No new taxes, more jobs – PM Barrow promises

“Absolutely no new taxes and no spending cuts!” and more jobs, Prime Minister Hon. Dean Barrow promised the nation as he read the 2013-2014 budget in the House of Representatives in Belmopan on Friday, March 1.
The Government of Belize will create and own a private company: Belize Infrastructure Limited, which will finance and implement a $60 million infrastructure project that will create jobs while buying material and supplies from the private sector.
And no more “superbond”! At least not the “superbond” created by the previous People’s United Party administration in 2007 with its unsustainable repayment schedule that Belize could not meet!
Barrow said his administration has “tackled and tamed” the superbond “when the critics said it was impossible.”
Indeed it was quite a coup since by international standards, countries with over 5% economic growth would find it hard, if not impossible, to get debt relief when negotiating a restructuring of foreign debt while attracting signature $100 million foreign direct investments (FDI) such as the American Sugar Refining has invested in Belize Sugar Industries Ltd.
It was even more remarkable that the UDP had gotten this debt relief without surrendering to the retrenchment, cuts in public spending and fiscal austerity of any arrangement with the International Monetary Fund.
But Barrow reminded the PUP that they would still be hearing about the superbond until they are dead, because Belize will be paying off the “superbond” under its new terms until after most of today’s members of the House of Representatives are dead.
“The fiscal cliff is not for the UDP”, Barrow assured the nation, as the UDP had not only found a way to pay off Belize’s debts in a timely manner, but also stimulate further economic growth.
Barrow also recounted the many successes in agriculture and industry, which had fuelled Belize’s unprecedented economic growth in 2012.
He reported that Belize’s economy grew by 5.3%, much more than the 1.9% GDP growth of 2011.
In this regard Belize had out-performed all of the English-speaking Caribbean and Central American countries.
This came from improvement in the banana industry, a 40 percent increase in citrus production with a matching 12.8 percent increase in value-added citrus products, a 22.6 percent increase in sugar cane production with a resulting 15.4 percent increase in sugar production, which translated into a $72.12 per ton final price for cane farmers—an increase over the previous year’s price of $68.12 per tonne.
It hasn’t all been a bed of roses. While overall tourism arrivals were also up over 10.2 percent, cruiseship arrivals had fallen. Oil production has slipped to three-quarters of what it used to be, despite the introduction of four new wells at Spanish Lookout and Never Delay.
The silver lining to this cloud was the announcement that a new cruise ship terminal is to be built in Belize, where cruise ships can dock and passengers can walk directly ashore.
Belizeans are all feeling the pinch of a 16 percent hike in electricity rates, and Barrow did not hide the fact that domestic production of electricity fell by 15 percent last year as a result of low rainfall to power the hydro-electric plants at Mollejon and Chalillo, and other difficulties at BELCOGEN.
The bottom line in dollars and cents is Belize’s gross international reserves have increased by $105.6 million to $577.8 million, equivalent to 4.6 months of imports.
These “impregnable reserves” make the Belize dollar secure, and the banks have plenty of cash, 81.7% above what is required by law, to offer credit to the private sector, Barrow said.
The outlook for next year is good: three percent GDP growth, since it’s anticipated that tourism arrivals will continuing to grow.
Any increase in revenue will benefit public officers who have been trying to negotiate a pay increment from government. The Prime Minister made it plain that after paying off superbond creditors, it cannot offer what it does not have, but with no new taxes, the only way the public officers will get their raise is if the government finds ways to improve their efficiency of tax collection.
According to Barrow, the government expects to collect $871.7 million in revenue and grants, and it proposes to spend $934.3 million, which will produce a deficit of $62.6 million, or 1.9% of GDP to which we must add $64.5 million for loan amortization.
Government proposes to meet this shortfall of $127.1 million, in part through a disbursement of $54.8 million from Loans already contracted with our multi-lateral development partners to fund our Capital III Expenditure Program.
Some $20.0 million will come from the Republic of China (Taiwan) in budget support financing under the on-going bi-lateral economic cooperation program. GOB will also borrow $32.2 million domestically and draw down $20.0 million from its deposits in the banking system.
Barrow assured that government is not about to become spendthrift, but pressing social needs will be addressed, as government will expand its food pantry program to help the indigent and the working poor, including some rural areas.

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