State of the Nation’s Economy: Personal income down; unemployment, debt up

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Published by BBN Staff at February 11, 2021

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Posted: Thursday, February 11, 2021. 7:24 pm CST.

By Aaron Humes: The Ministry of Finance this evening released its findings of a preliminary analysis of the state of the national economy to date.

The Government is consulting with social partners in the public and private sector on the Budget due a month hence, but the figures quoted by the Ministry make clear Belize has very little wiggle room.

According to the Government, real gross domestic product (GDP) per capita – that is, the average income per person is down to $5,843 in 2020 from $7,412 in 2008 – a difference of $1,569 in 12 years. Between 2019 ($7,040) and 2020 alone, the figure slumped by $1,197. The 2020 figure is the lowest it has been since 1992 – 28 years ago.

The Government claims unemployment is almost 30 percent, almost triple from 10.4 percent in 2019; underemployment has increased from 22.7 percent to 38 percent, leaving more than two-thirds of the labour force (68 percent) looking for work. Belize’s unemployment rate is more than triple the average unemployment rate throughout the Caribbean and more than quadruple that of Central America.

Government revenues fell by almost 30 percent, or over $300 million, in 2020. 36 cents out of every dollar spent on government expenditures is being borrowed to make payments, while 83 cents out of every dollar of government revenues is being spent on wages, salaries and pensions. Wages and salaries in particular have almost tripled – from $234 million in 2008 to $684 million in just 12 years. Heightened spending coupled with revenue shortfalls led to financing requirements of over half a billion dollars in 2020.

On the matter of debt, the more than $500 million in financing requirements racked up last year is almost equivalent to the total debt taken on between 1981 and 1998 ($700 million), covering the successive administrations of the late George Price and Sir Manuel Esquivel.

Since 2008, the Government claims, debt has gone up by almost $2 billion dollars, the majority of that being domestic debt (tripled from $333 million to $1.3 billion) and external debt outside of the $1.1 billion Superbond (doubling from $830 million to $1.77 billion). Creditors of the latter include bilateral credit from the Bolivarian Republic of Venezuela and the Republic of China (Taiwan), and credit from international financial institutions (the Inter-American Development Bank (IDB), Caribbean Development Bank (CDB) and World Bank among them).

And finally, at 134.1%, Belize now has the highest debt-to-GDP ratio in the entire Caribbean and Central American region.

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