DON'T count on the continued economic growth of the international business sector. That is one local economist's message to Finance Minister Paula Cox.

Bermuda College economics lecturer Craig Simmons said the non-assumption of continued growth should have weighed heavily in Ms Cox's reasoning when she was compiling the Budget, which she will deliver in Parliament today.

Mr. Simmons described Bermuda as economically being like a "banana republic", in that it was heavily reliant on one sector ? international business ? to bring in foreign currency.

"At the present time, tourism is only bringing in between $200 million and $300 million of foreign currency, while international business is producing $1.5 billion to $2 billion per year," Mr. Simmons said.

"That means our economy is fairly precarious. It could dissipate as quickly as it has grown."

He said the Government had enjoyed the luxury of greater than expected levels of income thanks to the continuing success of the international sector, which had helped to finance Government spending.

"Payroll tax revenues have consistently been greater than expected, but I don't think we should count on that continuing," Mr. Simmons said.

"When you look at the numbers, revenue and net debt as a percentage of GDP (gross domestic product), it all looks pretty good. But that is in the context of a continually growing GDP figure. It wouldn't look so good if the GDP began to decrease.

"Government net debt stands at about $214 million. So without raising the statutory limit of $250 million, the Minister could probably borrow another $80 million, assuming an increase in tax revenue.

"We are certainly in a situation where Government's ability to borrow has decreased. Capital spending last year was $115 million ? I would not expect to see that level of capital expenditure again."

An alternative to increasing borrowing could be to increase payroll tax, a realistic option in Bermuda's growing economy, Mr. Simmons said.

In last February's Budget, payroll tax rose from 12.75 to 13.5 per cent.

This week David Ezekiel , chairman of the Association of Bermuda International Companies (ABIC), said any increase in taxes would increase the cost of doing business in Bermuda and would not be viewed favourably by his members.

"I think the trend going forward will be one of payroll taxes going up," Mr. Simmons said.