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Jul 10, 2012

Heated budget debate expected

Normally, an official release would be sent regarding House meetings and though this Wednesday and Thursday’s budget debate is expected to bring out some fiery exchange between the two parties, strangely no release has been sent by the press office. Nonetheless, News Five will cover the verbal assaults and the budget debate extensively. But tonight, we continue with our series called “Know your budget” so it may help you understand how it will affect the government’s plan for 2012-2013.  Tonight, the “know your budget” analyst examines inflows derived from the exports of goods and services such as petroleum, agricultural and marine products. However for the year 2011, both the primary and secondary industries experienced significant declines. The volume of citrus, orange and grapefruit exports decreased by twenty percent for the year,  oil production declined by three point four percent while new construction fell by sixteen percent. The biggest contraction was in the service, tertiary sector which contracted by forty-four percent despite a three percent growth in hospitality and other service gains. With such weak domestic economic activity, there are no large scale projects, new projects or policy measures to boost investment within these sectors in the budget for fiscal year 2012/2013.

 

The lack of economic diversification measures or policies to address the shortfalls within the secondary industries, consisting of the manufacturing sector and the construction industry will limit the ability to increase inflows or revenues. This shortfall, compounded by the leading export of oil production in decline, poses more downside risks for economic growth resulting in even lower revenue projections. In addition, factoring in the population increase, the unemployment rate, which has increased from eight point two percent in 2008 to twenty-three percent in 2010; the poverty rate of forty-seven percent now increasing on an upward trend to forty-nine percent of the population, according to recent unofficial estimates, will likewise be additional pressure.

 

There are no policy incentives or measures to address the national overall high unemployment rate or the national overall poverty level within the budget for fiscal year 2012/2013.  This will likely have negative repercussions and strains on limited sources of revenues as there is a lack of sustainable growth measures or investment priorities within the budget for fiscal year 2012/2013 to address these key sectors which generate jobs, income and government revenue, and overall economic performance. The lack of such inflows will limit the ability for funding required to buy materials and equipment, pay salaries and wages, and to produce the revenue required to run the government. Also since these export values as inflows come in foreign currency, mostly US dollars, it will limit the monies available to pay for imports. The other source of inflow is grants. While being externally dependent on grants which accounts for sixty-five percent of GDP, such measures provide limited capacity for sustained growth. While likewise, other unsustainable short term poverty dependent related policies such as the minimal geographically skewed pro poor policies, do not provide the national capacity to boost investment or sustained growth.

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3 Responses for “Heated budget debate expected”

  1. Storm says:

    It will be stupid and immoral for any representative to vote for a budget that is not truly balanced — and I don’t mean “balanced” with false projections or phony accounting. Balanced means that GOB spends no more than it receives in revenue for the year.

    If that rule is set as a firm line that cannot be breached, then just prioritise — security first, education next, emergency and road maintenance, and EMERGENCY medical service [subject to repayment where the ability exists]and that’s about all we really should expect government to provide.

    No gangsters on any government payroll. No new vehicles for any government employee, unless enlisted BDF or police patrol officers need them to perform their missions. Cut the budget of embassies and consulates, close them where possible. Don’t forgive any legitimate debt owed to the government, don’t give away any public money or property.

    That will be a good start, so that GOB can realise that the money they spend comes from hardworking taxpayers — and from their children because of past deficit budgets.

    AND GOB WORKS FOR THE VOTERS. Do what the boss wants, or get replaced.

  2. Ragamuffin says:

    Totally Agree with you storm

  3. Louis says:

    The budget deficit for this year is estimated at 2.4%. It wouldn’t be a problem if Belize was growing at 4% or more, as revenues would end up being higher than are presently estimated.

    The deficit starts to be a problem given the mediocre 2% growth we get under Dean Barrow, due to lack of confidence in this government.

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