The people of Bermuda must prepare themselves and their country for a severe economic downturn following the attacks on the United States last month, according to the head of BELCO.

Garry Madeiros, president and chief executive officer of the Island's electricity company, said that the ripple effect of the downturn will have dramatic consequences that will test the nation's resolve.

Last week Government urged Bermudians not to panic, but yesterday Mr. Madeiros urged the country not to adopt a "wait and see" attitude, but to prepare itself for what might come.

He said in a letter to shareholders: "It is important now more than ever, that we are realistic about the impact to Bermuda, to Bermuda companies and to each of us as individuals. We cannot simply adopt a 'wait and see' attitude."

In the letter he expressed his and BELCO's deepest sympathies with the families and friends of the victims of the September 11 attacks.

But he said that the events would have a dramatic impact on Bermuda, both in reinsurance and in tourism as well as other sectors of the economy. He said that the insurance industry had positioned itself well to weather the events, but also that tourism was already in decline. He pointed to hotels laying people off, the possibility of closing early for the winter, others permanently.

And he said that retailers were considering a four-day week, and other tourism-related businesses including restaurants and taxis are already seeing a slow-down in business.

He added; "We expect to see other sectors of the economy impacted as well."

And he said that BELCO was assessing the impact to the business, shareholders, customers and employees.

But he said: "We must prepare ourselves and the country for a severe economic downturn. The magnitude of our challenge is something most of us have never experienced; hence we have no reference point.

"Revenue to the Government coffers and the community will be dramatically reduced and will require a corresponding reduction in expenditure, but the balance must be right to or part of the solution may become part of the problem.

"The ripple effect on both of these factors throughout our economic fabric will provide dramatic consequences that will test our resolve. It will require courage to come together like we never have before - Government, Opposition, business, labour and the people of Bermuda."

He said that the financial position of BELCO was strong and anticipated finishing the year in a strong position.

He added: "We do however expect to feel some impact from these events during the fourth quarter."