Bermuda’s Prudent Economic Management Praised By Moody’s

by Amanda Banks, Tax-News.com, London

03 May 2005

Affirming Bermuda's 'Aa1' foreign currency ratings and 'Aaa' domestic currency debt rating, international ratings agency Moody's has praised the government's prudent macroeconomic debt management policies.

"Bermuda's conservative debt-management practices are evidenced by the government's policy that absolute debt cannot exceed $375 million or nine percent of GDP," Moody's stated in a report.

""The country's government debt-to-GDP ratio was 4.8 percent in 2004, compared to the average of 32 percent among its peers in the Aaa-A3 rating category," Moody's observed.

Whilst the analysis noted that Bermuda's tourism sector continues to decline, a situation exacerbated by Hurricane Fabian in 2003, these losses have been offset by growth in international business and a boom in business and private-sector construction.

According to Moody's Bermuda's international business sector accounted for 20.7% of Bermuda's GDP in 2003, and is set to grow by 7% to 10% in 2005, driven by mutual funds, for which invested assets have tripled since 2000, and hedge funds.

However, Moody's observed that the continued weakness in the US dollar, to which the Bermudian dollar is linked at parity, has negatively affected Bermuda's terms of trade, especially import prices."

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