31.1 C
Belize City
Thursday, March 28, 2024

World Down Syndrome Day

Photo: Students and staff of Stella Maris...

BPD awards 3 officers with Women Police of the Year

Photo: (l-r) Myrna Pena, Carmella Cacho, and...

Suicide on the rise!

Photo: Iveth Quintanilla, Mental Health Coordinator by Charles...

Barrow discusses state of Belize economy

GeneralBarrow discusses state of Belize economy
At a press conference in Belize City today, Prime Minister and Minister of Finance Dean Barrow presented a state of the nation address of sorts, outlining the country’s major economic milestones in 2008, and expected challenges for 2009.
 
“Belize did well in 2008,” the Prime Minister commented.
 
One bit of good news was that while Prime Minister Dean Barrow, in the national budget read last July, projected that the economy would grow by 1.7%, Government’s new estimates place the figure closer to 2.8%.
 
On the other hand, Government is expected to incur a substantially bigger deficit in its budget than initially projected, as petroleum revenues fell way short of projections because of the recent nosedive in world oil prices.
 
“There is no doubting the pressure that in particular the fall in revenues from our taxes and royalties on petroleum will produce,” the Prime Minister said. “The global crisis will just as well affect foreign direct investment, remittances from the US, and especially tourism.”
 
Even though preliminary estimates place Belize’s economic growth (Gross Domestic Product) at 5.3% growth for the first 9 months for 2008, with third quarter growth driven particularly by increased production and higher prices for petroleum exports, there was reportedly a sharp fall after, as Belize was hammered by Tropical Depression #16 in the fourth quarter. Overall, Government’s GDP projections say growth is expected to be no better than 2.8% for 2008.
 
If that is achieved, Barrow said, he would feel relatively satisfied.
 
The value of Belize’s exports increased 13.9%, to $492.1 million for the first ten months of 2008 – a growth led by petroleum, citrus and bananas, the Prime Minister and Minister of Finance reported.
 
Barrow commented that a recent report of the Economist Intelligence Unit “contained alarming” projections for Belize’s economy, but as it turns out, he said, they were “utterly wrongheaded.”
 
What he did concede is that one specially hard-hit sector has been tourism, which, he reported, suffered a 3.6% decline in overnight tourist numbers, as of November 30, 2008, over the previous year, but data for the second half of December show a slight improvement, Barrow claimed.
 
All this notwithstanding, Barrow said government’s performance during and after the flood crises of 2008, the removal of (General Sales Tax) GST from medication and medical services, the zero-rating for GST in basic food prices, and falling pump prices and electricity rates are all matters for celebration.
 
One major point of concern is a major shortfall in Government’s revenues from petroleum, which has widened the gap between what Government collects to finance its operations and how much it has had to spend.
 
Last year, said Barrow, GOB collected $45 million from petroleum, and $80 million was budgeted this year. However, with oil prices falling, Government expects to collect only about $63 million. Government’s windfall tax projections were shattered when oil prices took the plunge late 2008.
 
Barrow indicated that, all told, Government expects a deficit of 0.7% of GDP. This works out to almost $18 million – $10 million more than Barrow predicted in his 08/09 budget.
 
He told the press today that GOB will look to Taiwan to finance the deficit. In 2008, Taiwan gave $50 million to GOB, under the Barrow administration, and Barrow said that he is negotiating with Taiwan for a 4-year loan program for budget support. This program foresees Belize borrowing from Taiwan $25 million per year, at rates lower than commercial rates. Barrow said that he hopes to advance those negotiations during a state visit to Taiwan in the coming months.
 
Global markets are drying up and we have that super bond, which makes it impossible for government to do any further commercial borrowing, said Barrow, adding that Government is looking to concessionary sources to borrow from to meet its financing needs.
 
He told the media that the extent of the financial crunch is not expected to last beyond the upcoming fiscal year – which ends March 30, 2009, and a rebound is expected thereafter.
 
As to whether Government will move to raise taxes to finance its budget for the next year, 2009/2010, Barrow remarked, “Mr. Keynes says you don’t raise taxes in the middle of a recession.”
 
While he told the press that GOB has no intention to raise taxes, they may propose a floor for fuel prices, at which Government would introduce a compensating tax, to ensure that it collects a minimum amount of money from fuel taxes.
 
As to bread and butter issues, Barrow indicated that food prices are moderating and fuel prices have come back down to earth. GOB expects that inflation will fall by half, from the 2008 levels of 6.4%.

Check out our other content

World Down Syndrome Day

Suicide on the rise!

Check out other tags:

International