Dear Editor,
According to the Oxford dictionary, deleveraging is the process or practice of reducing the level of one’s debt by rapidly selling one’s assets. The global debt is 257 trillion, according to an International Monetary Fund’s estimate for the end of March, 2020.
Belize is the 18th most indebted country in the world, with a debt-to-GDP ratio of 92%. After the coronavirus (Covid-19) passes, Jamaica and the world will have to deleverage.
Historically, there are four ways to deleverage. The first is to cut government spending. This will mean an increase in unemployment.
The second is the restructuring of debt. This includes debt reduction and decreasing the amount of each installment.
Third is taxing the rich, and businesses/companies.
The fourth way of deleveraging is by printing money. It is likely a combination of all of the above that will be employed.
The United States (US) has the World Reserve Currency, and 70% of its GDP is based on consumption. Currently, and for the next few months, consumption is anemic. The US is Belize’s most important trading partner and major contributor to the tourism industry and remittances.
The sky is not falling, but we have rough seas ahead, and need to navigate these rough seas skillfully.
Yours truly,
Brian Ellis Plummer