Government's debt ceiling was raised to $250 million to cover the costs of large projects, despite objections from the Opposition.

Finance Minister Eugene Cox told the House of Assembly on Wednesday night that raising the ceiling to just ten percent of the gross domestic product was "a long standing and prudent policy'' and timely because the last increase was in 1991.

But Shadow Finance Minister Grant Gibbons questioned the move, saying raising the ceiling to undertake large capital projects in an uncertain economy and potentially rising interest rates was faulty economics.

Mr. Cox said the public "should not be concerned'' because the move was reflective of the "current success of the economy''.

He explained the increase was more than Government needed and was viewed favourably by international credit agencies.

Mr. Cox added: "I feel quite confident that we are staying within the prudent policy and in limited waters.'' He later called Opposition tactics "scaremongering'' and added that some countries, including relatively developed ones. have debts of up to 40 percent of GDP.

"The ladder may have to be raised in the next few years,'' Mr. Cox said.

"But current trends indicate that ten percent would not be breached.'' The Sinking Fund, which pays on the loans, and the Contingent Liability Fund would also protect against an overly high debt.

"You may have a doctoral degree,'' he said to Dr. Gibbons, "but I'm a professional engineer of 30 years and no, I'm not just going to run up the debt. It is common sense.'' Dr. Gibbons listed several capital projects and agreements Government has signed on to that may increase the debt to near the new limit within a few years.

The new projects, like the Berkeley Institute and National Stadium, 100 houses promised for the Bermuda Housing Corporation and guarantees to the builders of Castle Harbour may be too much he said.

"We ought to be careful going forward,'' he said. "Because we're getting pretty close to that $250 million when you add all those up.'' Dr. Gibbons also said economic indicators do not show a solid future and added that if the economy were to shrink, and the Gross Domestic Product were to go below the current level, the debt would be more than ten percent of the GDP.

He added: "Right now the interest payment is what the Youth and Sport Ministry budget is at $11.5 million. But when it starts to look like Education and Health, we should be worried.

"Interest rates are going to go up if (Alan) Greenspan has his way,'' Dr.

Gibbons said. "It's very easy to borrow. But at some point, somebody, and it will be our children, will have to pay.'' Environment Minister Arthur Hodgson replied that the Government's current debt had been incurred by the United Bermuda Party and his party had inherited several projects that it felt were necessary.

"We came into office realising that certain of these projects are beneficial to the country and now we face the decision,'' he explained. "Do we borrow or do we do away with these projects''.

Eugene Cox Grant Gibbons