Posted: Tuesday, May 26, 2020. 5:55 pm CST.
The views expressed in this article are those of the writer and not necessarily those of Breaking Belize News .
By John Saldivar MSc (Econ): As Belize attempts to recover from the economic impact caused by the worldwide COVID-19 pandemic, jobs need to be created, industries need to be established, and our economy needs to be rebuilt. This economic recovery at least for the next twelve months will have to be mostly internally driven. Agriculture, infrastructure and construction, industry expansion, digitization, and tourism can be the five pillars of our economic recovery plan. Part III of Belize’s Economic Recovery Plan focuses on creating an infrastructure and construction boom.
AN INFRASTRUCTURE AND CONSTRUCTION BOOM
For any economy undergoing structural change a major challenge is skills training. Until the workforce can be retrained or skill sets can be matched with employers, the best candidates for immediate impact on job creation are those industries that require minimal or no training. Road infrastructure and housing construction investments are therefore very good candidates for rapid job creation.
Already government has programmed a couple hundred million for various highway construction projects including the Coastal Highway, the Caracol Road, the Sarteneja Road, the George Price Highway (already underway), and the Philip Goldson Highway (also already underway). These projects should be fast tracked to rapidly create up to three thousand new jobs.
A feasibility study should also be taken to determine the appropriateness of tolling all or portions of these roads to provide the financial stability for their maintenance which if not provided for will put additional strain on public finance.
A dialogue must be started between Government and private contractors and investors to explore public private partnerships and build, operate transfer models to finance the construction of other vital roads in the national road network as well as the construction of new public buildings across the country to reduce government’s office rental bill. These partnerships will reduce government dependence on public borrowing to spur the construction boom and has the potential to provide another five thousand jobs.
A housing construction boom will similarly be timely in absorbing some of the unskilled labor dislodged from the tourism industry. Simultaneously, housing construction is in line with reaching our millennium goal of lifting our people out of poverty and providing adequate shelter for all. A roof over our head is a human right not a privilege.
Given the huge unplanned outlays already taken on by government most of which have had to come from lending sources, it may be untenable at this time for public funds to be used to spark this boom. Creative incentives must therefore be found to direct private sector funding to a massive housing construction boom.
The Central Bank can look at the classification of the mortgage portfolios of commercial banks, or even the deposit rate relating to such portfolios. This should incentivize banks to ramp up lending to housing construction.
As interest rates fall, those who can afford to borrow from the banks will do so, however, we must also explore a modest government rental subsidy and rent to own program for those who do not have access to commercial borrowing. The concept of starter housing must be adopted to reduce the initial cost of obtaining a roof over one’s head. Starter homes allow the family to have a basic shelter with an affordable monthly mortgage while completing the house as their economic situation allows. Private investors with funds to construct homes and apartment complexes can participate in a program where upon completion of the house and selection of qualified families, government can subsidize a portion of the rent and implement this program along the guidelines of the existing conditional cash transfer program. This rental subsidy program should therefore qualify for international funding from agencies concerned with poverty alleviation. This construction boom spurred by investments in roads, housing and public buildings should create another eight thousand construction jobs.
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