It is no secret that Bermuda is living with a huge public debt that continues to get bigger every year. The gravity of the situation for all Bermudians should not be underestimated. The Bermuda Government’s gross outstanding debt stands at $2.25 billion, which breaks down to about $45,000 per Bermudian man, woman and child.

During the fiscal year that ends next March, the Island is expected to spend about $170 million on debt servicing alone, or about 18 cents of every dollar the Government takes in.

The Government has made some progress in reining in the annual budget deficit, but still it expects to spend about $220 million more than it takes in during the current fiscal year. The aim is to balance the budget by the fiscal year 2018/19 and thereafter start to chip away at the debt mountain.

If the plan fails and we continue to plunge deeper into debt, then we will reach a tipping point.

Beyond that, the cost of servicing the debt — which this year will be $43 million more than the Ministry of Education’s entire budget — will rapidly become unsustainable. Our credit rating will fall, causing the interest rate on our debt to rise.

This vicious cycle will eventually necessitate a rescue, which could involve the British Government and the International Monetary Fund.

At that point, we will no longer have a choice as to how the debt problem is addressed. Our rescuers will dictate terms and decide how many hundreds of public-sector jobs must go and how much taxes will have to be increased.

Every Bermudian would be negatively impacted by this nightmare scenario, but it’s not too late to avoid it.

Against this backdrop, the formation of two significant entities over the past couple of weeks, was encouraging news.

The Fiscal Responsibility Panel (FRP) and the Financial Policy Council (FPC) may be shrugged off by some as Government-backed talking shops. They have the potential to be much more than that. If they function as intended, these two bodies will help to guide us on the rocky road to a balanced budget, while safeguarding the Island from the types of risks that could cause severe economic damage.

The FRP is due to publish its report this month, offering an independent view on the Government’s efforts to get the soaring debt under control. It will make interesting reading, particularly the panel’s opinions on whether the austerity measures and tax increases already implemented go far enough and what will be necessary next.

The panel members are certainly three wise men. Their collective education includes degrees from Oxford and Princeton, as well as a doctorate from Harvard.

David Peretz, the panel’s chairman, has worked in a top post in the UK Treasury and as UK executive director of the International Monetary Fund (IMF) and the World Bank.

Jonathan Portes, among other roles, was chief economist to No 10 Downing Street, while Mr Heller can boast senior management roles in a near 30-year career at the IMF. So when it comes to public finances, these people know their stuff.

This week the FPC sat for the first time. Its remit is to keep an eye on systemic risks to our economy, which would include high levels of indebtedness and the stability of the financial sector. Ensuring the interests of the public are protected in the case of financial-institution failure is also high on its agenda.

The FPC is chaired by Bob Richards, the Minister of Finance, and also includes Jeremy Cox, chief executive officer of financial-services regulator the Bermuda Monetary Authority.

Its three external members are Sir Andrew Large, the former deputy governor of the Bank of England; Sir Courtney Blackman, former governor of the Central Bank of Barbados; and Michael Butt, chairman of Axis Capital Holdings Ltd.

The two bodies harness heavyweight intellect and experience, from which Bermuda could benefit significantly. Their assessments and recommendations will add an independent element to the policy-making process, hopefully resulting in an outcome more attuned with what’s best for the Island than with what will win votes.

This implies long-term thinking, sorely needed when tackling challenges of this nature and often lacking with politicians distracted by the next election.

Greater value still may come from the message that these moves send to the world. As a heavily indebted country we are reliant on overseas creditors to prop up our Government and will remain so. Credit rating agencies, whose opinions govern the rate of interest we pay, will most likely look favourably on the commissioning of proven experts to help us get our fiscal house in order.

Also, potential investors or companies considering setting up an operation here can derive confidence from the effort to maintain financial stability and balance the Government’s books.

The real test of the effectiveness of FRP and the FPC will come when their advice is to take tough and unpopular measures. Some short-term pain will doubtless be necessary for long-term gain.

The alternative is to bury our heads in the sand, continue living beyond our means as a country and accelerate down the hill to devastating insolvency. And that is not an option.