$127 million financing gap in billion-dollar budget

The Government of Belize proposes to spend a billion dollars during the upcoming fiscal year which begins on April 1, 2014 – BZ$38.5 million more than the current financial year, including $34 million for salary adjustments for teachers and public officers – a commitment which Prime Minister and Minister of Finance and Economic Development Dean Barrow said is “the centerpiece” of the newly proposed budget.

While the budget was being read, teachers and public officers rallied outside Parliament, insisting that they want that commitment in writing but also calling for the Government to sweep corruption out of its ranks.

During his budget speech, Barrow said that teachers and public officers “…are receiving the nectar of a not less than 5 percent salary increase on top of the annual 2.5 percent increment.”

He said, though, that staff must double down and make every effort to improve the productivity and output of the public service at all levels.

“This is from the CEOs and heads of departments down to the clerks and office assistants, from the school principals and managers, down to the beginning, first year teachers,” Barrow added.

The proposed framework for the salary adjustments is for the three-year period 2014 to 2016, he added.

Barrow said that “the Government is committed to applying fifty percent of the difference in actual recurrent revenue performance between successive fiscal years toward an annual salary raise, with the first to take effect from 1st April 2014.”

That adjustment is to be implemented in July, retroactive to April 1, the start of the Government’s financial year.

“The concept is that the public officers and teachers would share in one-half of the incremental increases, which increases should occur not only because the economy is growing but also as a consequence of redoubled efficiency and collection efforts on the part of the public officers,” Barrow said.

Barrow said that committing to such a formula means that Government is taking a substantial risk, because the commitment is permanent, whereas the revenues from which the increases are to be paid this year may be only temporary.

Total revenues and grants appear to be almost $30 million more than projected in the last approved budget. Barrow said that the boon is due largely to unbudgeted inflows of $22 million from licenses and fees from the International Business Corporation (IBC) and Shipping Registries, as well as $7 million in dividends from Belize Telemedia Limited (BTL), unfrozen during the fiscal year by the Caribbean Court of Justice.

Meanwhile, he noted that tax revenue from traditional sources (import duties, business tax, and GST) together increased by $24 million, but this was offset by weaker than expected performance in other non-tax revenue areas, particularly in the repayments on old loans.

“As the outturn numbers suggest, though, for this year at least there appears to be an increase of almost $44 million [in recurrent revenue] between FY 2012/2013 and FY 2013/2014. Applying the framework [for the salary adjustments], we then needed to set aside some $22 million toward the salary adjustment. And this is precisely what we have done. We have allocated the sum of $22 million in the Capital II budget of the Ministry of Finance only for this purpose,” Barrow said.

He confirmed that union executives are due to meet in the coming days with officials of the Ministry of Finance “to hammer out more precisely what rate of increase such a sum will yield, as there is still some estimation to be done with respect to the salary-related transfers.”

Barrow also confirmed that the 5% salary adjustment would be separate from the annual “merit increments” of 2.5% per annum, meaning that the total increase in the wage bill is estimated at 7.5% or almost $34 million dollars.

“Of course, there is much more in this budget than just the headline-grabbing salary increase,” Barrow added.

He announced the implementation of a subsidy for students sitting assessments by the Caribbean Examination Council (CXC), the roll-out of the National Health Insurance (NHI) Scheme in northern Belize, an expansion of the BOOST and Food Pantry Programs, as well as infrastructure works around the country.

“Never before has so much spending been programmed on construction, road and bridge building, drainage, street rehabilitation, community centers, sporting facilities. Cities, towns, and villages — every nook, every cranny, every corner of this country, will benefit from our Herculean public works drive. This will improve the quality of life in a measurable, visible way, create thousands of jobs, and inject huge doses of additional disposable income and spending power into the economy,” Barrow said.

Whereas this new budget—to be debated two weeks from now—calls for a billion dollars in spending, it also comes with a financing gap of $127 million – money not coming from the usual budget sources which Government will have to find to finance its spending plan.

Barrow said that these financing needs will be met from the following sources: (1) disbursement of $48 million from loans already contracted with our multilateral development partners to fund our Capital III expenditure program; (1) disbursement of $20 million in budget support financing from the Republic of China (Taiwan) under the on-going bilateral economic cooperation program; and (3) a further draw-down of PetroCaribe financing in the amount of $59 million.

He also said that his administration expects a boost in collection efforts from the main tax sources, which, he said, will translate next year into the second successive year of salary raises for teachers and public officers.