The Bermuda Government yesterday unveiled its new Budget for 2002/2003, revealing that the Island's economy and Government revenues were battered by the September 11 terrorist attacks.

Finance Minister Euene Cox did not raise taxes signuificantly, but increased current and capital spending mean that the Island's debt is expected to increase $75 million or almost 50 percent to $235 million.

The major surprise in the Budget as Government's announcement that it was launching an unemployment insurance scheme and had provided $1 million in seed money for the scheme.

The Budget Statement, unveiled by Finance Minister Eugene Cox, showed that Government took in $609,060 in 2001-2002, 2.9 percent less than estimated. Much of the revenue shortfall as due to declines in tourism-related taxes as a result of the industry's slump last year.

Current account spending spending was $553,563, leaving a current account surplus of $55.4 million - $18 million less than expected.

After taking account of sinking fund contributions, interest on outstanding debt and capital expenditure, Government ran a deficit of $34.391 million.

For 2002-2003, Mr. Cox said Government plans to spend $571.7 million on current account, while tax revenue is expected to remain flat at $609.1 million, leaving a current account surplus of $37.387 million.

After taking account of sinking fund contributions, interest on outstanding debt and capital expenditure, the Government deficit is expected to balloon to $85.465 million, requiring $75 million in new borrowing.

That will increase Government's outstanding debt to $235 million. But it said it expected debt payments to rise just $750,000 to $10.75 million next year.

The outstanding debt comes to seven percent of gross domestic product, still within the ten percent ceiling that Government permits itself to borrow.