Minister Dickinson: "our objective is to retain jobs, strengthen our economy"
The Minister of Finance the Hon. Curtis Dickinson, MP, JP, issued an open letter to all public officers regarding the island's economic situation.
Our success with managing the COVID-19 crisis over the past several months lies mostly in the hands of earnest and hardworking public officers. Your professionalism, mature and thoughtful decisions, operational efficiency, daily grind, and your steadfast efforts have been invaluable. While some public officers were directly engaged in pandemic affairs, others were focused on keeping all areas of the Government operational and providing for the people of Bermuda.
Many of the unsung heroes worked from home, or simply stayed at home as directed, some willing but unable to assist because of circumstances beyond their control. Your dedication and love for your country have amazed me. Your hard work has brought us to this point. Thank you for giving your best to Bermuda during the past few months. I’m not alone in my recognition, the Government received hundreds of emails, letters, and social media posts from grateful residents extending their thanks as well.
This crisis however has bought with it a new level of economic hardship for Bermuda and its people.
Based on submissions by Ministries and Ministry of Finance projections, unbudgeted COVID-19 expenditures for this fiscal year are estimated to be in the range of $80-$90 million. These funds have been expended on things like the Unemployment Benefit Programme; COVID-19 testing; personal protective gear, supplies and equipment; homeless shelters; quarantine facilities; and more.
Further, all public officers continued to receive full salary during the shelter-in-place phase despite the loss of tax revenue, and in some cases, our inability to provide full service levels.
We are still progressing through the phased re-opening of Bermuda and economic activity is just beginning. COVID-19 will cause a major decline in Government revenues. This is caused both directly by the economic slowdown and indirectly by necessary tax policy and administrative measures taken in response. The Ministry of Finance estimates that revenue yields for 2020/21 could be reduced by an estimated $200-225 million. After factoring in the impact of COVID-19, the revised deficit for 2020/21 is estimated to be in the range of $275-$315 million.
This level of deficit is not only unsustainable but economically and fiscally imprudent. When considering the current high level of our public debt, the Ministry of Finance regards this level of deficit as a serious challenge. The Government’s target is to keep the deficit for 2020/21 below $175 million.
The Government now needs to raise $700 million to finance the 2020/2021 deficit, refinance short-term credit facilities and other current government bonds with relatively high interest rates and also fund possible deficits over the next two years. If government does not convince foreign creditors and rating agencies of our absolute commitment to manage this crisis and control our deficits, credit rating downgrades will come.
Continuing declines in our ratings will not only lead to higher interest rates, but threatens the job security of public servants, it threatens the job security of those people employed in International Business and the job security of all those companies and individuals employed in providing services to International Business. This will result in the loss of more Bermudian jobs. We cannot allow this to happen.
Our objective is to retain jobs, strengthen our economy, and get Bermudians in all sectors back to work. That’s why we’ve been working hard with our Union partners on a package of savings to avoid layoffs and balance the budget.
The savings package is perhaps tougher than the Unions had envisaged however, I am satisfied that this is the best deal we can achieve; one which saves jobs, creates room for us to continue delivering much needed services to our people and positions us to lead Bermuda’s recovery.
The Unions have now taken the necessary steps to arrange a series of membership meetings. Your support is vitally important to our country’s success.
Thanks again for your continued excellence in public service.