Finance Minister Paula Cox says Bermuda faces "unprecedented economic challenges" and more capital projects could be axed as Government looks to save cash.

But her handling of the economy has been ridiculed by Shadow Finance spokesman Bob Richards who said Government was making things worse by cutting projects as Bermuda heads into a recession.

Last week Housing Minister David Burch announced a string of affordable housing projects had been shelved while the much-delayed Southside project has been slashed in size again.

Asked why homes had been the first to be dropped, Ms Cox said all Government spending was under review and other projects could also be on the chopping block.

She said: "Bermuda, along with the rest of the world, is facing unprecedented economic challenges.

"And every jurisdiction around the world has had to take a long hard look at how it will address these financial challenges."

She said Cabinet, as part of the annual budget, was now reviewing current Government capital spending.

"We have heightened our focus on the budget process due to the current economic outlook.

"So while the Housing Minister – in speaking to the lottery winners – took the opportunity to update on the areas within his remit, it should be pointed out that his approach is not unique, as this is something that Cabinet as a collective unit is looking closely at."

However there was no word on which projects are in jeopardy.

Government had given a target date of replacing King Edward VII Memorial Hospital by 2013, but nothing was put aside in the last budget.

And there was also a pledge to clean-up Morgan's Point ahead of a new hotel development there.

Capital projects mentioned in last year's budget include a new cruise pier in Dockyard which has already been started, and the redevelopment of Port Royal Golf Course, which must be ready for next year's PGA Grand Slam.

Urgent Care Centres at either end of the Island have also been promised as have renovations to Fort St. Catherine, refurbishment work at Paget Island and Ports Island, and continued improvements to national parks.

A year ago Premier Ewart Brown said he expected the National Sports Centre (NSC) would be finished by 2011 – if he remained in power that long.

And in March, Government said announcements on developing the NSC, including adding a swimming pool, would be made very shortly.

But nothing has been said since.

Shadow Finance Minister Bob Richards has blasted Government for axing capital projects such as the housing project just when Government needed to prime the pump.

Mr. Richards said: "They have no choice but to do this as a result of very poor planning and economic forecasting – they have to cut a lot of these projects. Only they know how much revenue they are going to be short by."

Mr. Richards said the UBP would be pressing the Government on how it aims to tackle the slow down when Parliament resumes in November.

A dismal tourism season and a slow down in the incorporation of new companies would further hit revenue but those two sectors were the ones that drove the Bermuda economy, added Mr. Richards.

"If the engine slows down the whole machine slows down. But they didn't see it coming, their Budget was all blue sky stuff in February, now they have to rush around trying to cut things.

"I am not surprised they are cutting, particularly capital projects – that's something they can cut if they haven't started it yet. "Whether we will have a new hospital? Well they weren't planning to build a new hospital when they thought they were rolling in dough so clearly we are not going to have a new hospital.

"Now it is so far on the backburner it is not even on the stove."

He said Government was having problems because it had not planned for the downturn although he said it didn't take a genius to anticipate difficulties back in February

Mr. Richards argued governments should spend less when the economy was booming to help avoid overheating and when the economy was slowing down they should increase spending to keep people employed.

"In fact they have done the opposite. They have spent like drunken sailors when the economy has been strong thereby overheating it.

"Now, when the economy is likely to be falling into recession, they are exacerbating the situation by cutting projects. They are helping to contract the economy. "To me this is disastrous economic management and it falls right at the feet of the Minister and the Premier."

Mr. Richards predicted more cuts in Government's capital programme.

"They increased the size of the Civil Service which they can't cut back. They have already had civil servants marching on Parliament so they have to cut the capital projects. Most of the capital projects that were imminent were housing projects. Yet there was a lot of pressure on the Government to build affordable houses."

Mr. Richards said after winning the election Government didn't need to have a big spending budget to curry favour with voters.

"There wasn't any politicking in it – they just got it wrong. It is text book example of bad economic management."