General — 12 March 2016 — by Adele Ramos
Barrow’s 9th budget calls for $1.15 billion in spending

BELMOPAN, Tues. Mar. 8, 2016–Prime Minister and Minister of Finance Rt. Hon. Dean Barrow presented his 9th national budget in Parliament today, announcing that 12,000 public officers and teachers will this year receive their third consecutive salary adjustment, bringing the total received since 2014 to almost 25%—a figure which Barrow said “by any measure and in comparison with any country anywhere is absolutely spectacular.”

He announced that a placeholder of $20 million is being included in the draft budget to help pay for the salary increase, which, according to figures presented in the budget tables, will push the wage bill past $400 million, out of a total budget of $1,151,104,349.

He explained that “under the salary adjustment framework that this Government agreed with the unions in February 2013, pay raises for the public officers and teachers are triggered by increases in the actual recurrent revenue outturns between two successive fiscal years. In the past two time periods, salary adjustments of 6 and 8 percent respectively were implemented [and] given the preliminary numbers available so far, there is likely to be a further increase under the framework—albeit at more moderate levels than in the past two years.”

He added that, “The actual percentage increase will be determined using the framework agreed with the unions once the final revenue outturn figures are known.”

NTUCB president, Marvin Mora, who noted the increase confirmed by the Prime Minister, went on to say that what should have been highlighted was the result of the recommendations made by the committee of union personnel which had been formed and tasked with the responsibility of scrutinizing government spending in each and every department and coming up with recommendations.

“It is in those savings and cost-cutting measures that they had argued their way that the Government could have room for those [salary] increases,” Mora said.

He added that he had seen “some frightening figures,” in regards to how much government pays for rent for certain offices, resulting in an overall bill to the tune of millions of dollars on a monthly basis.

Mora also pointed to a cyclical pattern—which he said had been observed since 1981—of a spending spree before elections and a flat line on spending after elections.

Opposition Leader Johnny Briceño told the media after today’s House meeting that the Government had engaged in a spending spree in 2015 due to electioneering—a charge which Barrow said amounted to an “insult” of the electorate.

Barrow’s 2015/2016 budget shows a projected outturn which is substantially different from last year’s approved budget, with a deficit $92 million larger than had been originally estimated; that amount represents the difference between how much Central Government earns and how much it spends—a difference which it has had to meet through borrowing. The projected deficit stood at $88 million, but now the Government is saying it may be as high as $180 million.

We contacted the Ministry of Finance for further explanation on the numbers, and were told that payments made to the former owners of Belize Telemedia Limited and the Belize Electricity Limited were primarily responsible for the disparity in spending.

Barrow said that under the PetroCaribe program, his administration had received $325 million in all, and during the fiscal year, $55 million of that had been spent on road rehabilitation and $94 million of that has been put towards compensation payments.

Barrow said that all compensation-related payments made during this budget year to the former owners of BEL and BTL amounted to the full settlement of BZ$70 million to Fortis, the partial settlement of BZ$65 million to the former owners of BTL, as well as the BZ$97 million to the British Caribbean Bank.

All-in-all, while the Government earned $51 million more in revenues and grants than it had anticipated, expenditures were $143 million higher, producing a deficit of over 5% of the country’s Gross Domestic Product (GDP), based on projected figures. Notably, this is the largest deficit recorded since Barrow was elected Prime Minister in 2008—but not the largest in recent memory.

Briceño had told journalists that the deficit was a record; and when we contacted him to clarify, he indicated that it was at least a record under Barrow’s leadership.

Records published on the website of the Central Bank of Belize and in annual reports on Belize by the International Monetary Fund indicate that the $180 million deficit projected for the outgoing budget year is slightly lower than the deficit reported for the year 2004/2005 – when a deficit of $180.4 million was reported. Whereas this year’s projected budget deficit is roughly 5% of Belize’s GDP, the deficit a decade ago amounted to more than 8% of GDP, since the economy was smaller at the time.

In fact, Amandala had reported in September 2004 that the then Government, led by former Prime Minister Rt. Hon. Said Musa, had committed to a $35 million spending cut in response to IMF recommendations for austerity to reduce the deficit from the high levels of over 9% of GDP maintained since 2000 to below 3%. The IMF had said that the government’s deficit was being financed largely through external borrowing.

Of note, though, is that the national budget presented after the change of administration in 2008 reported that the deficit had been substantially reduced to below 1% of GDP under the outgoing Musa administration. However, in the budget year 2013/2014, it rose above the recommended 3% figure but declined to below 3% the following year. Although a substantial increase to 5% of GDP is expected for the outgoing fiscal year, the new budget forecasts that the deficit will fall to 1.68% for the next budget cycle and should be maintained below 3% thereafter, perhaps in tandem with the theme of Barrow’s new budget: “stability in a time of change.”

While Barrow had announced no new tax measure for this year’s budget, tax adjustments were made in the months leading up to the budget presentation. Government’s finances will be propped up by a recent increase in import duties on fuel, levied in December and February, from which, Barrow said, the Government will earn in excess of $50 million more for the budget year.

“On the other hand, this increased collection from duties on imported fuel is moderated by an almost complete collapse in tax and royalty revenues generated from local petroleum production (due to declines in both output and prices),” Barrow said.

The loan receipts under the PetroCaribe program have also contracted. Barrow said that “already the flows from PetroCaribe are greatly reduced and its very existence, longer term, is uncertain given the recent domestic political developments in the Bolivarian [Republic].”

“So Government’s take on borrowing under the PetroCaribe scheme is that they should therefore, while the getting was good, procure for the Belizean people every last penny we could from the unbeatable bonanza of one percent money over twenty five years,” Barrow asserted.

He reported that at the close of 2015, the external public debt stood at $2.352 billion or 66% of estimated GDP, while Government’s total domestic obligations were $0.494 billion or 13% of estimated GDP. The total public debt then, external and domestic, stood at 79% of GDP, Barrow added.

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