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COVID-19’s effect on Belize’s economy

Belize remains one of the three countries in this region that are yet to declare a confirmed case of COVID-19.  El Salvador and Nicaragua are the other two countries that have taken precautionary measures. 

Belize remains one of the three countries in this region that are yet to declare a confirmed case of COVID-19.  El Salvador and Nicaragua are the other two countries that have taken precautionary measures.  In the case of El Salvador, they have closed its borders and the only way you can enter the country is if you submit to a mandatory 30-day isolation at their quarantine centres.  While the country is still allowing for food imports, their extreme measures will be costly on the country’s economy.  On the home front in Belize, Prime Minister Dean Barrow expressed the same sentiment saying that Belize will have to find ways to recover as the country is looking to invest millions as the COVID-19 threat remains alive.  In yesterday’s press conference the Prime Minister gave a brief synopsis of where we are in terms of our economy.

Rt.Hon Dean Barrow, Prime Minister of Belize: “With regard to foreign exchange the commercial banks are at $315 million US, the Central Bank of Belize is at $250 million US so together we have $550 million US that’s a little over half of the value of all 2020 imports just to make the point that we can find it, it’s what happens after we find it we use it and then there is nothing left but it’s not as though there is any immediate worry of starvation because we don’t have the foreign exchange to purchase the imports we need from abroad and it’s not just food stuff. If we will eat what we grow as George Price said a long time ago we still need the essential inputs. So I didn’t want to talk about all this because as I said again while this is so and this is undoubted and this is factual you have to worry about what comes after but that’s in the long run and as you and I have said to one another from time to time in the long run we’re all dead.”

As we noted yesterday, the Government has discussed with the Leader of the Opposition various ways in which the poor and middle class Belizeans would get help in surviving the economic downturn that is anticipated once COVID-19 reaches the country.  The monies being allotted for aid will be managed by Dr Carla Barnett and Chris Coye.  In the following clip, Prime Minister Barrow speaks primarily on the help to be given to those in the tourism sector.

Rt.Hon Dean Barrow, Prime Minister of Belize: “An immediate priority would be the people who have lost jobs in consequence of the pause or the cessation for now of the cruise industry. I believe that the BTB has a record I believe most of these people are registered with the BTB but in any event the two Czars and whoever they use as assistants will have to work with the BTB. These are the mechanics, the logistics of doing this and I don’t think that neither the Leader of the Opposition nor I would be in a position to give you the details, those things will have to be worked out. What we are concerned with is that at the very top there are persons who we can trust of the requisite experience and skill we can trust them to absolutely ensure that in fact there is not just transparency and honest oversight but that there is efficiency with respect to the disbursement of funds. Carla was vice president of the CDB I’m telling you personally Chris Coye is a wizard financial and legal so I believe that we are going to be in good hands in that regard.”

According to Leader of the Opposition, John Briceno, in the tourism industy aid for Belizeans will also come via tax relief for the hotels and local air carriers.

Hon. John Briceno, Opposition Leader, People’s United Party: “I think what’s also important is that we decided to set up a committee, a committee will be formed from the different relevant agencies within government and BTB to look at the issue of tax relief measures as we agreed there that as this committee we have to set it up quickly tomorrow and for them to get back to us hopefully by next week with some concrete measures again to give relief to all of these people who are going through a very very difficult time.”

Rt.Hon Dean Barrow, Prime Minister of Belize:We’re already agreed that the 9% tax would not be collected by the BTB or that only half of it to be collected which caused some wit to say but half of nothing is nothing. The way arrivals are plummeting there will soon be no hotel tax to collect but in the mean time certainly to the extent that the hoteliers still have some degree of occupancy and collect the tax they would either be able to keep half or of Ms.Bevans, it will come right back to government she has marketing contracts that she has to service but it may well be that the agreement is that they not pay the tax at all not even a portion to the BTB for the foreseeable future until we can start recovering.”

Hon. John Briceno, Opposition Leader, People’s United Party: “May I add one more thing ? For instance the airlines, local airlines as it is when I spoke to both of the companies yesterday they have already lost about 50% of the business and so they are also crying out from the rider’s fees and all the other taxes that are expected from them to see what kind of relief we can give them whilst this whole thing is stabilized. Hopefully we get out of it as quickly as we possibly can.”

Yesterday we told you that the Government has been looking at various financial sources to sustain the country during the COVID-19  crisis.  So far he has identified seventy five million dollars in loans and grants.  It may seem a lot of money but according to the Prime Minister thirty five percent of those funds could be well depleted within two months.

Rt.Hon Dean Barrow, Prime Minister of Belize: “For example when we talked about if we paid for 25,000 unemployed persons in eight weeks we would already have exhausted the $20 million so because we ultimately have something like $75 million dollars I would think that we certainly can afford to look confidently at being able to provide for three months. Now I’m no expert but again you keep hearing that the virus doesn’t live very well in warm climates and as the summer in Belize ramps up we have to hope and feel that we will never see the sorts of proliferation that there has been in other countries but once global travel is down, once the airlines don’t fly it won’t matter if we have few or even no cases – it will matter  from the point of view of the health of our population but from the population of the economy that is going to be cold comfort. As I said though if the airlines are still going to be interested in short haul flights, if perhaps I should say when there are a few cases here if by the height of the summer if when you start getting into June and July cases start decreasing, disappearing because of in this case our good fortune in terms of our extremely hot summer weather that would be lovely but as I am looking at things we can manage twelve weeks I think, not comfortably but we can manage and if we have to go beyond that we will go beyond that. We will do what we have to do.”

In yesterday’s press conference it was also mentioned that the Central Bank of Belize has been in dialogue with the local banks requesting some relief of sorts to their customers.  Prime Minister Barrow explained to the press that while they cannot force the banks to help in this regard, there are two banks that have expressed a willingness to do so.

Rt.Hon Dean Barrow, Prime Minister of Belize: “I don’t know that the governor of the Central Bank, there are certain things she can do but I don’t think she can tell the banks “You must advance new loans. You must impose a moratorium on current loans.” but as I said on the last occasion certainly one bank and that’s Atlantic Bank had said already to me that they were prepared to do it I know that Steve Duncan’s bank Heritage has said the same thing so I don’t expect that there will be any difficulty from the banks at all.”

With Belize still having time to prepare for the COVID-19 arrival and with the government sourcing funds to mitigate the economic impacts, there is the hope that the public sector workers would do their part in engaging in cost cutting measures.  Prime Minister says he is not as hopeful as the Opposition Leader that this would be done but it is worth a try.

Rt.Hon Dean Barrow, Prime Minister of Belize: “Remember I said that I think the hope to do that really hangs by a thread. I don’t want to be discouraging but I indicated that for me I could have cared less about the 2% cost saving. The Leader of the Opposition quite responsibly said “but you have to pay this back.” What I’m trying to say is I don’t place a great deal of faith in the success of the cost saving measures but we have to try man because it is something as the leader pointed out if we’re going to be responsible we should be prepared to live with some sacrifices so that this huge debt that we have to rack up to take care of those at the margins and to take care of the middle classes and to take care of the business owners we surely will make sacrifices in government to help to assist in paying back that debt which will come due very quickly.”

Hon. John Briceno, Opposition Leader, People’s United Party:”If we can do the 2% that will virtually pay off this $25 million dollar loan and it will also required that the government employees that they could consciously look at where it is that they could cut here and there to make sure that we cut. 2% in the grand scale of things is not a lot, you know 2% of a billion dollar budget but it could be enough to pay that $25 million dollar loan.”