Finance Minister Paula Cox will be trying to pull off a balancing act when she compiles her toughest Budget yet next month, according to an international business leader.

David Ezekiel, chairman of the Association of Bermuda International Companies, said Government faced having to balance the two competing interests of maintaining its own revenue base, while offering some form of stimulus for the economy and business.

Ms Cox will present the Budget in the House of Assembly on February 19, against a backdrop of rising Government debt and revenues that have slumped during the economic slowdown.

Business leaders questioned by this newspaper yesterday said they would be happy to see a freeze on taxes and duties.

"I think it is going to be clearly the most difficult budget that the Finance Minister has had to put together," Mr. Ezekiel said.

"These are strange times for everyone with governments the world over looking at covering their revenue bases at the same time as being under pressure to provide stimulus for certain sectors of the business landscape.

"I think we might see some stimulus perhaps in the construction area, where in other countries, given that the private sector has dried up, governments are looking at opportunities to stimulate the road and bridge building programmes.

"Clearly one hopes one will get a Budget that will encourage people to keep going and use their funds to expand rather than just retreat and so I would expect a 'steady as she goes' style Budget because of the conflicting demands.

"It is difficult to expect any major reductions, especially in the international business arena because a small reduction could mean a fairly large decline for Government revenue, but at the same time international business is becoming a largely competitive arena."

Stephen Todd, president of the Chamber of Commerce, said: "Ideally we would like to see a Budget that does reflect an increase in various tariffs that will effect both the business community and the individual tax payer, so if at all possible we would hope that the Finance MInister in preparing the Budget would ensure that internal efficiencies within the Government departments have been achieved and that expenses are kept to a minimum.

"We are hopeful that any increases that are brought forward will be at a minimum."

Andy Pereira, president of the Construction Association of Bermuda, said that capital projects and additional concessions to real hotel developments were a necessity to help stimulate the industry, creating jobs both during and after the work had been completed.

"Bermuda needs more hotel beds and we need to keep local construction companies busy building," he said. "Construction companies are presently downsizing to stay in business.

"The boom of large construction sites has come to an end for the handful of larger contractors who employed hundreds of locals. Now the market is shifting toward residential renovation.

"While consumers are taking advantage of additional quality contractors who may not have been available to them before, there is not enough work for everyone. Somehow work needs to be generated."

Mr. Pereira said he would like to see a continued commitment in Government's promotion of training within the construction trades and the budget allocation for that area.

"A reduction in this would only compound the problem of finding qualified local tradesmen," he said.

"In a time when people are looking to market themselves good Government training programmes can assist."

Government debt has been a big concern for many businesses based in Bermuda in recent months, with the latest report by the Economist Intelligence Unit revealing that initial estimates pointed to a widening of the Island's fiscal deficit as revenue fell short of budget targets and capital spending increased.

The report said that despite official data yet to be released by Government for the first quarter of 2009/10, in November Finance Minister Paula Cox had announced that Government revenue projections were missed in the first quarter by as much as eight percent, resulting in a revenue shortfall of $20 million. It said that, if confirmed, this would point to an acceleration of revenue declines seen in 2008/09, when total revenue was 3.3 percent below budget.

Although Government spending was reported to have been on target in the first quarter of 2009/10, the revenue shortfall has prompted them to make expenditure cuts, the report found. And with civil servants seeking savings of around 20 percent on current budgets and public-sector recruitment being frozen, Government estimates it will protect capital and social spending plans in the remainder of that period, it added.