The Bermuda Government will pay more than $310,000 per day in interest on its growing mountain of debt in the coming fiscal year.

And despite the $70 million of cuts in public spending announced yesterday, next year’s Budget will run a projected deficit of $267 million, meaning that the net debt will continue to rise.

By the end of the next month, Bermuda’s net debt will total $1.77 billion — equivalent to nearly double the Government’s total annual revenue. At the end of March 2015, the net debt is projected to have climbed to nearly $2 billion.

Interest payments are expected to total $113.5 million in 2014/15, making it a bigger budget item than Public Works, National Security, or the Finance Ministry.

Mr Richards said in his Budget statement that Government would draw from the Sinking Fund to pay off $120 million of debt that was due to mature in May and June of this year. That will reduce interest costs by around $7 million.

Last year, the Island raised $750 million on the international bond markets, and a further $50 million in the Bermuda dollar market, in order to take advantage of low interest rates and meet borrowing needs for several years.

“Last year Government set up debt related targets, or rules, that were appropriate for an economy the size of Bermuda’s,” Mr Richards said. “These rules committed Government to keep public debt at such levels that the net debt/GDP ratio would not exceed 38 percent.

“Additionally, Government recognised the desirability of achieving a net debt/revenue ratio that would not exceed 80 percent and a debt service cost/revenue ratio that would be below 10 percent. These were targets we would work toward over the medium term.

“As at 31 March 2014, the net debt/GDP ratio will be 32 percent, the net debt/revenue ratio will be 199 percent, and the debt service cost/revenue ratio will be 16 percent. There is much work to do to bring them in line with our targets.”

Revised estimates for the year ending March 2014 show that revenue exceeded estimates by $21.4 million. However, expenditures were $32 million more than planned, prompting Mr Richards to emphasise the need for greater efficiency.

Some of the cost overruns had occurred as a result of the massive bond issuance. Others, Mr Richards said, “have occurred as a result of inertia and inadequate budgetary controls within the Government”.

“This is clear evidence that the old corporate culture in some ministries of Government, the absence of strictness and accountability as it relates to budgets, has not yet been squeezed out.

“Surely, some expenses are more difficult to project than others — financial assistance and the Bermuda Hospital subsidy for example have increased to support families in need — nevertheless the problem remains.”

Revenue is forecast to rise 3.4 percent in 2014/15. The bulk of the increase is down to Customs duty, projected to rise by $25.7 million, or 14.7 percent.

Additionally, Mr Richards said: “The biennial adjustment of Government fees will be increased by about five percent for most fees and the anticipated increased yield should be $2 million-3 million.”

The projected budget deficit of $267 million will be down by $64 million, or 19.4 percent, compared to 2013/14. “So we are moving in the right direction but much more work is required,” Mr Richards said.