On Fitch’s rating and Bermuda’s future

I have great confidence in the people of Bermuda.

I have confidence in our common sense, in the pride that carries us through our daily lives and in the spirit we share to make the most of what we’ve got.

Bermuda has succeeded over time because we possess the character and the smarts to do what is necessary to improve our lives — to work through our differences and pull together to make things better.

But it is never easy. The island, like everywhere else, has faced its share of ups and downs. The difference is that we’ve always managed, from generation to generation, to keep the island moving forward for the greater good.

Last week’s report by Fitch Ratings Agency was a reminder — as if we needed one — that we are in one of the “downs” and facing tough decisions to get ourselves back on top.

In downgrading Bermuda, Fitch traced the source of our current troubles to negative trends that developed between 2007 and 2012; trends that must be put right to get us back to a position of strength and stability, where the economy is once again providing jobs and incomes that help people support their families and pursue their dreams.

There can be no ignoring the hard facts Fitch used to justify its downgrade:

• The burden of government debt, rising from just 6% of GDP in 2007 to 28.5% in 2012; and forecasted to trend higher.

• The high debt-to-revenue ratio.

• The damage to government credibility in passing “multiple” increases in the debt ceiling, which is supposed to be used as a tool to limit public debt.

• Four straight years of economic contraction limiting the prospects for growth over the next year.

These factors, and others, limit our options and capacity to quickly turn the corner on these challenges. In other words, there is no silver bullet to get us out of this jam. 

Rather, it’s going to take a national effort — doing a lot of things right, big and small, to get the good ship Bermuda sailing again in a direction that works better for everyone.    

Fitch’s evaluation, and that of Moody’s in May, tell us we have to get our house in order to see our way to real and lasting recovery.

Confidence

For my government, that means taking steps to grow local and international confidence in Bermuda as a place to do business. 

It means putting out the welcome mat and making it easier to conduct business — “more red carpet, less red tape” as my colleague Bob Richards says. 

It means attracting new investments to help us build our infrastructure such as the Hamilton waterfront or revive tourism through new hotel construction. 

It means managing government spending more responsibly and growing revenues to start reducing the debt.

All of us can play our part in the renewal of Bermuda — welcoming visitors, working hard, and understanding what it takes to get us on the road to recovery. 

And keep in mind Fitch wasn’t all negative. It took care to note that Bermuda has a lot going for it — our competitive advantage as a domicile for reinsurance and financial services companies, our sophisticated legal system, our strong regulatory framework, our simple tax regime, our proximity to the United States and our “highly skilled human capital.” 

All of us, in one way or another, have played a part in building that strong foundation. 

It’s why I am confident in the future; confident we can take our beautiful island from strength to strength, helping Bermudians to live full, productive and happy lives. 

It’s what gets me out of bed every morning. 

Craig Cannonier is Premier of Bermuda.