By Marion Ali, Assistant Editor
Figures for fiscal year 2015/2016 reveal that Belize’s deficit is leaning more menacing than in recent years.
The approved budget set total revenues and grants at $980 million and total spending at $1.068 billion – a deficit of $88 million. But the the gap was much greater after factoring in loan payments and other expenses which were not in the domestic budget, and brought the deficit closer to $180 million!
During his presentation, which he called “Stability in a Time of Change”, Prime Minister Dean Barrow said higher subsidies and transfers in the education sector contributed to the record deficit.
“Included in these numbers is the extraordinary payment of just over $97 million in respect of the settlement of the international arbitration award related to the British Caribbean Bank loan to Belize Telemedia Ltd. Second, is the additional spending of almost $55 million on the National Road Rehabilitation Program and some $15 million more on sport facilities,” Barrow said. These payments were financed under the PetroCaribe Program.
Meanwhile, draft estimates for the upcoming 2016/2017 fiscal year show that Belize would record an overall deficit of $62.5 million, with total revenues and grants estimated at $1.088 billion and total expenditures at $1.151 billion, but our economy is still “sturdy and strong”, Barrow assured.
“When taken together, these result in a projected overall deficit of 62 million, which is the equivalent of 1.7 percent of Gross Domestic Product. The magic figure is 3 percent of GDP. After that, you are in trouble. We are looking at only 1.7 percent of GDP in a time of tightening circumstances,” the Prime Minister said.
Industries that once flourished now show significantly lower revenues in the year ahead.
“It is currently estimated that GDP growth will moderate to between 1.5 to 2.0 percent in 2016, as the primary sector contracts further and activity in the secondary sector flat-lines. Sugarcane deliveries are projected to rise by 23 percent due to Santander’s output. However, production of all other major export crops is likely to decrease. Banana output will be negatively impacted by the halt in the operations of the Meridian Group, and the major producer of papayas has signalled that production will be halted in August. Output of farmed shrimp will remain low as farms will only recover from disease and begin harvesting during the second half of the year. Manufacturing should decline with the anticipated drop in agro-processing and the continued shrinkage in crude oil extraction,” he advised.
One of the few areas that promises a robust outlook is the services sector, with the expectation that tourism activities will expand in stay-over arrivals; and distributive trade activities expected to grow moderately. But even tourism can reveal a slightly lower than anticipated out-turn arising from the correspondent banking difficulties.
But against the backdrop of all these uncertainties, teachers and public officers will get another salary increase, the Prime Minister promised. “Even with the fiscal challenges we face, we are resolved at all costs to honour our commitment to the public officers and teachers. We have, therefore, made a provision in the budget estimates for the further, and final, upward adjustment in their compensation packages in the new financial year.”
He shared that preliminary figures indicate his Government would have given its employees over a 25 percent raise extending for the three-year period. The salary adjustments will see the wage bill rise to around $400 million over the next fiscal year.
Along with the 12,000 or so public officers who will have new purchasing power, there will be some 8,000 Social Security Board pensioners who will also see an increase in their monthly payments, to take effect in the new fiscal year.
In road infrastructure and sporting facilities, Barrow said the unprecedented investments from PetroCaribe have transformed the country, unlikely ever to be seen again at this magnitude. “The $70 million is treated as a one-off capital expenditure, which was undertaken given the availability of the highly concessionary funding under the PetroCaribe Program. There will be similar capital investments programs, though not at the same level”, the Prime Minister said.
Under the Road Rehabilitation program, the Barrow government has upgraded streets in Belize City and in every district town, including San Pedro. He cited the Philip Goldson Highway, where it passes through Orange Walk town, as well as a section of the San Antonio road, the Old Northern Highway leading to Altun Ha, and the Franks Eddy Road to the Sibun River. There are other roads which are still undergoing repair or complete reconstruction, and the Prime Minister said, “We are getting value for money!”
His goal is that by the end of this parliamentary term, his United Democratic Party (UDP) Government will see a thriving Gross Domestic Product in excess of $4 billion and a national annual budget of more than $1.2 billion.
The budget will be debated on Tuesday, March 22 and Wednesday, March 23.