Author’s note: this article was originally published half-a-decade ago. It has been revised to reflect Bermuda’s current debt situation.

As at March 31, 2012, the Bermuda Government’s audited consolidated statements listed net debt of $2.42 billion; while unfunded pension/health benefits for civil servants, ministers/members of the legislature and contributory benefits for the general workforce had increased almost 50 per cent from 2008 to $1.1 billion.

The report did not include the financial activities and liabilities of the Bermuda Hospitals Board, the Bermuda Housing Corporation, and the Bermuda Land Development Company Ltd for which the Bermuda Government has the ultimate financial responsibility.

As at March 31, 2017, the audited Bermuda Government’s consolidated statements, tabled in Parliament) stated that our net debt has increased to $3.7 billion, according Auditor-General Heather Thomas last week. This outsize sum does not include the underfunded pension/health benefits liabilities, and again the BHB, BHC and BLDC financial statements.

Debt is easy money. A lump-sum payment, upfront cash, easy to justify, easy to spend. Trouble is, what you bought with it — capital assets only — is not yours, not until you pay the cash back.

Personal debt is an inescapable personal responsibility. No matter the financial circumstances or the persuasive asset acquired, the decision to borrow money is an emotional and mental strain. You are not your own complete person. Someone else can control your lifestyle until you are debt-free.

Corporate debt is a common business strategy to leverage the assets, products, and employees of an organisation for efficient cashflow, profits and acceleration of future growth. Measured corporate borrowing generates offshoot products: investments such as commercial paper, money market and bond mutual funds, components of millions of investment portfolios.

The corporation itself has repayment responsibility with failure generating serious consequences.

Government debt is everyone’s financial responsibility. Government debt does not discriminate. Some, but not all, will share in government largesse — if debt cash borrowed can be called that — through employment-guaranteed pensions, or financial need with social benefit programmes and the like.

But, every resident present, and in the future, will share in the repayment pain. Everyone, through their involuntary tax contributions.

Debt is borrowing money with a promise to pay the principal sum back — with interest to the lender investor — because who in their right mind would lend cash without an increase in value?

The future promise to pay rendered in contract form may represent an intangible hope-filled wish or a careful financial plan that the cash infusion will, given certain assumptions, be a jobs growth enhancer, a revenue and profit generator from increased taxes, tariffs and the like to support the repayment of principal and interest.

Debt is not an equity investment in the future, no matter how eloquently stated, but a means to an end, not an end in itself. Careful long-term debt is, and should be, used to purchase, restructure, rebuild assets and business that will appreciate over time, long after the debt is repaid.

The use of short-term debt to meet expenses and cashflow shortages begs the question — where is the capital investment?

Long-term financial planning guidelines recommend borrowing the amount of debt that an individual, family, business, or even a country can safely repay, even in times of financial stress. What is implied in contracts — even with the use of good debt for appreciating assets — is the understanding that debt must have a ceiling beyond which the borrower cannot trespass. An individual applying for a residential mortgage will almost never receive borrowed funds in excess of the home’s value, or above the family budgeted amount that the family can afford to repay.

Otherwise, at the mere hint of hardship or a reduced income stream, there will be little to no ability to meet debt payments. It is too easy when times are booming to feel confident that a person’s compensation scale, or actual government revenue receipts, will always be the same or better.

In a competitive global economy, there is no such thing as always.

So, what have we as a country received from all of our billions in borrowings?

Anyone have a list of new, or revitalised infrastructures, or additional new business generation schemes that have (or are now) generating new or additional profits for government? Can anyone provide figures on the return on these cash borrowing infusions? Just asking for discussion purposes.

Trending talk commentary conjectures increased taxation, new revenue fee generators and the like to increase government net revenue. As yet, there is no definitive information. We also await the information provided in the full audited consolidated financial statements for government release.

What we do know is that ordinary citizens and residents, the middle class that does the right thing — working, saving, voting, living life by actions applied responsibly, the individuals and their families that represent the backbone of the country, will continue to shoulder this collective country debt, along with our own personal loans and financial plans, possibly for the rest of our lives.

Our debt is still there. The unfunded pension/benefit obligations are still there. The Consolidated Financial Statements still do not include BHB, BHC, and BLDC.

On December 8, 2017, Government announced a $135 million loan agreement with Butterfield Bank.

We need a serious debt-reduction financial plan for government that is credible, workable, and actionable now.

Martha Harris Myron CPA JSM: Masters of Law — International Tax and Financial Services. Pondstraddler Life™, financial perspectives for Bermuda islanders with multinational families and international connections on the Great Atlantic Pond. Contact: martha.myron@gmail.com