Rebounding Revenues, Spending Cuts To Narrow Bermuda's Fiscal Deficits

• Bermuda’s fiscal deficit will narrow in FY2021/22 (April 2021-March 2022) as an economic recovery drives renewed revenue growth and the government reins in COVID-19 relief spending. 
• The deficit widened substantially in FY2020/21 to 4.1%, up from an average of 2.1% from FY2015/16 to FY2018/19, as an estimated 7.5% contraction in GDP amid the pandemic, significantly undermined revenues. The deficit also increased on account of additional government spending to the tune of US$127.3Mn in emergency spending. This is equivalent to 11.3% of FY2019/20 expenditures and was part of the government’s strategy to mitigate the health and economic impacts of the pandemic. 
• Fitch Solutions has revised its budget deficit forecast for FY2021/22 to 2.1% of GDP, from 2.4% previously. 
• Total public debt is also forecasted to decline to 48.5% of GDP by end-2025, from a peak of 55.6% in 2020, as fiscal consolidation flips the primary fiscal balance into surplus beginning in FY2022/23.

(Source: Fitch Solutions)