Fiscal Consolidation Is a Must, Says PM Barrow

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Updated: November 14, 2016

The International Monetary Fund projected that Belize’s Gross Domestic Project will decline by one point five percent in 2016, in part due to the damage inflicted by hurricane Earl. According to the IMF, in the absence of a radical change in policies, rigid current fiscal spending, particularly the public sector wage bill, would fuel high fiscal deficits and add to the already high debt burden. Financing constraints would reduce public investment. The current account deficit would slowly improve due to a gradual recovery in major commodity exports, but would remain high, indicating a weak external position. This deficit, combined with remaining payments for nationalized companies and increased debt service, would reduce international reserves to uncomfortable levels. So how does the Barrow Administration plan to deal with this problem? Would that mean that taxes will be increased? That is what Prime Minister Dean Barrow was asked at the PGIA on Saturday.

DEAN BARROW

“We’ve made no secret of the fact that there would have to be a degree of fiscal consolidation and so there is going to have to be a tax restructuring as well as a bond restructuring exercise that we need to undertake that we have already started on. The key though, and this is why Dr. Barnett was brought into the Cabinet, the key is that the government will not get ahead of the people, will not get ahead of the commercial sector, will not get ahead of the business sector so that whatever we do and we will not do and we won’t do anything before the next budget which is not that far away; whatever we do for March will be as a consequence of the most intense consultations you can imagine. It doesn’t mean that after we have engaged everyone that what the government does will have the support of everyone but nobody will be able to say we’ve been blindsided and nobody will be able to say I didn’t have an input in so far as the process is concerned. I think given the times that is about the best we can do or the best we can hope for.”