While the man in the street may well be pleased with yesterday's Budget at first glance, Opposition Leader Grant Gibbons sounded a warning bell, while suggesting that the ruling Progressive Labour Party (PLP) has general elections on its mind.

And he says Finance Minister Eugene Cox, is making a risky bet that the economy will rebound this year.

Meanwhile accounting firm PricewaterhouseCoopers is warning of the possibility of "serious damage" to the economy in its first reaction to the Budget Statement.

"First of all I think what's most evident from this particular Budget Statement is that the PLP Government has shifted their emphasis from tax and spend to borrow and spend," Dr. Gibbons told The Royal Gazette.

"I can only guess that they recognise they will have to face the electorate in the next year or so.

The strategy in this particular budget is to put off any pain until much later. And it's very clear that Government intends to continue to spend its way through this recession and they intend to finance the very large capital spending programme through a staggering increase in debt."

Mr. Cox's Budget for the year 2002-2003 projects an $85 million deficit - the bulk of which will be made up for by borrowing some $75 million.

He told his House colleagues that the borrowed funds will be spent on priority capital projects and the total capital expenditure budget comes to $109.1 million - 40 percent of which will be spent on education.

"What this means for your average Bermudian is recognising that their job or income are in jeopardy and they are having difficulty already with paying bills - they then go down to the bank and take out a huge loan," Dr. Gibbons said.

"The simple fact of the matter is they have had to borrow because they haven't delivered on the tourism front either in providing jobs or attracting visitors to spend money here.

"I also feel Mr. Cox must be a gambler because if the economy doesn't come around this year he will face the very frightening consequences of having to take on more debt next year or increase taxes to pay for it due to the large amount of capital spending which they are continuing with."

Dr. Gibbons added that Mr. Cox's Budget Statement showed a lack of vision in addressing the economy's "real structural problems" and the tourism slump.

"There's no vision which addresses that in this Budget and the borrowing approach almost seems to be an effort to put off dealing with it until a future date or hoping Bermuda's economic problems will go away."

And Dr. Gibbons was unimpressed with the Finance Minister's contention that the level of debt was still below the statutory ceiling of $250 million and only seven percent of GDP.

"That's true but when you look at it it's an extraordinary increase in debt in one year and it's going to take him very close to the ceiling. The point about him being a gambler if this recession continues beyond this year he's going to have to go back to the bank for additional borrowing or he's going to have to significantly raise taxes."

And asked whether he expected the economy to come out of recession within a year, Dr. Gibbons said economic uncertainty demanded fiscal prudence.

"One of the points we made before in last year's Budget response was when you have a period of uncertainty, prudent and cautious behaviour - particularly on the spending side - is advisable. And most people in their private lives will take a cautious and prudent approach."

When asked, he said Government should "absolutely" have deferred some capital projects. "They are suggesting they are going to continue with a broad array of projects which are multi-year ... They should really have taken a harder look at what is absolutely necessary on the capital side."

On the fact that the tourism budget is over five percent slimmer than it was last year, due to the rigours of zero-based budgeting, Dr. Gibbons said : "I think most people would be pleased that they have taken a hard look at the tourism budget because Minister of Tourism David Allen has certainly wasted a tremendous amount of money over the last three years - judging by the performance on both arrivals, visitor expenditure, bed-nights, etc. ... and clearly should be held accountable for the results which were dismal long before the September 11 events."

PricewaterhouseCoopers published its annual Budget Bulletin on its website together with the full text of the Budget.

The professional management services firm argues that the Budget should have focused reducing real, as opposed to nominal spending.

"We also question whether some of the capital expenditures could have been deferred to a time when the construction industry is not as stretched, reducing the impact on the deficit and debt and maintaining employment levels in that sector," stated the Bulletin. "It is difficult to understand how this level of government expenditure can be sustained without serious damage to our economy. Government expenditures as a percentage of GDP have increased from 18 percent to 22 percent since 1998. This trend should cause alarm."

However, president of the Chamber of Commerce Charles Gosling was reasonably pleased that the Finance Minister did not impose any `sin tax' increases.

"I was not expecting any increases on liquor, and maybe not even next year," he said. "And cigarettes have been bashed almost every year. If it is appropriate for cigarettes to have a breathing space, this is it," he said.