Prime Minister Says Belize Is Doing Well Despite Challenges Of 2008
January 21, 2009
Prime Minister Dean Barrow hosted his first press conference of the New Year earlier today. Prime Minister Barrow said that in spite of the challenges faced during last year, as a country Belize did well.
Dean Barrow; Prime Minister of Belize
“The fallout from the world recession and financial collapse has of course been compounded here in Belize by the effects of the unprecedented floods in early and late 2008. Nevertheless, preliminary GDP figures record a 5.3% growth for the first 9 months of 2008. Growth of 8.2% during the third quarter was especially buoyant driven particularly by increased production and higher prices for our petroleum exports. However, the sharp fall in oil prices coupled with the ravages of Tropical Depression # 16 hammered us in the last quarter. Growth has so far moderated in that last quarter that we expect to come away with no better than a 2.8% overall GDP growth for the year. All things considered, though, this is still good when you look at what is happening all around us and in the larger global community. If we achieve 2.8% GDP growth for the last fiscal year I certainly will feel relatively satisfied. Notably domestic exports went up by 13.9% to 492.1 million in the first 10 months of 2008. Apart from petroleum, top performers were citrus and bananas. I especially thought it useful to give you these preliminary numbers because there was a much circulated EIU report a couple of months ago that contained some alarming … but it turns out … utterly wrongheaded statistics. The increase in official reserves to 3 months worth of imports is holding steady. There will be a primary balance of about 4.9% for fiscal year 2008-2009 compared to 3.8 for fiscal year 2007-2008. The overall fiscal deficit, the EIU notwithstanding, is projected to be 0.7% of GDP almost identical to that of the previous fiscal year. Statistics apart, lots of good things happened over the past year. I continue to say that our performance during and after the flood crisis has been both outstanding and uplifting. The removal of the GST from medication and medical services, the zero rating of basic food items, the dramatic cut in fuel prices at the pump and now the lowering of electricity rates are all matters for celebration. All in all, comparatively speaking, I think Belize did well in 2008.”
The Prime Minister said the nation will be confronted by serious challenges this year.
Dean Barrow; Prime Minister of Belize
“Food prices are moderating and oil prices are certainly not expected to go back to anything like the highs of 2008. Thus, inflation will fall by about half for the currency it is a little over 6%. We expect inflation to fall by about half this year and government will of course continue with the expanded social safety net that we introduced last year. There can be no doubting the pressure that in particular the fall in revenues from our taxes and royalties on petroleum will produce. The global crisis will just as clearly affect foreign direct investment, remittances from the US and especially tourism. The December figures are not yet in, but tourist overnight arrivals were down 3.6% as of November 30 2008 over the previous year. Anecdotally, though, it does appear that we will do slightly better for the second half of December. The outlook suggests that tourism will be hardest hit in Placencia and Cayo, although in San Pedro the premium and established brand name properties are actually seeing an increase in business. However, that is balanced by the fact that the properties that cater for the middle income even in San Pedro are experiencing a 5 to 15% decline in revenue and occupancy rates. The great economist John Maynard Keynes preached a doctrine that suggested government could avoid or deal with recessions by running deficits and borrowing when the economy slows because the private sector investment will simply not be enough. Well, Richard Nickson, I believe, once famously said ‘We are all Keynesians now’. That Keynesian play book especially includes accelerated spending programs and other economic stimuli. In Belize we certainly cannot barrow commercial borrowing even if Keynes would have us do that. Global markets are in any case drying up and we have that super bond that makes it impossible for us to do any further commercial borrowing. I noted that the Germans went to markets recently and could not raise what it set out to raise, which I think is quite a story. But as is said in any event we are unable, even if we would like to, go to global financial markets. We certainly would not want to in any event."
During the course of today’s press conference Prime Minister Barrow confirmed that Cabinet has decided to renew the contract of NICH President Diane Haylock for another year.
The Prime Minister said Government has engaged a U.S. law firm to further look into settling the issue with NEWCO over that company’s lawsuit against the Government relating to the termination of its contract for the running of the international airport.