Finance Minister Paula Cox's guidance to her Cabinet colleagues that they need to trim their Ministries' Budgets by 10.5 percent is surprising.

First, this is a deeper cut than might have been expected. That will cause fears that, prudence aside, the Government's financial position may be worse than thought. Given that the current account surplus was estimated at $30 million this year, though, it is conceivable that it won't be met and Bermuda will have a current account deficit for the first time in decades.

Second, it is being done at the same time that Premier Dr. Ewart Brown still aims to launch expensive programmes like Future Care and free day care, which in turn will demand deeper cuts in "non-people" programmes, regardless of how important they are to the efficiency of Government.

Third, and most seriously, Ms Cox has drawn a line in the sand with regard to public service employment, saying there will be no job cuts. Curiously, she has not even said that there will be a Government hiring freeze to cap numbers at their present levels, which would seem to be an obvious first step.

In doing so, she is presenting her colleagues with a near impossible task. Personnel costs account for around $480 million or half of Government's projected $960 million current account expenditure in this financial year. Even assuming that they will not go up in the next financial year – and they will – that means Government needs to cut close to $100 million or more than 20 percent of the remaining $480 million in spending. The betting here is that it can't be done.

Many of these costs will be fixed, like the $22 million Government will pay in public debt charges. Other costs, as Ms Cox admitted, are likely to go up if the Island goes into recession and members of the community need more help, not less. So where will the cuts come from?

To be sure, some reductions in the overall budget could come on capital projects where $154 million was due to be spent in the current financial year. But spending in this area needs to be maintained, to inject some liquidity in the economy in the event of private sector construction falling or an overall economic downturn.

Politically, this presents several problems for Ms Cox. She has set a 10.5 percent spending target that may not be met, giving instant ammunition to the Opposition if she fails to meet her targets.

By refusing to reduce jobs (and Government employment numbers have jumped during the PLP's tenure), she is again setting herself up for criticism in the event that jobs are eventually shed.

Reductions in Government travel, the mothballing of Government cars and advertising bans just won't do it.

It is worth noting that while Premier Dr. Ewart Brown has cancelled a trip to the Azores, possibly saving several thousand dollars, his Tourism Ministry is still advertising for three new top jobs which will cost the taxpayer $300,000 in new salaries. This is where prudence would be wise.

Similarly, and this may be in the works, Government spent $15 million on consultants in the last financial year; again, this would be a good area to cut. Ms Cox is right to rule out tax increases at the present time. Adding to the tax burden might well guarantee a recession.

But in the absence of being able to raise revenue elsewhere, and with current revenues likely to fall, she is unwise to protect all Government jobs when that is the obvious place to cut, albeit with some political cost.

At the very least, capping Government employment levels and aiming to reduce staffing levels through attrition where feasible would help to control expenditures. Certain areas would inevitably have to be ring-fenced, such as the Police.

Others would be available for cuts. One would be to kill the tone-deaf proposal apparently made on behalf of backbench MPs to raise their salaries closer to those of Cabinet Ministers who got a massive raise a couple of years ago.

Here's a better idea: Ministers, in the interests of economising, should reduce their salaries by ten percent for the duration of the economic crisis. That would make little difference to the overall budget problem, but would at least be leading by example.