The cost of interest alone on Bermuda’s spiralling public debt equates to $191,780 per day.That is according to the Budget statement released by Premier and Finance Minister Paula Cox yesterday, which shows that Government borrowing has surged past $1 billion.Government’s total debt outstanding, or the amount it has borrowed under loan facilities, rocketed by about 27 percent in the space of 12 months to the revised estimate of $1.05 billion for March 31 this year, compared to $823.4 million a year earlier.Over the next fiscal year, it is forecast to rise by another 14 percent, or $146.5 million.In last year’s Budget, interest costs from public debt for the 2010/11 fiscal year were projected at $38.4 million. The cost has turned out to be 47 percent higher than that at $56.3 million, according to the revised estimate. Interest costs on the debt next year are projected to total $70 million.Only last year the statutory debt ceiling the legal limit on what Government can borrow was raised by 25 percent to $1.25 billion. Under the coming year’s plans that ceiling would have been breached, but for a proposed accounting change.This change excludes guarantees from the figure charged against the debt ceiling, guarantees which include the $200 million Butterfield Bank preference share issue, a $10 million West End Development Corporation guarantee and a $500,000 National Education Guarantee Scheme.Under the previous system the debt and guarantees outstanding would have climbed to $1.29 billion, requiring Parliament to raise the statutory ceiling again. With the guarantees excluded, the Budget total is $1.08 billion.“With effect, April 1, 2011, these guarantees will no longer be charged against the statutory debt ceiling unless the guarantee obligation becomes due and payable by the Government, pursuant to the amended Government Loans Act 1978,” a footnote explained.A Government spokesman said on the change yesterday: “Currently Government guarantees are charged against the statutory debt ceiling, despite the fact that they are contingent liabilities to the Government.“This treatment is contrary to how these guarantees are accounted for in the financial statements of the Consolidated Fund as these amounts are not included on the Government’s balance sheet; rather they are note disclosed in the Financial Statements of the Consolidated Fund.”With the guarantees removed, the public debt is equal to almost 19 percent of the 2009 gross domestic product.The past five years have seen a more than six-fold increase in Government debt levels. At March 31, 2006, public debt was $175.2 million and interest on debt for that year was $10.9 million.What has caused the debt’s build-up is that spending, including capital expenditure, has outstripped revenue for each of the past seven years.Even the $60 million rise in revenue in 2009/10, achieved mostly through last year’s increase in payroll tax, failed to stop that trend.The deficit for the current fiscal year will be $223.8 million, according to the revised estimate, compared to the original projection of $143.5 million.Another budget deficit of $146.6 million is expected next year.The soaring cost of servicing the debt is hampering Government’s efforts to steady the fiscal ship and is reducing the benefits felt by cost-cutting efforts across the ministries.For example, Premier Cox announced cuts of $90 million in current account expenditure and $60 million in capital spending yesterday. However, the $150 million cut is offset by the $31.5 million increase in interest costs. Total expenditure will actually fall just over $122 million from the 2009/10 Budget.In her Budget statement yesterday, Premier Cox referred to borrowing costs, when she stated that Fitch, in November last year, had affirmed Bermuda’s credit rating at AA+, just one notch below the top AAA rating. The high rating “means that lending institutions consider uis a good risk and we end up paying much less interest on our debt than countries with lower ratings”, she said.She added that the rationale behind last year’s unpopular payroll tax increase, which was reversed yesterday, was to avoid risking a ratings downgrade that “would have driven up the cost of borrowing in Bermuda and potentially damaged our reputation as an international business centre”.In July last year, Government raised $500 million on capital markets through a bond issue, paying a 5.6 percent rate of interest, or $28 million a year, to investors.