Money matters

Most international financial analysts will agree that the global economic recession is far from over. The U.S., one of the primary global economies, still faces unacceptable levels of unemployment. China exports are down, contributing to its economic decline.  And most of Europe, with the exception of Germany is in a mess. 

Third World countries like Belize whose economies are even more vulnerable to international influences, are not faring any better.

The key to Belize’s financial recovery rests in two distinct areas – an increase in taxation and/or an increase in foreign investment. Increasing taxes is something the government will not do for all the right reasons but stimulating foreign investments is something the government needs to do.

Despite the global recession, there is always a pool of potential investors waiting for the opportunity to invest. There are even high risk investors on the international market who target recession economies to invest in.  In other words, there is money out there to be made. Belize just needs to find the right investors.

We need the type of investors that will work fairly with partners – not predatory investors who will bleed us dry. And most importantly, we want clean money.

Mexico is awash in blood money thanks to the type of investors they have courted.  We do not need or want that type of investment – there is enough of that already in Belize. We must therefore be wise in our decision making process when we deal with potential investors.

Probably the biggest fear investors have about investing in Belize is  stability – in terms of the business environment and the relationship with the government.

While there are those who will argue that nationalization is a good idea, the one thing that is sure is that it has affected our reputation on the international market in a negative way. Belize needs to restore that reputation and the GOB needs to be a key player in its restoration.

The second factor which has caused a loss in investor confidence, is our apparent failure to be able to meet our debt obligation on the Super Bond. And the reason is simple. When the PM talks, the world and those who have an investment stake in Belize listen.

I must admit that his approached is a bold and calculating one,  which can actually work in our favour. While admitting that we cannot pay may hurt us from an investor confidence standpoint, it can also help lower the price of the bonds even further which does two things; it encourages the investor to come to the table and it gives us an opportunity to scale back our own debt at pennies on the dollar.

Now if we were to entertain default as other countries have done, it would save us from making further payments but would affect both our credibility and borrowing capacity on the international markets. Yet, if we take the default path it’s not the end of the world. Countries like Argentina, which have done that in the past are back on the recovery path, which shows us that the task is not impossible.

I am not certain what GOB’s strategy is, but it best be a sound plan because the players on the international market are seasoned, aggressive and are like sharks at the smell of blood.

It’s all about the people!

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