“Flour gone up! Milk gone up! Fuel gone up! And now chicken and electricity gwine up, too?” The outcry continues against the rising cost of living in the country, and while what is happening in Belize is, to some extent, mirroring what is happening in other parts of the region and the world, the United Democratic Party came to office promising Belizeans that it will do something immediately to reduce the burdensome cost of living in Belize.
But consumers will, apparently, have to wait until the new budget takes effect sometime around June.
In speaking to the media this morning, PM Barrow recommitted to putting in place measures that would reduce taxes and duties on certain goods, to provide some relief to consumers. But with the need for funds to maintain the Government’s own operations, it’s going to be a tough balancing act.
“The experts need to tell me exactly how far we can go, without compromising government’s ability to deliver basic goods and services,” said Barrow. “Clearly, because we are going to be relying with respect to capital projects, principally on these external sources of funding, all we have to worry about…in terms of government revenue, is the basic operating expenses…”
Barrow went on to say, “…the bottom line is, we are going to bring down prices where we can, [by the restructuring] of GST and the lowering or elimination of import duties.”
Barrow explained that CARICOM had already signed an agreement with Europe to eliminate import duties, “because of globalization,” but his administration “will get in ahead of the crowd in putting that into effect” early.
Government, he said, does not have control over all prices.
“Wheat has gone up by a factor of two in the last year alone, and fuel prices 77% since 2005,” said Barrow, pointing to riots in Asia, riots in Latin America, and riots in Haiti over cost of living issues.
“And so it’s a global problem. But that’s not to suggest that we throw up our hands in despair,” he continued. “To the extent that we can’t control things like the acquisition cost of wheat, and so there will be increases where that is concerned, we need to compensate. Things that we can control, things that we can take off the GST from, in order to compensate, as I’ve said, we will do that, so that has to be the formula …”
Barrow told the media that he wants to implement the changes in the new budget, because changes will affect Government’s bottom line.
A new budget should have been in place by April 1, 2008, but since the new administration has only recently come to office, it has said that it will take three months to prepare, present and pass a proper budget, in line with the administration’s manifesto commitments.
When the Barrow administration came to power, a new ministry of consumer protection was commissioned, and PM Barrow told our newspaper today that a paper will be tabled at Cabinet next Tuesday to present proposals to address the problem of price gouging by unscrupulous merchants.
One necessity that the Government says it will tackle immediately is the price of bread. Barrow said that they have worked out an arrangement where there will be an increase in the price of regular bakery products, but they will keep the price of basic bread stable.
“We have to be able to police prices…We must make sure increases don’t go through the roof, and the only way to do that is to have a properly staffed, properly functioning consumer protection agency. We want to start to do that right off,” he told the media.
He also said that Government is in discussions with Belize Natural Energy on the establishment of a light oil refinery, and that entity has indicated that “they are just about ready to sell, commercially, their blended diesel products.”
But there is also the concern that the international fuel conglomerates will react to any internal initiatives to lower fuel prices, which they may feel would affect their sacred bottom lines.
PM Barrow said that they have to figure out how they will apply an excise duty on locally produced products, to ensure there is not too huge a differential between the price of imported and Belize-made products.
“Exxon can also threaten that if there is too huge a dent, they will pick up their marbles and go,” said Barrow, adding that the Government has to have a “plan B.”
Similarly, there is the possibility that the PetroCaribe deal with Venezuela could be used to offset cost of living pressures on Belizean consumers. Under the deal, Government gets fuel from Venezuela, sells 100% to a local company, but pays 50% to Venezuela, while the remaining 50% remains in a fund at the Central Bank. Barrow said that his government has to now see how that fund could be used to “help the poor.”
“They want the government and people to get the benefit… to set up our own storage, and distribution network we have to invest $8 million US to build storage tanks, and we have to be concerned about sustainability of supply,” he said, pointing to the uncertainty of the political future of Venezuela.
Another element to addressing cost of living factors, said Barrow, is ensuring that Belizean entrepreneurs have access to credit to earn a living. Money is coming from a range of sources, Barrow informed our newspaper.
Firstly, his government is in negotiation with the CDB for a policy-based loan of US$25 million, and he has requested that the figure be increased to US$50 million. The CDB, said Barrow, has promised to send a mission down to see how a new agency could be set up to take over the functions of the DFC. The CDB wants to discuss what kind of seed money will be required, he added.
As to his recent meetings in Miami, USA, from which he returned yesterday, Barrow said that the Inter-American Development Bank has said that it will proceed with a new loan with Belize, while the World Bank will restart its funding relationship with the country.
But Belize won’t see the first of those monies before the end of the year, he added, pointing to the second half of a loan with the CDB, $12.5 million in funding, which is due to be disbursed in the months ahead.
Still, there is the question of what has happened with respect to all the hundreds of millions of dollars from commercial, bilateral and multilateral lenders that Belize had received over the last 10 years under the last administration.
Barrow told us that the US Embassy here has promised to fund auditors to determine the scope of such an investigation, so that when Government gets people to do the actual work of the investigation, they will know where to go to do their specific probes.
In the upcoming budget, the Government will also have to factor in the financing of a new DNA lab, and they hope to shift the annual $1 million annual fee he said government has been paying Houlihan and Loukey for the debt restructuring program to help finance the expenses for the lab. Government said that it would conclude that arrangement this year.
In light of tremendous public outcry to lower the cost of living, and the financial costs of new projects such as these, the new administration will have a tough task ahead in juggling the magic numbers to meet public expectations.