PM’s Budget Touts “Bold, Belizean Recovery”
The much anticipated 2017-2018 Budget was considered a crossroads for the Government and people of Belize. The country faces heavy external debts including the Belize Telemedia Limited settlement and arbitration awards as well as a weakened economy and low investor confidence; not to mention, the costs of the re-negotiated Superbond and the need to meet the salary adjustments for teachers and public officers. The challenge facing Prime Minister Dean Barrow and his administration is to avoid being too heavy-handed with the fiscal measures while maintaining their chosen course of action. The Prime Minister’s budget introduced this new “cautious consolidation”, which as Aaron Humes reports, means that the best is not quite here yet.
Things aren’t as bad as they seem. That seems to be the overarching message of the ninth presentation of the General Revenue and Appropriation Bill for 2017-2018 financial year as presented by Prime Minister Dean Barrow. But as promised about a year and a half ago, is the best yet to come? Sure, the economy contracted for the first time under the current run of the U.D.P. in administration, and Government continues to battle to find solutions to debt problems and a sluggish economy. But the Minister in charge of the public purse says Government is more committed than ever to ensuring that all are not left behind.
Prime Minister Dean Barrow
“Credit to the private sector expanded last year and is forecast to broaden even more in 2017; interest rates have fallen yet again, and should fall further; the health of the commercial banking system is the best in over a decade with non-performing loans falling below five percent; foreign reserves easily surpass the adequacy benchmark; and correspondent banking arrangements are the steadiest since this de-risking challenge first arose. These are the factors which make for optimism. These are the ingredients that help to solve the objective difficulty of our economic and fiscal circumstances. What are those circumstances? Sixty cents of every dollar government collects goes directly to wages, pensions and benefits for fourteen thousand public servants, while another twenty cents pays for the goods and services that support the needs of our citizens.”
The 2016 contraction in gross domestic product of zero point eight percent is blamed on agricultural setbacks for all major crops exported by Belize except for sugar. But construction, utilities and tourism slowed the fall to allow for a modest decrease in unemployment and inflation kept below one percent year-over-year. In all, the Government came in about one point six percent below projections in deficit and near five percent by the end of the current fiscal year. But in line with the rest of the region, the P.M. says Belize is on its way back up.
“Here at home, the Central Bank of Belize expects an economic recovery in 2017 with real GDP growth between three percent and three point five percent. The improvement is based on an expected upturn in crop and livestock production as well as higher farmed shrimp production based on the field trials’ outcome in late 2016. In the secondary sector, citrus juice production and petroleum extraction will dampen output, while services should remain buoyant with continued expansion in tourism, transport and communication, the distributive trade and government services.”
After seven years of heavy deficits, the Government is projecting a small overall surplus of just six point seven million dollars, contingent on approval of more than eighty-eight million for loan amortization requirements and one hundred and eighty million to complete the settlement of the B.T.L. arbitration award. But the general taxpaying public will also pay their share, whether on Belikin and Kubuli beer or light bills above a hundred dollars. The Government aims to raise more than eighty-eight million dollars this way, in addition to freezing spending by Ministries and Departments beginning about mid-way through the current fiscal year. The Prime Minister also confirmed that statutory boards will now be required to contribute to the Government purse.
“Now, satisfied (unfortunately, as the math has shown) that the cost reduction as well as the statutory board contribution must be supplemented to achieve our consolidation targets, Cabinet proposes the following limited measures: one, we’re going to adjust the excise levy on aerated water, beer and stout, cement and fuel to generate zero point seven-seven percent of GDP; two, we will amend the departure fee for non-Belizeans, travelling by air, to forty dollars, to yield zero point three-zero percent of GDP; three, we will bump the environmental charge on imported goods by one percent producing zero point four-one percent of GDP; next, we will shift the social fee on Free Zone cigarettes (only in the Free Zone) to twenty percent, generating zero point two-nine percent of GDP; we will lower the tax threshold for electricity consumption from two hundred dollars to one hundred dollars, yielding zero point one-nine percent of GDP; as it is now, to help poor people, you pay no G.S.T. if your bill is under two hundred. We have checked and poor people’s bills don’t go above one hundred. So we’re lowering it, so that poor people [will still be] protected, and once you pay one hundred dollars or less as your electricity bill, G.S.T. will not be charged on it. Finally, Madam Speaker, we will amend by fifty basis points the stamp duty on foreign exchange permits to yield zero point two-two percent of GDP.”
Capital III projects involving investment in infrastructure are limited to existing projects such as the Belize City Sports Center, Hummingbird, George Price and Philip Goldson Highways among others, all, said the Prime Minister, are funded by grants and existing funding and not new loans. But the Government’s main priority, said Barrow, remains the maintenance of its existing program and keeping Belize on the right side of the path to prosperity.
Prime Minister Dean Barrow
“What I, my Cabinet and my Party are most determined to preserve, is the goodwill of the people. That is why, as this budget demonstrates and consolidation notwithstanding, we will continue to protect the poor and deliver: job security not retrenchment; (Applause) salary increases, not wage and increment freezes; (Applause) pension protection not pension cuts! (Applause) And a durable Belize dollar in a growing economy, never… (Applause) Never, ever, devaluation or economic decay.”
From the National Assembly, Belmopan, Aaron Humes reporting for News Five.
The Budget Debate takes place on Thursday, March twenty-third and Friday, March twenty-fourth.