told MPs yesterday.

But he warned closure of the Base would have "severe'' implications on the Island's financial health.

Reporting on the country's regular economic check-up, Dr. Saul said 1993 was on target for the most tourist arrivals since 1988.

He estimated a total of 570,000 -580,000 visitors by the year's end, "one of the best ever''.

There had been a "disturbing'' drop in the length of vacations, he said. But for the first time since 1989, all major hotels would be open through the winter.

And latest figures showed that for the first time since early 1991, average spending by tourists was up.

International business was continuing to grow, and spending in shops had "improved sharply'' in recent months.

There had also been "some decrease'' in unemployment this year, he said. The number of people getting social assistance had gone down, and so had the total amount paid out.

But Dr. Saul spelled out just how much the Base contributes to the Island's financial well-being.

He said that in 1992 the cost of running the airfield was about $5.6 million in terms of maintenance, air traffic control, and crash and fire services.

Weather forecasting cost another $1.6 million, and search and rescue more than $700,000.

"These figures are probably under-estimated because they exclude resources shared with the military Base,'' he said.

"In addition, in 1992 the US Bases employed 102 Bermudians at a cost of $4.2 million in wages and other benefits.

"It paid an estimated $12.8 million in rents to Bermudian landlords in respect of accommodation for US civilian and military personnel, and a further $17.3 million to local companies for goods and services.

"Clearly, the closure of the Base will pose a host of challenges to Bermuda, but in the long run the return of 10 percent of our land mass will be of major benefit to the Island.

"The financial implications are severe. However, if the current economic recovery is sustained, and we are creative in facing these challenges, Bermuda should be well placed to meet the financial problems involved.'' Dr. Saul said there was "clear evidence that the economy has emerged from the depths of the recession and that a recovery is taking place.

"However, as I said on June 11, a recession is not like a light switch -- it cannot be turned off in an instant.

"Even when many of the leading indicators suggest that the recession is behind us, the financial implications of that downturn will remain with us for some time to come.

"Nevertheless, there are indeed grounds for greater optimism that the economy is strengthening and in a better position to meet the challenges that lie ahead.'' Tourism was set to improve further, he said, boosted by the 68-degree temperature guarantee and the new St. George's cruise ship.

Much of the improvement in the hotels' financial position had been achieved through heavily discounted room rates. But despite that, hoteliers' confidence was increasing.

Construction in the third quarter of the year had remained "disappointing''.

Only $15.5 million worth of projects had been completed, down more than 11 percent.

Major projects were "in the pipeline'', Dr. Saul said. But building techniques had changed and it was unlikely that the jobs boom of the 80s would be repeated.

At the latest count, inflation was at its lowest since 1977, and the continued "moderation'' in wage settlements was encouraging.

Preliminary figures from the Monetary Authority showed Bermuda had a current account surplus of $56 million in the first nine months of the year, compared with $46 million in the same period of 1992.

Government income and spending was broadly on target with the Budget. Income in the first six months of the fiscal year was $158.3 million, 1.6 percent up on the same period last year.

Current account spending in the first six months was $182.6 million, down 3.1 million.

On international business, which he said was "entirely complementary'' to tourism, Dr. Saul said figures for 1992 were now in.

The proportion of Bermudians working in the sector had gone up, from 64 percent to 64.8 percent.

Total foreign cash earnings from international business had gone up 10.7 percent, to $467.9 million.

The sector had continued to grow during 1993 and Bermuda was now "the envy of the world'' for its insurance industry.