30 December 2012News

Fitch assesses OBA’s chances following election

After 14 years in power, Bermuda’s Progressive Labour Party (PLP) was defeated in this week’s closely contested election by the One Bermuda Alliance (OBA), which will form the new government under its leader and the newly elected premier, Craig Cannonier.

The OBA secured 52 percent of electoral support and control of 19 seats in the 36 seat parliament, while the PLP retains 17. Cannonier is a fairly recent addition to the Bermuda landscape, having only been a member of parliament for 13 months. The outgoing premier, Paula Cox – who lost both her constituent seat and resigned from her role as leader of the PLP – has been a member of parliament and a consistent feature of successive governments for the past 14 years.

Canonnier campaigned on a pro-business platform and it is believed that the state of the Bermuda economy, which contracted by 2.8 percent in 2011 and is expected to contract again in 2012, helped to encourage the change in government. According to Fitch, the OBA’s focus will be upon economic growth and job creation.

Assessing the OBA’s plans, Fitch said, “the new administration wants to attract foreign investment...at the same time, the incoming government has announced initiatives to support local business owners and entrepreneurs."

“The OBA's platform includes a tight control on public spending and a reduction in public debt. The new governing party has identified several sources of potential public spending cuts to reduce public deficits, including a possible government headcount freeze, the elimination of consulting contracts, a 10 percent pay cut for government ministers, and closer monitoring of all public expenditures. No planned reductions in social services spending have been included in the OBA platform."

“We will remain focused on the government's commitment to a credible fiscal consolidation plan and steps to restore economic growth in assessing the sovereign's credit profile”, said Fitch.

Bermuda and the OBA will be hoping that they can overcome the significant headwinds that have buffeted the Island’s economy since the financial crisis, with its effects particularly sharply felt due to Bermuda’s links with international business and re/insurance in particular."