Watchdog raises alarm over Government debt

FRIDAY, FEB. 4: Interest on Government debt has increased over the past year by about $40,000 a day, according to the Auditor General.

Heather Jacobs Mathews said Bermuda is facing increasing financial challenges due in part to a shrinkage in revenue, high public spending, a weak cash position and a growing deficit.

She issued a report today in response to Government’s 2009-10 Consolidated Fund Financial Statements and was critical of its tardiness.

“The Statement s were issued on October 28, 2010 and should have been available for tabling in the House of Assembly shortly after that date.

“This delay has resulted in Members of the House of Assembly and the public not having timely access to important information.”

Mrs. Matthews Jacobs said her opinion on the statements was qualified because there were serious deficiencies in internal control over the management of various development projects. She made the same point last year.

“…Without the benefit of an independent professional valuation of assets in question, I am still unable to determine whether adjustments might be necessary to tangible capital assets, assets under construction and the accumulated deficit as at March 31, 2010.”

The Auditor General said Bermuda faced increasing financial challenges because of a “shrinkage in revenue, a weak cash position, expenditures significantly outstripping revenues, increasing long-term debt and, by extension, a growing deficit and public debt”.

She said Bermuda’s net debt had increased by 25 per cent from March 2009 to March 2010, rising to $1.739 billion — up $348.5 million in one year.

The accumulated deficit was up 55 per cent and stood at $1.018 billion in the year over year statements. Accumulated debt was up $361.2 million.

Mrs. Jacobs Matthews added the Public Debt — debt owed or guaranteed by the Consolidated Fund, minus the Sinking Fund (The Sinking Fund is money set aside to repay Government loans) — was up 100 per cent in year over year statements, to $969.5 million.

She added that the interest expense on debt rose from approximately $60,000 per day to about $100,000 per day.

The Auditor General said she will shortly be publishing her first annual report on Government’s Consolidated Fund financial statements.

“My report will include some of the detailed analysis that I believe Government should be providing.”

She did caution that the Consolidated Fund financial statements do not include the financial results or financial position of Government controlled organizations like Bermuda College, the Bermuda Hospitals Board and the Bermuda Housing Corporation.

Mrs. Jacobs Matthews said because of this, the Consolidated Fund statements do not show the financial position of the Government as a whole.