Meticulously prepared, the Budget is 54 pages long, replete with charts, statistics, analogies, historical data, and some very cautious optimism. It contains shrewd observations on our Bermuda financial environment: investments, government infrastructure and assets, impact on population, serious concerns relative to full employment, challenges Bermuda faces and important economics lessons.

If you really want to be better informed about our economy and our place in the world, read the Budget. Then, consider dissecting it by taking each section in turn.

We should all be spending plenty of time on our individual family financial budget. And we should be equally concerned about our government’s budget. After all, this is our country, this is our economy and in most cases this is our money, deducted from our earnings without our having any say in the outcome.

The least we can do is actually know where our money is going. Don’t approve of government spending choices? Then voice your disagreement with your MP. Further, we certainly should know just how much revenue Government is generating.

It may seem challenging to understand the most recent Budget. It may seem tedious, intense and time-consuming, but it is not difficult. However, isn’t it even more important than your family budget to know if our country’s budget is fair and equitable? Can we even have a family budget without our Government operating on all cylinders?

Quite frankly, the annual Bermuda Government Budget is a marvellous teaching tool. It should be and taught in school. Everyone has a stake in our country. What better way to demonstrate to our young people how unique our Bermuda economy is and the respect that our international financial centre contributes to the financial world.

Our youngsters will inherit the earth — in short order, why not have them be fully prepared?

There are highlights and lowlights to this Budget.

According to Bob Richards, the Minister of Finance: “The 2016-2017 Budget is the first of the three-year plan to eliminate our deficit (more cash spent than earned in a year) so that finally Bermuda can begin to pay off in earnest our enormous several billion dollar debt to foreign investors.”

Reviewing the highlights

Highlights include signs of recovery after six long years of recession, specifically:

• We have worked our way out of The Great Recession, with five consecutive quarters of GDP growth. Chart four, on page five, displays the first positive upswing in our gross domestic product in more than five years. GDP means all private and public consumption, government outlays, investments and exports minus imports that occur within a defined fiscal year. Put simply, GDP is a broad measurement of a nation’s overall economic activity.

• The property market is stabilising, signalling a return of value to the family home. An estimated 300 properties were sold in 2015, an increase of almost 100 from the 209 sold in 2012, which was the worst year of property sales on record.

• Credit is starting to expand. In 2015, for the first time since 2011, there was evidence of an increase in bank lending in our economy. That is a positive development since an economy cannot expand without an increase in credit flow, while non-performing loans are stabilising. Check out chart 11 on page 20 of the Budget.

• Upticks in economic activity have become positive trends; retail sales, construction building permits and planning permits up more than 100 compared with 2013. Furthermore, company formations and consumer confidence has risen.

• Bermuda freight volume increased by more than 2,500 containers from 2014 to 2015, although it is not clear if this was mostly inbound, indicating increased consumer consumption or outflows leaving island. You can find chart six on page seven of the Budget.

• Hotel developments are taking shape across the island, with ground breaking for a new hotel in St George’s just a few months away.

• The airport project will break ground later this year creating hundreds of jobs for Bermudians.

• Bermuda’s insurers and reinsurers, the core of our international business sector, are well positioned to freely compete in the EU with Bermuda’s badge of excellence attained in Solvency II equivalence.

• The government deficit has been slowed, with the current account this year recording a surplus before debt service for only the second time in more than seven years.

The current account is the difference between a nation’s savings and its investment. The current account is an important indicator about an economy’s health. It is defined as the sum of the balance of trade (goods and services exports less imports), net income from abroad and net current transfers. This is a very interesting equation that will be discussed in depth in future Bermuda economic articles.

A current account surplus does not necessarily mean there is real cash in the Government’s bank accounts at year end.

Reviewing the lowlights

I regret to say that the 2016-2017 Budget is not balanced; our Government is still spending more cash than it is taking in. Regrettably, Bermuda does not have a balanced-budget mandate, which is a constitutional rule requiring that a state (country) cannot spend more than its income. It requires a balance between the projected receipts and expenditures of the government.

Balanced-budget provisions have been added to the constitutions of most states in the US, and can similarly found in Germany, Hong Kong, Spain, Italy and Switzerland.

In a US state, for instance, if the revenues do not meet expenses, state government literally shuts down. No payroll, no administration, no activity until sufficient cuts are made in expenses to bring that budget in matching line: the revenue earned equals, and not one penny more, the expenses paid for the year.

Then again the US Federal Government budget is not balanced and has not been for many years. The US has recourse, though, they just print more money. Bermuda cannot do that.

And for Bermuda there is the elephant in the room. That is our foreign debt, government civil service and ministers’ pensions and benefits.

This was part one of a two-part series looking at the Bermuda Government Budget for the 2016-2017 fiscal year. Next week: more lowlight details.

And in a future article: the perfect Utopian society with no foreign workers, no annoying visitors from the outside, no foreign politicians telling us what to do. That is what we all want isn’t it? Controlling our own destiny.

Martha Harris Myron CPA PFS JSM, Masters of Law: International Tax and Financial Services. Appointed to the Professional Tax Advisory Council, American Citizens Abroad, https://americansabroad.org/. The Pondstraddler* Life™ Consultancy providing financial planning, publications, presentations for Bermuda residents, their multinational families and connections. Contact: martha@pondstraddler.com