Finance Minister Paula Cox unveils her fourth Budget today enjoying a position that most of her colleagues around the world would envy.

Bermuda?s economy remains astonishingly resilient. International business continues to boom, with a new wave of reinsurers, this time from London, moving to the Island.

A quiet hurricane season saw existing reinsurers produce record earnings in 2006. With licence fees already increased and employment in the sector generally strong, tax income from fees and payroll tax is likely to be higher than expected.

Ms Cox will also for the first time in her tenure be able to use higher than expected revenues from the tourism industry which finally started to recover in 2006. With the construction industry still booming, and imports increasing, Customs duty revenues should be strong as well.

So everything points to Ms Cox reporting a current account surplus for 2006 which should be higher than the $45 million estimate, and equally strong expectations for 2007.

If anything, Ms Cox will have to address concerns about the economy overheating. Premier Ewart Brown denied this was the case in his speech on Monday, but increased pressure on the Island?s infrastructure, inflation which is well above the Island?s main trading partners and generally high levels of liquidity all suggest the need for caution.

This is a difficult thing to manage, but there are two good reasons why it is necessary. One is that runaway costs, both for goods and services and for labour, will make Bermuda uncompetitive in the long term.

The other is the Island?s physical and population size inevitably limit the economy?s capacity for growth.

It has been noted that under the Progressive Labour Party, the number of work permits has soared and this has everything to do with growth running ahead of the local labour market?s ability to absorb it.

The other part of Ms Cox?s job is to spend taxpayers? money prudently. There have been a few ?shocks? in the last year that are likely to see Government?s spending rise above its estimates, notably the costly clean-up of CedarBridge Academy.

If there is a knock on Ms Cox?s tenure as Finance Minister, it is that Government employment and spending have risen as fast, if not faster, than revenue.

This is storing up problems in the event that economic growth slows.

A better approach would be to cut Government?s indebtedness, thus freeing up money to be spent on public services. Government expected to increasing its borrowing to $285 million in 2006, which would have required interest payments of $11.7 million.

It now seems unlikely that Government will have required that much, because of delays in capital projects and because of stronger than expected revenue.

There will be capital spending in the next year, notably on housing, but it would be nice to see debt, which is already low by global standards, eliminated entirely.

That is not to say that there will not be demands for Government spending in the future. Housing and a new hospital will need capital injections and it would be prudent to put money aside for pensions and for health care for the elderly, which are long term threats to all countries.

Some tax cuts would be welcome too. Ms Cox recently unveiled a series of business incubator initiatives which are welcome. But the greatest challenge for small businesses are employment costs and the cost of goods, partly because of Customs duty.

This particularly affects local retailers, who face ever growing competition from overseas.

Customs duty is the one cost that is easily controllable for importers, and now is the time to start reducing the tariff.

Ms Cox should release a Budget today that sees only minimal increases in Government current account spending while allowing the population to keep more of their income in their pockets. We shall see.