WEDNESDAY, DEC. 14: The private sector will have to mobilize to dig Bermuda out of a debt hole, a business analyst said yesterday.

Peter Everson, chairman of the Bermuda Chamber of Commerce’s economics committee, said it’s not a question of what the debt looks like, “it’s the ability to repay the debt and service the interest on it”.

As Bermuda’s debt tops $1 billion, opinions vary sharply on how worried we should be.

Statistician Cordell Riley said Bermuda’s financial position compares well with other countries and “as long as Government takes the measures to get the debt down, we’re fine — as long as we can repay the debt.”

Mr Everson said Government revenues for 2012-13 are unlikely to be much more than $900 million — but the interest on debt set to be $1.3 billion will cost $110 million.

He added: “They’re only going to have $790 million to spent and yet the average cost of a civil servant is $86,000 a year – when you have 5,500 on the payroll, you won’t have much to spend on anything that isn’t salaries and wages.”

Mr Everson warned that economic recovery would have to depend on the private sector’s ability to create jobs and wealth for the country.

He said: “That’s the single focus for 2012 — if we don’t do it, then the outlook is bleak. So we have to do it. It’s not an option, it’s an absolute requirement.”

Mr Everson declined to speculate on whether — in the current global financial crisis — enough jobs can be generated in business.

He said: “That’s a good question — we just have to go forward and create as many jobs as possible. There is no choice.”

Mr Everson was speaking after Premier and Finance Minister Paula Cox delivered a pre-Budget briefing ahead of next February’s financial plan for the coming year, and invited public comment on how best to spend taxpayer dollars, a first for the island.

She ruled out compulsory redundancies in the public service, but said a hiring freeze, non-replacement of non-essential staff that leave and greater efficiency would help cut costs.

She also said that the island’s debt to GDP ratio in September this year was 19.2 per cent — up 2 per cent on the figure at the end of the 2010-11 financial year.

Cordell Riley, a former Government statistician who is now managing director of consulting firm Profiles, said that the debt to GDP ratio remained “extremely low”.

He added: “It’s still a great deal of debt for Bermuda, especially as we haven’t been there before. The Government has to reassure the people it has the ability to repay that debt.”

Mr Riley said: “Debt is not an election winner or loser. It’s not like at the end of the year we get a bill for our portion of the debt, although it may manifest itself in higher taxes.

“As long as Government takes the measures to get the debt down, we’re fine — as long as we can repay the debt.”

Mr Riley said: “The real challenge is that Bermuda’s economy is built on two very volatile industries — international business represents 85 per cent of our economy and tourism is 5 per cent.

“There is a potential threat from the Caymans, but the initial comments from the international business sector are that it doesn’t have the attractions and robust regulatory framework Bermuda has, although we do have to keep an eye on them.

“The US and Europe could also decide to make themselves more attractive to business to help deal with their financial problems.”

Mr Riley said he was not in favour of cutting public sector jobs — a widespread tactic in the UK and US — because that would create social problems and add to the cost burden of social programmes.

He added: “I would go for cutting hours, which is something the retail and restaurant sector have done, to cut taxes. If you’re going to save money, you have to tackle salaries in some way.”