Curtis Dickinson told MPs that the projected budget deficit for the 2020-21 fiscal year was estimated at between $275 million and $315 million.

“This level of deficit is not only unsustainable, but economically and fiscally imprudent,” Mr Dickinson said.

“When considering the current high level of public debt, the Ministry of Finance regards this level of deficit as a serious challenge.

“Total net government debt outstanding could rise to approximately $3 billion, which is $100 million above the current statutory debt ceiling of $2.9 billion.”

Unemployment benefits alone were likely to cost about $44 million, Mr Dickinson said, while he estimated that the Government could have to pay $10 million on its airport minimum revenue guarantee.

Another $20 million of unbudgeted expenditure is earmarked for the ministries of health, national security, legal affairs, public works and the Cabinet Office departments, as well as a $12 million grant to the Bermuda Economic Development Corporation to help distressed small businesses.

Government revenues were likely to come in at between $175 million and $200 million short of the $1.12 billion projected by the Budget, Mr Dickinson said.

With an eye on the future, the finance minister said the crisis “must be seen as an opportunity for a profound shift”.

“Any Covid-19 reform programme must be multipronged,” Mr Dickinson said.

“It is also important that this plan be far-reaching, comprehensive and supported by a broadly based consensus across all the key stakeholders, including the trade unions and church groups.

“However difficult it may be, opting out from taking tough decisions at this time is no longer an option.”

Credit rating agency Standard&Poor’s last month affirmed the Government’s A+ debt rating, but revised its outlook to stable from positive. A lower debt rating would cause bond investors to demand a higher interest rate, raising the Government’s debt-servicing costs.

“I am all too conscious of the significance of our debt rating and the impact of a potential rating downgrade,” Mr Dickinson said.

“Therefore, we must be judicious in the use of additional debt and keep an ongoing active dialogue with the rating agencies. Accordingly, the ministry’s target is to keep the deficit for 2020-21 below $175 million.”

Mr Dickinson said the deficit projection was based on no action being taken to reduce expenditure, but in reality savings would be made, including delaying the start of planned capital projects by six months, a hiring freeze, a ban on non-essential travel and reductions in discretionary spending on items including grants, consultancy, training, materials and uniforms.

He added: “To reduce the deficit further, other temporary payroll or government employee overhead savings will have to be considered.”

Last week’s talks with public sector unions had been “fruitful”, Mr Dickinson said.

“I am convinced that all parties understand the need to collaborate to develop solutions to the fiscal challenges that we are dealing with,” he added.

“The Government has already identified an estimated $50 million to $60 million in potential savings and we are looking forward to working with our union partners to identify even more.”

Michael Dunkley, an opposition One Bermuda Alliance MP, asked Mr Dickinson when a decision would be made on pay cuts for MPs, senators and civil servants.

Mr Dickinson described the talks with unions last week as “introductory” and involved the Government laying out the state and direction of public finances.

The talks would continue over the coming two weeks, he added, and would be aimed at finding opportunities to reduce costs and narrow the deficit gap.

He added: “With respect to pay cuts for civil servants, it is my expectation that MPs and senators will step up to the plate, similar to the concessions given by public officers.”

Mr Dickinson said his ministry was evaluating probable economic scenarios, including some that could result in “even more severe reductions in business conditions, employment and government revenues”.

He added: “This will allow for further temporary emergency measures to be taken, if necessary, so that Government can maintain essential public services and continue to service the needs of our community and as required to protect our national interests.”

Craig Cannonier, the Opposition leader, asked Mr Dickinson about the time frame from when a loan application was made to the BEDC to when the applicant could expect the cash.

Mr Dickinson said the BEDC, rather than his ministry, was responsible for administering the programme.

David Burt, the Premier, said the time frame for a decision from the BEDC on an application was “within two weeks”.

Patricia Gordon-Pamplin, the shadow finance minister, asked Mr Dickinson for a detailed breakdown on identified cost savings.

Mr Dickinson said that the “lion’s share” of any possible savings would be from “salaries and wages associated with unfilled or vacant, funded positions”.

He declined to give specifics, adding that the savings targets were based on “preliminary estimates”.