Bermuda's economic challenges laid bare - Royal Gazette

Scott Neil, Assistant Business Editor

Published Dec 7, 2018 at 6:19 pm (Updated Dec 7, 2018 at 6:24 pm)

Assessment report: David Perez, left, chairman of the Fiscal Responsibility Panel, speaks to David Burt, the Premier, during a meeting between the panel and the Bermuda Government (Photograph supplied)

Bermuda has been warned that on present trends it is heading for a downwards spiral of demographic and economic decline.

In addition, the Bermuda Government has taken a significant step back from fiscal targets set a year ago, with projected lower revenue and higher spending than originally forecast.

Its decision to delay achieving a balanced budget by a further year to 2020-21 has been described as regrettable, while the recalibrated target “must now be met”.

Those are among the conclusions in the annual assessment of the island by the independent Fiscal Responsibility Panel, which highlighted the shrinking workforce and rapidly ageing population as “perhaps the greatest concern” facing the island and its economic future. It said the situation will put ever-increasing pressure on both taxes and spending.

The three-strong panel was chaired by David Peretz, who has worked in the UK Treasury, the International Monetary Fund and World Bank. This is the fourth consecutive year it has reviewed and reported on the fiscal progress of the government.

According to the panel, Bermuda needs to reinvigorate economic growth “including through a decisive change in immigration administrative practices”. It stated: “A precondition for faster growth is to increase the island’s workforce. It is the only realistic counter to the island’s demographic challenge from a rapidly shrinking and ageing population. Immigrants and returning Bermudians with the right skills will help to create jobs, not displace them.”

The panel noted that recent improvements in processing times for work permit applications “are an excellent start,” but that they must be urgently followed through with broader changes in administrative practices and policies.

The Fiscal Responsibility Panel held meetings with individuals and institutions during the course of its discussions in Bermuda from November 19 to 24. The other members were Peter Heller, a retired deputy director of the fiscal affairs department of the International Monetary Fund, and Jonathan Portes, principal research fellow at the UK National Institute of Economic and Social Research.

Curtis Dickinson, Minister of Finance, said: “The Government is certain that the panel’s report will be a useful document to assist with the Government’s deficit and debt reduction strategy, and I encourage the general public to thoroughly read the report to get a better understanding of the various fiscal challenges facing the Government”.

• An expanded article will appear in tomorrow’s Royal Gazette. See Related Media for full report from the Fiscal Responsibility Panel

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