Absolutely no one needs a degree in economics to know that the government’s decisions to cut the salaries of most of its employees by 10%, continue a freeze on increments, and slash government spending on goods and services by $78 million, will increase financial pain across the nation, definitely in the short term. The cut in salaries and freeze in increments are expected to reduce government spending by $80 million yearly, and with the $78 million cut in spending on goods and services, a total of $158 million is being removed from circulation.
Apart from the salary cuts and the increment freeze, the employees of the government face another financial hit, this one in the long term. In his budget presentation for this fiscal year, Prime Minister John Briceño stated that the present non-contributory pension plan for GOB’s employees is unsustainable, that this year it amounts to nearly $100 million, and that it must transform “to a contributory structure, either standing on its own with payments from both employer and beneficiary, or a merger of the public pension program and the Social Security System.”
It was not smooth sailing in Belize prior to the Covid-19 pandemic. Three of our major money-earners – citrus, farmed shrimp, and crude petroleum – have been underperforming for years, and funding from the Alba Petro Caribe Program has dried up.
Some estimates indicate that prior to the pandemic close to forty percent of our people, particularly the unskilled, were living below the poverty line, and the folk in the middle class were experiencing consistent attrition of their earnings because of a rising cost of living. Salary adjustments in recent decades for government employees have not been sufficient. If the research from the Statistical Institute of Belize covered the cost of goods in the grocery stores and pharmacies, the annual inflation rate would probably be 25% more than what has been reported.
Government employees know the dire straits our economy is in, but for the majority of them this cut in earnings goes to the bone, hence their ongoing fight for every penny of relief they can get. Government employees have not been “making it” these past years, and things have actually been worse for small farmers and other small entrepreneurs in our country.
For years the financial experts at the International Monetary Fund (IMF) have been saying that we were living above our means, and that to right our ship we needed to collect more taxes, and reduce the size of the public sector.
Belize was a struggling state when the pandemic hit fully in March, 2020, and then, overnight, the number one industry in the country, tourism, fell flat. Foreign exchange earnings from that industry were/are no more, and thousands of Belizeans found/find themselves standing in the hot sun for hours to collect food rations or a tiny stipend from the government.
Early in his administration, which took over in November 2020, the new Prime Minister indicated that the nation’s coffers were so bare that his government would have to make some tough decisions. The dismal numbers have been presented to the nation time and time again, and the ones that caused the most alarm were that our country was borrowing close to $1 million every day and that we would not be able to meet our external debt obligations.
It is apparent that the present government wants more emphasis on the private sector, and had there not been a pandemic it would have tried to keep the public wage bill down while it set about its agenda to grow the economy. But the terrible state of our finances forced the government to move beyond keeping the wage bill down, to instituting salary cuts.
It had been suggested in some quarters that we should continue “printing money”, but the truth is that after one year of doing just that, we have, as the Prime Minister stated, drained our account. Had we shifted our focus when the pandemic began, or before, to stimulate local production of processed foods such as breakfast cereals, and the manufacture of clothing, footwear, and toiletries, we might have been able to continue “printing money”, because Belize dollars would then have been buying more products that were made here. We cannot sustainably “print money” to buy goods manufactured elsewhere.
Because we insisted, and insist, on putting most of our investment in tourism, we found ourselves between the evil of mass retrenchment, and the lesser evil of salary cuts and increment freezes. These cuts/freezes, they will increase our pain in the short term, a lot.
We were hurting before the pandemic, and the PUP manifesto hatched for a pre-pandemic Belize promised that at the end of five years all of us would have been winning, a state many of us have never known. We can either set our sights lower, or work harder, and we have to do the latter, because as the check book is maxed out, so is our patience. We are tired of failing. We are tired of corruption in all its forms.
In his budget speech the Prime Minister said his government had no control over how long the pandemic lasts, when the tourists return, how much the weather cooperates. We know all that. What we also know is that improved collection of revenues and a drastic reduction in corruption are essential to help our finances recover.
In his budget speech, the Prime Minister said we must augment revenues, and “this can be achieved first by sparing no effort to collect current taxes from all sources from whom such taxes are due, and simultaneously, by ensuring that legitimate, outstanding taxes are recovered immediately.” It is hoped that the government will not have to be forced to collect what is duly owed, and also, that it has the inclination to review the tax structure with an aim to make it more fair, and efficient.
Things are going to get tougher in Belize, and there is no way around that. Our focus must be to ease the pain in the immediate, and shorten the extremely painful period as much as possible. As individuals, we are all called to do our share, a part of which is to support each other as best as we can. As for the government, it must, every day, work at being by far the best administration we have ever had. We have another part to play, which is that we must keep the pressure on, so that this government becomes just that.