Bermuda’s financials in shadows and light

The wordplay and thought twisting involved in politics often creates and casts long dark shadows. The latest credit rating by Fitch is a strong example of the long dark shadow cast by years of political game playing over Bermuda’s national finances.

For thirty-eight months, between October 2010 and December 2012, the previous administration — the PLP government led by the Seventh Minister for Finance — spent vast amounts of time and energy creating financial untruths or obfuscations or chimeras; all of which were intended to disguise or camouflage reality and re-present reality as something other than it was. 

This process helped cast the kind of long shadow that the June 7, 2013 Fitch credit rating report points to. 

For absolute clarity, I will give you this clear example of shadow creation.

‘We borrowed in order to spend on infrastructure’. This strongly suggests that the majority of the $1,350 million that was borrowed between 1 April 1, 2004 and December 17, 2012 was spent on capital and such. Recall, though, that no one ever spelled out or displayed any numbers. They just kept repeating the words and the idea.

Fact: Of the net $1,350 million taken up as National Debt between April 1, 2004 and December 17, 2012, only $555 million is recorded as going into capital spending. The remaining $795 million went to meet the PLP government’s day-to-day expenses. 

That’s $59 out of every $100 on day-to-day expenses and only $41 out of every $100 on ‘capital and infrastructure’.

Conclusion: In explaining what it was doing with the large amount of foreign funds it was borrowing, the previous administration was: Lying? Obfuscating? Deceiving? Camouflaging? Spinning? Myth-building?

You decide.

The outcome of that long process of whatever you’ve decided to call it, is that in 2013, a part of Bermuda’s population still believes that most of that borrowing did go into ‘capital and infrastructure’.  

This part of the population now finds itself having to deal with facts and discoveries that are only now coming out of the shadows cast by (whatever you’ve decided it was) into the light created by knowledge.

The June 7, 2013 Fitch Report is an ominous report. Fitch downgraded Bermuda in 2012. It points to the fast rise in the ratio of our Debt Service Cost to Revenue. Fitch also points to the reality that our Revenue stream has flattened out.

Less money

If you look at Government Revenue, you will see that Minister Richards is hoping to take in $871 million in this year, 2013/14. 

If you look further, as you should and as I always do; You’ll realize that the hoped-for $871 million for 2013/14 is LESS THAN the $883 million revenue that was collected seven years ago in 2006/07.

Think about that. 

Try running your personal life, household, or business on income that you were earning seven years ago in 2006.  

Note that a loaf of ordinary imported bread was $4.40 in 2006. Check the price of a loaf of imported bread today. You’ll find it’s floating around the $6.00 level.

What was your monthly ‘leckalight bill in 2006? What is it now? Assuming you’ve kept your car since 2006, what was a fill ‘er up in 2006? What is it now? What was your health insurance premium in 2006? What is it now?

On top of all that, Minister Richards has told us that although the previous administration forecast revenue of $910 million for 2012/13; he says that it is now likely that 2012/13 revenue will come in around $869 million. That’s $41 million (4.5 per cent) down.  

That means that for two years running, in both 2012/13 and 2013/14, Government revenues will be LESS THAN the revenues that government was actually earning in 2006/07. And 2014/15 is unlikely to see any revenue increase.

There is a long dark shadow over Bermuda’s national finances. It is a shadow cast, and cast deliberately and in part, by a combination of created and willing ignorance and a specific determination to (your word) ______________.

 What we all need, and need desperately, is the bright light of fact and knowledge shining into and dispersing this long dark shadow.

Until that shadow is eliminated, we’ll all keep stumbling around in the semi-dark of ignorance.