The budget, in its simplest terms, is the amount of money that the government has set aside to finance its operations and provision of public services. It should serve as a good forecast used by all citizens to decide how they will spend, save, work and even how they would invest.
Therefore, it was no surprise that many Belizeans waited eagerly for the late Belize 2012-2013 draft budget, which was debated on Wednesday and Thursday, July 11-12. However, the ardent listeners, for the most part, were left to wade through hours of political bickering, which mirrored election-season smear campaign tactics instead of the expected and needed economic discourse.
With the estimated $30 million dollar loss in revenue due to falling global oil prices; the forecasted reduction in Belize’s oil production; the expected increase in the billion-dollar “superbond’s” coupon payment to a 8.5% interest rate; and even the residual effects of the 2008 global recession, most stakeholders in Belize (local and foreign) were expecting prudent fiscal discussions.
According to the recent Belize 2012 Financial Update, produced in June, Belize’s crude oil production, which now accounts for approximately 36% of Belize’s domestically produced exports, had “began to decline in 2009 and fell by 10% in 2011, in absence of new discoveries.” The report went on to say that “production is forecast to drop steadily to reach half its 2009 level by 2015.”
It was the Prime Minister, Hon. Dean Barrow, however, who made the call for austerity official, when he gave his budget presentation on Friday, June 29.
“In the face of declining oil revenues, and in the face of burgeoning interest and amortization payments, we will clearly have to exercise a heightened level of fiscal discipline and expenditure restraint as we seek to recapture that lost, pre-1998, era of UDP debt sustainability,” he said.
That theme of austerity, however, was the target of much of the Opposition People’s United Party (PUP)’s contempt at Wednesday and Thursday’s debate.
The Leader of the Opposition Francis Fonseca was first to speak and set the motif: “Regretably…the budget 2012-2013 perpetuates the failed and flawed agenda of 2008 to 2011 (UDP’s term in office).”
Following his preamble, Fonseca pointed out that the budget—which should have been presented from March this year—failed to account for revenues or expenditures of the first half of 2012. “We are debating a budget and we don’t know how much of this budget has already been spent,” he said.
Fonseca also lamented that there was not any consultation with the citizenry in the budget preparing process. “No consultation with the unions, no consultations with the council of churches, … no consultation with the Chamber of Commerce or the Belize Business Bureau, no consultation with the youth leaders, no consultation with the people of Belize…”
Fonseca also said that the consultations were needed in a time when the government is calling for austerity measures.
The Leader of the Opposition then went on to label the budget as a budget of excuses. He agreed that there were external factors that slowed growth; however, he also criticized the UDP government on the need for more Foreign Direct Investments (FDI) to help grow the economy.
He quoted regional figures for FDIs in which he said that Central America had a 36% increase, in which even Belize’s southern neighbor, Honduras, recorded $1.1billion in FDIs. The Caribbean, according to Fonseca, witnessed a 20% growth in FDIs, and even Haiti was able to attract US$150 million in FDIs.
“These countries and their governments are bring home the bacon to their people and attracting investments and creating jobs,” he said before asking, “Why can’t this UDP government do the same?”
From that point on Fonseca gave somewhat of a PUP report card of their works from their previous term in office, while he lamented the austerity of this year’s budget.
The members of the UDP, however, were quick to mention that the UDP’s present financial constraints are the direct result of the PUP’s spendthrift borrowing during their 1998-2008 double term in office that forced them to renegotiate and consolidate the nation’s many debts into the “superbond” in 2007.
Minister of National Security Hon. John Saldivar reminded Fonseca that since the UDP took office in 2008, the Belizean economy had experienced a modest 2% growth per annum, except for 2009 when there was zero growth, at a time when the rest of the world—including our major trading partners: the Untied States, the United Kingdom and Europe, were mired in recession.
While most of the representatives on either side failed to really get down to the specifics of dollars and cents, Belize Rural Central representative, Dolores Balderamos Garcia, the only woman representative, attempted to speak figures, as opposed to general rhetoric.
However, Garcia’s criticisms of the education budget incensed the Minister of Education Hon. Patrick Faber, especially when Garcia cautioned Faber about reductions in the amount of money allocated to the ITVETs.
Faber, when allowed by the Speaker of the House Michael Peyrefitte to refute Garcia’s comments, which he says were totally untrue, sharply defended his education budget, saying that there are increases to the ITVETs and not decreases as suggested by Garcia, who he said did not read the budget correctly.
During his presentation, Barrow emphasized the importance of foreign direct investment to Belize’s income and admitted that more could be done.
The bank’s excess liquidity and the drop in interest rates should all stimulate investment, but even Belizeans have been cautious about new investments as they await the outcome of negotiations with the “superbond” holders, and its implications for the Belizean economy.
Some of the budgets’ analysts and criticizers question how the government proposes to spend $937 million this year, as compared to $867 million last year, when it claims that servicing the “superbond” under its present repayment schedule will run them into a $138 million deficit.