The Government plans to spend $19.8 million more than it takes in over the next 12 months, which will push the country’s total debt to almost $2.68 billion.

Interest payments will amount to $121.4 million in the 2020-21 financial year, about $332,600 per day.

If debt servicing were a government ministry, it would be the fourth most expensive behind health, education and national security.

Net debt is almost ten times the amount it was in 2008 and is equal to about 37 per cent of the island’s gross domestic product.

The Government’s aim to make inroads in the debt mountain over the past year were scuppered by a payout on a guarantee for the Caroline Bay project, which forced it to borrow $182.4 million.

The extra debt more than offset the $180 million that was paid off during the year.

Curtis Dickinson, the Minister of Finance, revealed the figures in his Budget Statement in the House of Assembly yesterday.

He said that Caroline Bay-related obligations accounted for $7.9 million of the coming year’s $121.4 million debt servicing costs.

Mr Dickinson promised more refinancing moves to take advantage of financial market conditions and cut interest costs.

He said: “It is well recognised that interest rates are relatively low and the ministry will therefore use the opportunity not only to finance the 2020-21 deficit, but also to refinance the loan agreement arranged to facilitate the Caroline Bay obligations and to refinance existing more expensive government debt at a more favourable interest rate, therefore reducing debt service pressure on the budget.”

The medium-term forecast for the next three years shows net debt hit a peak at $2.677 billion in March 2021 then edged slightly lower to $2.662 billion by March 2023.

The prediction depends on projected Budget surpluses of $7.7 million in 2021-22 and $21.1 million in 2022-23.

The Government said it expected to record a deficit of $14.6 million, as opposed to the $7.4 million surplus Mr Dickinson had projected in his budget last year, in the financial year end in March. Mr Dickinson said revenue of $1.111 billion fell 0.7 per cent short of projections, “due mainly to lower than expected stamp duty, hotel occupancy taxes and fees for sale of land to non-Bermudians”.

Operating expenses of $940.2 million were $10.3 million, or 1.1 per cent higher, than forecast.

Mr Dickinson said: “This was primarily due to a strategic decision to provide financial support of $3 million to secure winter air service from New York and Boston and subsidy funding of $7.8 million for the Bermuda Hospitals Board as part of the block grant provided to the hospital in relation to the healthcare reform.”

Operating expenses also included a 2.5 per cent pay rise for many civil servants.

Mr Dickinson explained: “As this amount was unbudgeted, departments have had to find savings from within their existing budget allocations.”

The Government said it expected to spend $1.141 billion, $30.9 million, or 2.8 per cent higher than last year’s Budget estimate, in 2020-21, while revenues are predicted to increase by $3.7 million, or 0.3 per cent, to $1.122 billion.

The Government will run a deficit of $19.8 million after interest payments and capital expenditure.

Capital expenditure will be ramped up by about $20 million in 2020-21 to $85 million, as the Government increases maintenance work on roads and public buildings and acquires new IT infrastructure in a bid to bolster efficiency.

Payroll tax will be the biggest contributor to government coffers next year, raising $467 million, or 41.6 per cent, of total revenue, followed by customs duty, which will bring in $235 million, or 20.9 per cent of the total.

Health is the biggest-spending ministry at a cost of $243.3 million, or 21.3 per cent of total expenditure, followed by education on $137.5 million, or 12 per cent, and national security with a budget of $134.8 million, or 11.8 per cent.