Finance Minister Paula Cox has lost her grip on public finances, said the Opposition after credit rating agency Moody's downgraded Bermuda Government bonds.

Acting Shadow Finance Minister Pat Gordon-Pamplin said the Island's first ever downgrade by Moody's was "disappointing news".

On Wednesday, Moody's lowered the Island's bond ratings to Aa2, with a stable outlook. The agency cited Bermuda's small size and lack of diversity, and "external shocks" as major factors in the decision.

"For Moody's Investors Services to downgrade Bermuda's bond ratings for the first time is disappointing news," Ms Gordon-Pamplin said.

"It marks the end of Bermuda's exceptionalism as a small, tightly managed financial jurisdiction that punched above its weight in terms of fiscal discipline and low government debt levels."

The United Bermuda Party MP also highlighted the impact of rising public debt. "We have expressed concerns repeatedly about Finance Minister Cox's management of the public purse, particularly her excessive borrowing that has seen our gross debt mushroom to a projected $680 million this year from $160 million in 2004, when she took over the post.

"Ms Cox has also broken the long-held policy of holding debt to 10 percent of gross domestic product — a hallmark of the island's fiscal responsibility."

Moody's noted that the level of government debt was "low, but rising".

Ms Gordon-Pamplin said the tripling of government debt to GDP ratio since 2003 and the four-fold increase in external debt to current account receipts ratio over the same period had clearly caught the rating agency's attention.

"For failing to maintain a strong grip on the Island's finances, Ms Cox becomes the first Finance Minister to preside over a downgrade in Bermuda's credit rating," Ms Gordon-Pamplin said.

"Ms Cox is pushing hard to put the blame for the downgrade on the global economy, but it should be noted that the island did not suffer a downgrade during the 1991/93 recession.

"Indeed, through the course of that prolonged downturn, Bermuda gained and maintained the double-A sovereign debt rating (AA) that Ms Cox has now just lost."

As reported in yesterday's edition, Ms Cox said the downgrade reflected that Bermuda was not insulated from the global financial crisis.