second Budget -- but sounded a note of caution over Government debt.

A spokesman for the Bermuda Chamber of Commerce said debt for the coming financial year will increase by $31 million to a total of $176 million -- when the 1991 debt was zero.

The spokesman added: "At the same time, overall Government expenditure continues to increase.'' The spokesman said: "The Chamber would like to see the Budget process move towards one which reflects balance sheet accounting which would more clearly identify Government priorities and management responsibilities.'' And the Chamber called for a return to the former policy of paying for capital expenditure out of current surplus and said the debt ceiling of $185 million should not be increased as implied in the Budget.

But Dr. Gibbons said -- while he and the Chamber were in broad agreement over the financial future of the Island -- the cash was mostly being used to help restructure the Island's schools, for Police and public safety and health care.

He added: "This is a budget about people and these three areas are very important. I would submit we have our priorities right.'' Dr. Gibbons added he would like to be able to pay for major projects out of current expenditure surplus.

But he said: "Debt is a tool which, if used properly, allows us to support large capital acquisitions. But education alone will cost a total of $120 million and clearly there is no way we could fund that out of the surplus on current account.'' Dr. Gibbons pointed out, however, that Government capital expenditure went through phases and there had been a particularly heavy demand in recent years.