The Bermuda Government has executed short-term loan facilities with local banks that will allow it to draw up to $170 million in funds to help cope with the Covid-19 crisis.

Curtis Dickinson, the Minister of Finance, also told MPs in the House of Assembly on Friday that the Government plans to go back to the capital markets and refinance those loans with longer-term debt, while also taking out additional debt to fund its 2020-21 budget deficit.

The finance minister emphasised that the Government had not borrowed $170 million, but the facilities gave it the ability to borrow that much.

On March 23, the Government executed a $20 million one-year term loan facility agreement with Clarien Bank. The interest rate was set at 4 per cent.

On May 22, the Government executed a US$150 million loan facility agreement jointly with HSBC Bank Bermuda and Clarien Bank, due to mature on September 17, 2020, priced at 3.75 per cent.

Mr Dickinson said: “It is encouraging that the two local financial institutions were supportive in providing Government with its financing needs in these uncertain times.”

He added: “To date I can confirm that the Government has drawn the full $20 million from the Clarien facility and approximately $10 million from the $150 million joint facility.

“Net debt stands at $2.71 billion, leaving the Government with $189.6 million of borrowing capacity.”

The debt ceiling stands at $2.9 billion and Mr Dickinson last month projected a deficit of between $275 million and $315 million for the 2020-21 fiscal year.

“As soon as is practical, the Government intends to refinance these short-term credit facilities by issuing long-term government debt in the global capital markets,” Mr Dickinson told MPs.

“The plan will be to not only refinance our credit facilities but to also finance the fiscal 2020-21 deficit and strategically refinance current government bonds at a more favourable interest rate.”

In 2018, the Bermuda Government sold $650 million of bonds priced at 4.75 per cent, as it rolled over old debt and took on some new borrowing.

In April this year, S&P Global Ratings affirmed Bermuda’s A+ long-term sovereign credit and senior unsecured debt ratings, but revised the rating outlook to stable from positive. On Friday, another rating agency, Moody’s, affirmed Bermuda’s A2 rating and its stable outlook.

Last month, Mr Dickinson estimated unbudgeted spending related to the crisis of up to $80 million in this fiscal year in areas including unemployment benefits, healthcare and national security.

He added that revenues were expected to come in between $175 million and $200 million short of estimates made in the February Budget.

“This level of deficit is not only unsustainable but economically and fiscally imprudent,” Mr Dickinson said at the time.

Mr Dickinson said the Government had identified between $50 million to $60 million of potential savings and hoped to achieve more through negotiations with unions representing public-sector workers. He plans to announce a recast Budget.