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What Will The Future Of Belize Look Like Beyond 2021?

Posted: Tuesday, May 11, 2021. 8:29 am CST.

The views expressed in this article are those of the writer and not necessarily those of Breaking Belize News.

By Charles Leslie Jr: In Barrow’s 2018/2019 Budget Speech he stated: “The immediate goal is to reduce the debt to πŸ–πŸŽ 𝐩𝐞𝐫𝐜𝐞𝐧𝐭 𝐨𝐟 𝐆𝐃𝐏 𝐒𝐧 𝐭𝐑𝐞 𝐧𝐞𝐱𝐭 𝐟𝐒𝐯𝐞 𝐲𝐞𝐚𝐫𝐬.”

This never happened under the UDP.

It needs to happen.

Optimally, we need to reach 60% of GDP, which needs to be done in the next 10 years, if Belize is to survive economically.

In 2021 our debt is still over 90% of GDP.

Reduce our debt to GDP ratio to at least 80% within the next 5 years should be the top priority for the country of Belize, however, how can that happen:

  • without reducing the wage bill, which is at over 80 cents on every dollar?
  • without collecting outstanding taxes?
  • without tax reform, which should also impact land reform?

The unions have a unique opportunity to work along with and help the Government to reach a goal of at least 80% +/- debt to GDP ratio over the next 5 years.

Let me stress: getting our economy back on track and our debt to GDP ratio under control should be our #1 priority right now.

The GOB needs help right now, not resistance and being strong-armed into spending money we do not have.

Bondholders seem to have run out of patience.

In our 2017 restructuring agreement with private external bondholders, we committed to a primary fiscal surplus of above 2% of GDP 2018/2019 budget and the subsequent 2 years.

We are now in 2021.

Indications that more spending on 𝐰𝐚𝐠𝐞𝐬 and public investment and weaker revenue than expected has put the budget’s target of 2% at risk.

This was from an IMF report in 2019.

Not sure where we are now.

With the Covid-19 pandemic starting in March last year, I am sure that we have fallen below that 2% commitment.

This means: if Belize fails to meet the primary fiscal surplus target (2%), the Belizean people will pay interest payments on the restructured bond on a quarterly rather than a semi-annual basis (for the subsequent 12 months that the target is missed).

Remember the increase in social security in 2019? Well, that increase was to shore up the sustainability of the social security scheme.

I think it was to give GOB access to more of the people’s money, indirectly, because of horrible fiscal management. But, that is an argument for another day.

I won’t speculate why:

But if we had Escape Clauses built into our fiscal framework via fiscal responsibility law (FRL), we would have probably weathered the covid-19 storm a lot better.

It would have permitted our GOB a rapid response to natural disasters, which I presume something like covid-19 could have been anticipated via Bill Gates 2015 Ted Talk.

The guy didn’t become a billionaire by talking foolishness.

This would have allowed our country to have been prepared for major adverse shocks.

The clause would have pre-defined a clear list of events or shocks that could have a serious adverse impact on public finances – and based on Gates’ Ted Talk, it wouldn’t have hurt to throw a worldwide pandemic on the list.

Back to bondholders:

When it comes to bondholders wanting Belize to sign on to an IMF program, Carl Ross (bondholder) stated: “Maybe it’s somewhere between a request and a demand…”

Read between the lines.

Decisions made in 2021 by GOB and the unions, will solidify the future of Belize for the next 50 years.

What will that future look like?

 

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