Government has operated within budget every year, but one, since coming into power in November, 1998, Finance Minister Eugene Cox told his House of Assembly colleagues yesterday.

And the Country's debt, inherited from the former United Bermuda Party (UBP) Government, has actually been reduced under the Progressive Labour Party's (PLP) stewardship.

Shadow Finance Minister Grant Gibbons responded by saying that, with a record of sharp increases in expenditure estimates, balancing the Budget was not that big a deal.

And he warned that, with rates the lowest they have been in 40 years, interest payments can only be expected to go up.

Mr. Cox said fiscal year 1999/2000 was the only year that the PLP Government overspent its Budget.

"The amount of overspending in 1999/2000 was not very large," he said. "In fact it represented less than one-half of one percent of the original appropriation. I think that any reasonable person, perhaps even Honourable Members on the other side, would allow some degree of flexibility, say 'plus or minus' one percent... In any event, since 1999/2000, even with the challenges created by September 11, this Government has operated within its Budget. Therefore, without a shadow of a doubt, I feel confident in stating that our record is one of disciplined control over public finances."

The Minister made his comments during Parliamentary scrutiny of the Finance Ministry in the penultimate Department Budget debate yesterday.

He said much of almost $22 million in supplementary estimates for 1998/99 represented reallocation of money to the PLP's new programmes.

And, even with that amount of supplementary estimates, Government still managed to come in under Budget that year - saving some $2.6 million.

"I think that outcome was an excellent achievement for an incoming Government that naysayers predicted would cause the sky to fall," he said.

"Mr. Chairman, the sky has not fallen. On the contrary, the economy has grown, more houses have been built, schools have been improved, students are performing to a higher level, garbage is now collected twice weekly and so on."

He said current account spending for the current financial year will come in more than $4 million under budget, and supplementaries are now down to $4.7 million.

In 1999/00, Government spending was $2.5 million above Budget, but $5.7 million and $4.2 million below Budget in 2000/01 and 2001/02 respectively.

Turning his attention to the Country's debt position, Mr. Cox said the planned $75 million of borrowing in the upcoming year represents the first real borrowing by the Government, and stressed that it was in keeping with Government policy to borrow only to acquire hard assets.

"I wish to make it clear that the debt that is presently on the books was inherited from previous administrations."

The Country's net debt was $150.4 million when the PLP came into office and is estimated to be $132.9 million by the end of the current fiscal year, he said.

"Therefore, if Government has to borrow as much as $75 million in 2002/03 it will represent the first real borrowing since the Progressive Labour Party assumed office as Government."

Mr. Cox added that, with interest rates the lowest they have been since the 1960s, "borrowing now for long term assets makes eminent good sense".

And he highlighted Government's strong credit ratings by Moody's Investor Service and Standard and Poors.

He attacked criticism of Government's planned borrowing, saying that in the last recession, the former Government also increased debt.

"If anything it (borrowing for capital spending) will create jobs for Bermudians," he said. "In the 1990s when we had that early recession you had an increase in debt by the former Government and a further increase in 1993. In a recessionary period it's good economic sense to provide work - to keep the economy turning rather than having to find money to assist people."

Some $10.75 million is slated to be paid out in interest payments for the coming fiscal year. Dr. Gibbons said that amount could balloon with slight increases in the rates, which is very likely in the near future.

And he made it clear that he had not advocated stopping capital projects entirely, but had merely cautioned that when revenue is projected to decline, "you should cut your cloth accordingly". But he warned that Bermuda had spent three years in recession the last time.

"If we continue to borrow at this rate for a number of years we could be in difficulty down the road. Bermuda comes out more slowly," he said.