Government for allowing debt to grow out of control.

But Shadow Finance Minister Grant Gibbons immediately returned the fire, dismissing the claim as being "completely unfounded''.

Mr. Cox took said the former Government had incurred "a steadily increasing amount of national indebtedness'', resulting in a large slice of current resources being used to pay off past borrowings.

Debt charges for the past fiscal year were estimated to be about $9.62 million while contributions to the sinking fund established to retire the debt were $3.33 million -- totaling $12.95 million.

Mr. Cox warned that since much of the borrowing occurred in the upswing of the economic cycle, if Bermuda's economy was to stall a range of Government projects could have to be canned so debt could be repaid.

And although capital and current account budgets were expected to be in balance for 1998/9, he said this was the first time for that in 11 years.

The Government's outstanding debt was expected to be $160 million excluding sinking fund balances of around $17 million -- leaving the effective net amount of outstanding debt at $143 million.

His Government would "not exceed the legislated debt ceiling of $185 million'' in the coming year and would also keep any future borrowing at less than 10 percent of gross domestic product.

"Any new capital projects will be properly reviewed, estimated and costed rather than pushed ahead to meet politically expedient targets at a possibly higher cost to the community,'' he said.

And as a result the Government would be able to better position itself to face uncertainties in the world economy.

But Dr. Gibbons said he was surprised so much of Mr. Cox's time had been spent commenting on debt since Bermuda had relied much less on it than the vast majority of other governments.

"Quite frankly a net effective debt of $143 million is quite a low and favourable debt position for a country to be in.'' He said as a percentage of GDP, Bermuda's debt was just over six percent -- resulting in excellent debt ratings from respected agencies including Moody's as well as Standard and Poors.

"Most countries are up in the 50 to 60-percent mark with some recording debt over 100 percent of GDP.'' He said the surplus from the current account routinely went toward capital expenditure and had this year entirely covered it so there was no need for any additional borrowing.

And while Mr. Cox had vowed to keep debt below 10 percent of GDP and under the ceiling set in 1991 of $185 million, the UBP had also achieved this.

HOUSE OF ASSEMBLY HOA