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May 27, 1999

Workshop held on private and public sectors

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Lack of Financing, the Value Added Tax and high utility rates are among the obstacles of doing business in Belize. This is according to a 1997 survey conducted by the Inter-American Development Bank. Today the results of the survey and economic data from the region were discussed at a workshop entitled, “Private Sector Development and Public Sector Reform: two sides of the same coin”. While none of the participants today were surprised at economist Jose Juan Gomez’s findings that Belizean banks have been tightfisted when it comes to lending and that interest rates are among the highest in the region, they were startled to discover that Belize, which has the fastest growing economy in the region and one of the lowest unemployment rates has lagged behind our Caribbean and Central American neighbors in private investment and export growth. It was also revealed that our electricity rates are among the region’s highest and that we are paying the most for telephone and Internet services. Prime Minister Said Musa said government has been able to get B.T.L. to reduce its international rates somewhat and will continue to push for lower rates. The P.M. said electricity rates will also come down for low to middle income homes and industrial clients by the end of the year. However, getting the banks to lower interest rates is more difficult and complex.

Said Musa, Prime Minister

“As was pointed out in the presentation, the high cost of credit is a major concern in Belize. It has been so for the last seven or eight years. The presentation shows there has been no appreciable decline until this point in the lending rate when you go to the banks.

There is no easy solution to that because a lot of it is driven by market forces. The critical thing is to have a maintained fiscal position that the business community feels confident with and secondly to have sufficient reserves on the dollar to ensure that there is that confidence, greater investment, greater economic activity which will drive down the high cost of credit, bringing down interest rates. Already there have been improvements. I was told by the Central Bank interest rates have gone down by one point one percent since we took office. A lot of this has to do with the fact that we have been pumping more money into the system through the mortgage securitization for instance. That’s 46 million fresh capital coming into the system, through the program that we have with the government of Taiwan. Again housing is driving the economy right now. In other areas there are big investments being made in citrus by the Commonwealth Development Corporation. All these things have major impacts because of the small size of our economy.”

The two-day workshop is looking at the interdependence of the private and public sectors and will require participants to come up with a list of priorities for improving both sectors. The I.D.B.’s survey of Belizean businesses gave some insight into the perceptions of the business community. Those surveyed said they felt constrained by high port costs, difficulty in obtaining foreign exchange, a clogged court system, poorly defined trade licensing requirements as well as disinterested and uncooperative staff in government offices. The Prime Minister says while it is critical that we address these problems, Belizeans need to accept that sometimes we need outside help to make the necessary improvements.

Said Musa

“I raised today what I considered something that he have to start talking about. That is the human resource capacity of our country and whether there is not a need for us to be open about this thing and recognize that there is a need to bring in from time to time high caliber talented people from outside to assist us in the work of development.”

On Friday workshop participants will make their recommendations for improvements in the public and private sectors, and suggest ways the two can work together. Government Ministers will then give their reactions to the proposals. The workshop at the Radisson ends with remarks by Minister of Economic Development Ralph Fonseca.

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