Royal Golf Course and the new cruise dock and much else.
The Minister of Finance operates as a cog in the wheel. My role is to add value and to provide input on fiscal positions taken in various ministries. I can indicate support or objection. However the sponsoring minister(s) knows that I cannot overrule their request unless I have others who join with me to support and uphold my position.
Individual Ministers are 'finance directors' in their own right and have a responsibility to keep a keen eye on how their senior officials manage their budgets and projects.
In addition, there is an accountability framework that includes the office of the Accountant-General's Department, the Office of the Auditor-General, the Office of Internal Audit, and the Ministry of Finance HQ.
Cost overruns on projects are vexatious and are not taken lightly. Lessons have been learned from recent experiences. Enhancements to controls that accord with best practices are in the pipeline.
That is our remit as Ministry of Finance and will continue to be our remit as we raise the bar in the financial management of Bermuda's public purse.
PAULA COX is Deputy Premier and Minister of Finance.
Posted: Friday, January 29, 2010
Comment by:
sandgrownan
Bet he didn't fly economy as per the new "rules".
Posted: Thursday, January 28, 2010
Comment by:
thascraZytalk
She would have a little more credibility,perhaps, if the government finances could pass an audit once in a while. Any publicly owned company wouldn't accept this level of utter incompetence. And what is the money being spent on? Let's see - did the Premier and his wife pay for their own trip to see the Prince's horse race, or was that 'Government business'? is that an example of 'meeting the country's needs'?
Posted: Wednesday, January 27, 2010
Comment by:
Dizzy
Ms. Cox has learned the art of SPIN so well that I am getting dizzy.
Give me a break!! I believe that you have been deficient in your duties as Minister of Finance.
Posted: Wednesday, January 27, 2010
Comment by:
letariatpro
It is shameful that such pathetic excuses for complete and utter failure in fiscal management are printed. Too little, too late Ms. Cox.
Posted: Wednesday, January 27, 2010
Comment by:
sandgrownan
"...as we raise the bar in the financial management of Bermuda's public purse."
You have to be joking? Right? Your audit reports are a disgrace.
I assume you want the assets of the two municipalities so you can borrow agaisnt them.
I like this bit: "I can indicate support or objection. However the sponsoring minister(s) knows that I cannot overrule their request unless I have others who join with me to support and uphold my position."
What's this, an "it's not my fault" argument?
