Bermuda is planning a long-term government bond issue to refinance facilities designed to support businesses and communities throughout the COVID-19 pandemic, such as its $170 million credit line for local financial institutions.
Curtis Dickinson, Bermuda’s Minister of Finance, said the capital raise will also assist Bermuda with the management of the economic fallout from this crisis.
Subject to market conditions, this transaction may also involve the refinancing of current government bonds at a more favorable interest rate, Dickinson said.
The measure is the next step in the Ministry of Finance’s COVID-19 - Fiscal Plan. As part of that plan, the government has proposed extending the unemployment benefit programme for an additional four weeks, with the maximum benefit extending to 16 weeks. It estimates this will cost $6-$10 million.
The Ministry of Finance said it has paid benefits to over 9,700 people to help them cope with the COVID-19 pandemic, costing around $38 million.
The government will also amend the National Pension Scheme (Occupational Pensions) Act 1998 to allow retired people to tap into their pensions for a $12,000 lump sum payment. The scheme had previously been amended to allow people under the age of 65 who were not retired and participated in private, defined contribution pension plans or local retirement products to withdraw up to $12,000, until June 30, 2021. The change will extend the scheme to people who have retired.
It will also extend the right to withdraw up to 25 percent of the balance of a pension account to people who have not yet retired. This right had previously been offered to people aged 65 or over, who had already retired.
The government will also amend the pension scheme to allow for a suspension of employee and employer contributions for a twelve-month suspension period, from July 1, 2020 to June 30, 2021. Participating employees will benefit from a 5 percent increase in their take-home pay.
Amendments to the Contributory Pensions Act 1970 will allow employees, employers and self-employed persons to suspend payment of their social insurance contributions for the duration of the suspension period. Dickinson said this will provide further relief to employees worth $143.68 per month.
The government will debate these measures on June 19, and hopes to implement the changes in the current legislative session.
The government has also promised to focus increased attention on supporting small and medium size enterprises.
Dickinson said: “We have taken a significant number of emergency and short term actions to provide relief to individuals, households and businesses which have been hard-hit by the economic fallout from COVID-19. However, we recognize that our strategies have to include all sectors that contribute to Bermuda’s economy and that more is still required in sectors where some support has already been provided.”
Curtis Dickinson, Minister of Finance, COVID-19