Government passed a bill allowing borrowing to increase last night as it paves the way for private financing to fund major capital projects. Finance Minister said the idea, popular in the UK, could be used to finance the replacement of the Causeway crossing, the new Police/Magistrates' Court, replacing the hospital and finishing the National Sports Centre.

The Government Loans Amendment Act 2005 allows the limit of public debt to be increased from $250 million to $375 million ? about nine percent of Bermuda's 2004 estimated GDP of $4 billion.

She told the House although Government wanted to use private capital in public-private partnerships for capital projects, for accounting reasons it was necessary to raise Government's debt ceiling. Financial institution's were keen to assist in major public sector capital projects said Ms Cox who said the time was right for a change ? if it could be proved it would give value for money and be cheaper than the old method.

It would mean large projects could be started quicker than the traditional method of Government putting a bit aside in each budget. She said a study by Arthur Andersen and the London School of Economics in 2001 had shown private financing initiatives (PFIs) saved an average of 17 percent compared to traditional projects.

And she said a UK Government Treasury review in 2003 of 450 PFIs showed 88 percent came in on time or early with no cost over-runs whereas 70 percent of non-PFI projects were delivered late and 73 percent were over budget. However she said PFI project procurement times averaged at 22 months and projects under $20 million racked up high overheads.

She said: "Consequently the UK Government does not now recommend PFI for small projects unless a number of smaller schemes can be sensibly bundled together so as to gain economies of scale."

In Bermuda's case PFIs were only cost effective for projects costing at least $40-50 million said Ms Cox.

But she said PFI could be considered for:

?the Causeway at $60 million+

?the new Police/Magistrate's Court at $40 million+

?the replacement of the hospital at $100 million+

?the completion of the National Sports Centre at $70million+

?the replacement of the international terminal building at $40 million+

?a new government building to house staff in rented accommodation at $45 million+

Opposition Leader Grant Gibbons warned raising the debt limit could backfire if interest rates rose and debt servicing costs escalated. Ms Cox had missed off other large projects ? the Baselands clean up and changes to docks and shipping lanes for new mega cruise ships.