Prime Minister and Minister of Finance Dean Barrow declared at his last press conference for 2009 that Belize was experiencing a recession. At his latest press conference, the first for 2010, Barrow solemnly declared that it’s going to get worse.
In his prepared remarks, during what was dubbed his “State of the Nation” address, at the Radisson Fort George Hotel, Barrow said: “The upcoming fiscal year is going to be the hardest of the UDP term. …This is going to be an extremely difficult year, and we are going to have to ask people to make sacrifices.”
This means that the trade unions—who have been asking government for a salary adjustment for teachers and public servants—among those hard hit by the rising cost of living, won’t get that request granted in the upcoming budget year, due to be read in March.
Barrow said that the financial package the unions submitted amounts to at least $122 million over the next three years (2010-2013)—money he claims the government does not have.
After his gloomy forecast of even more hardships ahead, Prime Minister Barrow went on to claim that the remaining two years of the UDP’s term would be better: “I know what’s going to happen after that—that things will turn around,” he claimed.
In his New Year’s Day Speech in January 2010, Barrow had declared, “The worldwide recession, which bore fully down on us in the second half of 2009, will run its course in the year ahead. Our difficulties will, therefore, peak and decline by the end of 2010.”
At last October’s press conference, the Prime Minister hinted to today’s declaration, saying: “We are going to next year have to deal with the step-up in interest payments on the super bond from 4.5% to 6%.” He said that Belize would have to find US$10 million more for debt servicing.
The bad news today, however, was the size of the deficit.
In response to Amandala’s query on the upcoming budget, Barrow admitted: “… [T]he numbers aren’t good.” He said, “We’re looking at a deficit of about $60 million, and we’ve been working overtime to see how we’re going to close that deficit.”
Barrow said that Cabinet will further discuss the budget next week Tuesday to look at possibilities for closing the gap between the spending plan and the revenues forecasted to finance the budget.
In the last budget speech in March 2009, the deficit Barrow quoted was about the same—roughly sixty million dollars. To help fill the gap, the government implemented the $1.00 flat tax on each gallon of fuel purchased at the pumps, saying that since prices at the pumps had fallen substantially from the previous year, government would take back some of the ease it gave in 2008 when it restructured the gas taxes.
However, Barrow later reneged on his promise to revisit the dollar tax on gas when gas prices would shoot past the $7 benchmark for gasoline and $6 for diesel, later claiming that his administration really needed the money to finance the budget. (Today, diesel is $7.70 a gallon, regular gasoline is $8.80, and premium gasoline is $9.07, and the tax remains in effect.)
“This revenue measure is, despite the 60-million dollar financing gap that we needed to close, and which we have closed, the only increase we are implementing. It is as painless as we can make it,” Barrow had said last March (2009), when reading his last budget. “This single step will yield thirty million dollars and that took us half way to closing the financing gap. Government’s economic diplomacy did the rest and we are now, so to speak, home free.”
There is no indication to date how the deficit in the new budget will be met. Prime Minister Barrow and Financial Secretary Joe Waight signaled at this week’s press conference that the government received $50 million from oil revenues for 2009. According to Barrow, government has had to use up all the oil revenues to meet general expenses.
In line with public discourse over the level of oil revenues government is receiving, Barrow said that he will not touch either the existing contract with Belize Natural Energy or the tax framework that applies to oil companies, because he does not want to chase investors away when the prospects for finding even more oil appears good.
Barrow claimed, on the other hand, that his administration has been running a tight ship: “… [W]e are in problems with the numbers as a consequence of the slump in global trade and the super bond, the horrible debt profile. …”
In the first year of his administration, Barrow reported an overall budget surplus for 2008/2009. However, the last budget required the government to find, according to initial estimates, $123 million in financing or loans.
Gaps in the budget are generally met using loan funds or revenue measures that raise the level of tax receipts, such as last year’s dollar gas tax.
At this Wednesday’s press conference, the Prime Minister reported on the progress his administration had made during the last budget year, with social intervention projects such as the women’s sewing corporative on Fabers Road; the rehabilitation of sugar roads in the North; fresh prospects for the exportation of Belize’s rice and beef; the expansion of subsidies and scholarships for education; and his expectations that tourism, which has been suffering declines in recent years, would see an upswing.
Barrow claimed that the unemployment rate has improved and that his administration has made progress with poverty alleviation and job creation.
While Barrow zoomed in on the decline in unemployment from 13.1% in April 2009 to 12.5% in September 2009 in his report, he did not say that the unemployment rate was still substantially higher in 2009 than May 2008, when an 8.2% rate was reported by the Statistical Institute of Belize.
He also did not refer to the recent Country Poverty Assessment (Draft) Report, which said that the number of poor people in Belize has increased from 34% in 2002 to 43% in 2009, with over 50,000 more Belizeans counted as poor.
Despite the impending financial pressures and socio-economic challenges, Prime Minister Barrow pointed to his plans for further investment in crime fighting ventures. He said that there will be a new police intake of 100 by mid-March; increased intelligence gathering; the addition of unmarked vehicles for the anti-gang unit; and the purchase of two buses, which will serve as mobile police stations.
Minister of National Security, Hon. Carlos Perdomo, had told Amandala more than a year ago that these mobile stations, which would be specially outfitted vans, would be used in the most problematic areas of Belize City, which he identified as Lake I, Collet and Port Loyola.
Police Commissioner, Crispin Jeffries, Sr., had told Amandala one station would have been placed in the St. Martin De Porres area near the Charles Bartlett Hyde Building (Government Complex) by February 2009.
Prime Minister Barrow informed the media today that within the next month or so, his administration would initiate the establishment of either the integrated ballistics system (an initiative being promoted within CARICOM for gun crimes) or a DNA lab, “whichever is [the] less expensive system.”
“In that particular area, the very mightiest of labors will be expended,” Barrow said. “There is no option. We want our communities back.”