First off, lets make it clear. We are not the UDP Opposition. Dean Barrow the Opposition Leader has his own points to make versus the PUP controlling party budget speech. If something strikes us as praiseworthy, then of course we will praise it. But all said and done, it is not our job either to praise the budget speech. Statistics being what they are, politicians can twist them with creative accounting to tell any story they want. You get to pick and choose your numbers to tell your own story. Our job is to try and make sense of what was in the budget speech. Being just a fisherman and tourist guide, self taught, if I can't understand it, or believe it, then I'll just say so.
We are going to try and figure out the truth behind the figures of the statistics in the Prime Minister's budget speech. What is the real truth and how do you translate it into action and future projections for business?
First off, was the declaration of a 6.7% GROWTH RATE! This is a remarkable figure. So remarkable, that if you look back to a previous REPORT on Development Issues involved with UGANDA and the World Bank, it makes you wonder why the PUP are borrowing more money? I mean, if we have a GROWTH RATE of 6.7% we don't need anybody's loans. We going strong mon!
Yet the same budget speech continues to talk about more loans from foreign lenders. In the words of World Bank types, you got to keep those country bumpkins in those third world countries maxed out at the maximum loan rate they can afford, based on their ability to pay, judged by the GROWTH RATE. Now foreign loans to third world countries are supposed to be SOFT LOANS. Helping the underprivileged and all that. A soft loan is 2% - 3%. Are we getting soft loans? If not, then why are we borrowing? I mean 6.7% GROWTH RATE and all. We should be lending them money.
Another remarkable forecast by the Prime Minister was a projection that for the next 3 years, the GROWTH RATE will JUMP TO A FANTASTIC 10%. Woweee! If that is true, Wall Street has jobs for Fonseca and Musa mon! Hire them right now at $200,000 USA per year each. Even the World Bank might. Joking aside, I hope some portion of it all is true.
The budget is for $461 million. Then comes the confusing part, when they start throwing numbers around in the millions with different jingoist fiancial jargon. You just know your getting some sort of snow job. But what it is exactly, one never knows, cause the Government keep their financial figures secret.
Revenue projection though for the year is $337 million. So $461 - 337 million, leaves a deficit of $124 million. Yet there is this constant harping on a surplus of $5 to $7 million. They joking mon! Surely they be joking!
Interest rates in the commercial banking sector are 16.3%. Now here is a fantastic realistic down to earth number you can roll around your brain cells. Even taste it and feel it. You want to borrow money it is going to cost you 16.3% interest? Mon! Oh Mon! The economy sick mon. Belize got pneumonia! 16.3 % interest! I'm paying 7.75% on my mortgage on the house in the USA. Now that is a realistic interest rate. Savings certificates are paying 3.2 %. What do savings bring in Belize? Yup! Something don't smell right to this fisherman. I may be dumb, but I'm not stupid. 16.3% on commercial loans at Belize Banks. The economy is sick mon!
There is talk of a debt service ratio of 15%. Now this ratio is guaged against what? Take your choice. In this case, they say against exports and tourism income flows. Or all our foreign exchange earnings. Have no idea on this jargon and hype at all. Some boasting of lowered unemployment rates. But nobody in the 300 villages of Belize see any change. False figures here! Government housing construction projects do not count in the final analysis of GROWTH, or productive figures.
The sale of BEL the electrical monopoly, to private people has skewed the annual figures out of recognizable shape.
USA Presidential candidate BUSH of the Republican Party in a recent primary debate was asked the question of what he would do to stimulate an economy? He said, CUT TAXES of course! Well the PUP did change the VAT to a lower Sales tax, but there has been some debate about the fact it actually comes out more expensive to the consumer. Leave that argument to the experts. But the PUP did cut taxes. They exempted everyone earning less than $20,000 a year from income taxes. Sounds good! A feather in their cap for that one. But why not stimulate the economy even more? How about just cutting out the income tax all together and thus attracting foreign investment, particularly in financial offshore service fields.
The only thing for sure out of this budget speech. Are the following conclusions:
a) The foreign debt will probably get the interest payments paid, but probably no payments on principal. They may actually borrow more money, to free local revenue to substitute in paying off interest payments on foreign loans. In fact, I suspect this is more fact than fiction.