The Government of Belize said that if it reduces fuel tax by two dollars it would translate to a loss of seventy million dollars in revenue. This, according to the government, has the potential to completely de-fund the Judiciary, and the Ministries of Human Development, Agriculture, Transport and NEMO, and Works. It says that public officers would not be paid and essential services provided by these ministries would collapse. It’s a scary scenario, one which many hope does not happen. Last month, former Prime Minister Said Musa called on the government to find other means to generate revenue in order to lessen the tax burden. While many calls have been made, Government is not expected to reduce fuel tax. It needs it to continue functioning and keeping the economy stable. Belize, many Caribbean nations, has a small open economy. The country’s exports have been overshadowed by imports for many years. Former Central Bank Governor for Barbados Dr. DeLisle Worrell says that the Belizean Government must adapt and implement a set of tools in order to see the economy grow.
Dr. Delisle Worrell Former Central Bank Governor Barbados: A critical tool in a small economy is the Governments expenditure, the tax policies and borrowing policies and so if I were to summarize the advice for successful economic policy in small open economies it would be that Government should always ensure that its current savings is ongoing. The ongoing cost of running the Government and paying for supplies and paying wages and so on is less than the amount of tax receipts that it gets on an ongoing basis that it receives and that every month there is a little savings on the current account of the Government’s activities which can put towards infrastructure and towards investment and things that will increase the capacity of the economy: schools and hospitals, roads etc. so that what it borrows whether it borrows domestically or borrows abroad can then be added to that domestic savings, that saving that the government has made on its current account to ensure that all borrowing contributes to building capacity for the future.
Dr. Worrell is regionally and internationally renowned scholar and policy maker in the fields of economic and finance.