On Friday, June 29, the Prime Minister of Belize, Rt. Hon. Dean Oliver Barrow, delivered the most anticipated budget speech in recent history. The General Revenue Appropriation Bill is usually moved through the National Assembly before the start of the financial year on April 1. However, 2012 was an election year as both the General and Municipal Elections were held on March 7. That caused the budget presentation to be delayed until June 29.
Prime Minister Barrow introduced the Budget Bill to the House of Representatives in a speech entitled “Exercising Discipline While Preserving Growth”. The title is a five word summary of the General Revenue Appropriation Bill, 2012. The United Democratic Party has been handed the task of leading the country’s recovery efforts in the most difficult global financial times since the 1930’s. Despite the difficult times, the Prime Minister Barrow-led administration has managed to maintain a 2% rate of GDP growth since 2008. That is outstanding considering the fact that countries much wealthier than us are drowning in deficits. However, our GDP growth has been stifled by debt obligations and other unbudgeted challenges. Prime Minister Barrow outlined the good and bad news on our present economic situation as well as our projected future performance in his budget presentation.
The GDP grew by 6% in the first quarter of 2012. That is a little lower than the 7.8% growth for the same time last year, but the Statistical Institute of Belize is still forecasting a growth of 2.0% at the end of the financial year. Belize has an exports-driven economy and the economic growth being experienced is as a direct result of well-performing industries. None more so than the tourism industry, which is expecting as much as a ten percent growth in 2012 due to a spike in overnight tourists arrivals. This translated into greater value added in hotel, restaurant, transportation and communication activities. Belize also recently closed the books on the most productive sugar crop season in years. There was a fifteen percent increase in earnings for sugar production this season. The sugar industry will also be boosted by a new strategic investor, American Sugar Refining, which plans to significantly increase production by injecting capital into the industry. Though the industry was affected by managerial disputes, the citrus industry had an equally impressive season in terms of citrus juice processing. Government’s take from petroleum production peaked at the start of this year and has continued on a downward trend in recent weeks due to a decrease in production and world prices. Projections have the Government of Belize receiving as much as $30 million less from oil in the upcoming year. That decrease in revenue is only one factor that has forced government to cut spending in the new budget.
The Superbond payment in August of this year will be some $47 million. The Government of Belize is able to make that payment but the Superbond is always one of the things that must be considered when talking about the status of the economy. PM Barrow has commissioned a debt restructure team that is tasked with negotiating with Belize’s bond holders to obtain more favorable rates for the country’s huge international debt. Another factor to consider is that the global economy is not on solid ground as the recovery from the recession has decelerated in the United States and Europe. The United Kingdom is at risk of slipping back into a recession this fiscal year. Because Belize’s economy is exports-driven, we will definitely feel the effects of the struggling international economies. Our country benefits greatly from our tropical climate based on our tourism numbers but Mother Nature also places a dent in our economy annually. Tropical systems and floods caused severe damages to our country’s infrastructure and the agricultural sector in 2011, and this hurricane season has already proved to be more active than the experts predicted. Factoring all the other challenges that already exist to our economy, Belize definitely cannot afford to have a hurricane this year. And as we dread the thought of facing a natural disaster, we also have to find a solution to the manmade disaster that is the issue of crime and violence. No figure has been labeled to it, but crime causes a huge dent in the country’s GDP. Tackling this problem is government’s top priority.
Government’s priority areas of spending are citizen security, poverty reduction and social protection, education, health and physical infrastructure. Prime Minister Barrow said that no crime prevention initiative may restore the “lost golden age” of his youth “but better, far better, must be done and can be done”. Therefore, more resources will be provided to all the security forces. The Belize Police Department will receive better equipment and more vehicles to increase street patrols and improve its interdiction and prevention efforts. Government will continue to fund and support Restore Belize for “social amelioration, community participation and outreach” as well as to provide employment opportunities for at-risk youths. Poverty reduction and social protection initiatives such as the Food Pantry Program, and Conditional Cash Transfer Program (BOOST) will continue. Government will continue its financial reform efforts in the education system to ensure equity for secondary school students. There will also be increased emphasis in early childhood education and the need for day-care facilities. The Ministry of Education will increase its support for technical and vocational education, especially at ITVET and in the community resource centers across the city. The National Health Insurance program will continue to provide quality service to marginalized Belizeans. GOB will also provide counterpart resources for two major projects sponsored by the World Bank and the IDB. Those projects aim to improve primary health care and education to reduce lifestyle and non-communicable diseases. In infrastructure, government will continue to invest in the improvement of our primary and secondary road networks. Funds will be allocated for the upkeep of streets in the major municipalities of the country. Prime Minister Barrow said that the Ministry of Works has allocated funds to upgrade the Toledo District Highway to the Guatemalan Border. Funds are also allocated for the new Macal River Crossing and the commencement of the Drainage Project in the North Side of Belize City. Construction of a flagship basketball and multipurpose arena will begin next year. The Mexican government had promised the Government of Belize to build the arena; however, their attention has turned to the completion of the border crossing bridge at the Rio Hondo River. Prime Minister Barrow said that he still has confidence that the Mexican Government will fulfill its promise but if not, construction will begin with local support and funds from BTL and Social Security Board. Prime Minister Barrow said, “One way or another we will get it done, the City Center Phoenix will rise, and the basketball facility it will house will be world class.”
As government looks forward to another year of growth, due to in large part by banana and sugar cane harvesting; sugar and electricity production; tourism, transportation and communication, it has entered its belt-tightening era with the hope of soon restoring Belize to its pre-1998 form. So, as one people, we “exercise a heightened level of fiscal discipline and expenditure restraint as we seek to recapture that lost, pre-1998, era of UDP debt sustainability.”
