Austerity Measures Remain Uncertain as GoB Presents Report to Bondholders

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Updated: December 6, 2016

March 2013 saw the Barrow administration applauded by many after renegotiating the Superbond that came into effect by the Said Musa administration during the period 1998 – 2008.  That renegotiation reportedly saved Belize almost half billion dollars.  Fast forward three and a half years later and Prime Minister Dean Barrow is having talks with creditors for another renegotiation.  There is a 17-page document that was reportedly prepared to present to the bondholders in meetings held in New York City over the last few days.  While we are yet to hear from Government officials on how those meetings are progressing, we can tell you that the factors being presented to the creditors are mostly what the International Monetary Fund had to say in their October 2016 Article Four Report.  The first part of the report zoomed in on what has been termed, ‘an imperilled economy’; in that section the report spoke of an agriculture sector that has been impaired over the last two years with fish and citrus being hit by diseases and the banana sector experiencing financial troubles.  It also spoke of the oil sector that has been uneasy as production has plummeted to virtually zero with the fall in oil prices aggravating an already troubled sector.  The hit by Hurricane Earl was also noted as a damaging factor along with the fact that the strength of the US dollar has made way for an over-valuation of the Belize dollar thus harming the country’s competitiveness.  Several graphs and pie charts were used with reference from the Central Bank of Belize and the recent IMF Report to explain the country’s debt as well as GDP (Gross Domestic Product) and Forecasts for the coming years.  The nationalization of two utility companies in Belize was cited as a major factor that now lends to the economy’s hardships; although on page twelveof the report it was noted, quote, “GoB is satisfied that the acquisitions and its ongoing efforts to contest the legacy claims are in the national interest and has actually reduced the ultimate costs to taxpayers and the risks to creditors.”  End of quote. Salaries being paid out to public officers were another factor cited for the country’s capital expenditures.  In the section of consolidation measures, the report noted, quote, “The government’s fiscal policy initiatives seek to balance the need for fiscal consolidation and the equally important consideration of maintaining the stability of the economy. The government has calibrated its program to ensure that the policy package does not push the economy into a recession.”  End of quote.  Measures already taken were the fuel tax in January 2015 and March 2016 which did contribute to growth in the GDP.  While the report did not go into details as to what other measures will be taken, it was noted that, quote, “As part of its planning for its 2017/18 budget, the government is considering measures that would increase revenues by another 2% of projected 2017/18 GDP above previously projected revenues and reduce expenditures by 1% of 2017/18 GDP.  The government is organizing a public forum involving a broad spectrum of private groups to mobilize public support for the reform efforts.”  End of quote.  Prime Minister along with his delegation is expected back in the country tomorrow