The budget speech this year by Prime Minister Said Musa comes up with some interesting figures. Some of which are probably politically enhanced creative accounting for "feel good" public consumption.
Looking at the figures with a jaundiced eye, one can try to sift the figures for a glimmer of what may be the truth buried within the fiction.
Some things seem apparent. Over the last 20 years, no matter which political party has been in power, the annual revenue though fluctating with economic forces, seems to average out, around a $332 million annual revenue that any government by any political party could count on with any reasonable certainty.
That said, with the propensity for political parties to overspend, borrow foreign loans and support all the wild crackpot ideas of pork barrel politics, it would seem that any political party should with reason and experience over the years, limit the government expenditures to around $280 million in any given year. Despite fluctating economics of exports, revenues, disasters and other such things that can happen to Belize.
Essentially, for all intensive purposes, what we propose is that the ceiling on running the government of Belize should be limited to $280 million. Any excess go to paying off any loans, or building of foreign reserves in good years.
On the foreign debt loan front. A year and a half ago, the now Prime Minister said that the foreign debt of Belize was $650 million. In this annual speech, the same Prime Minister says the public external debt is $241.9 million. Or $242 million in round numbers. $650 million - $242 million leaves $408 million that has mysteriously disappeared. Perhaps it was paid off by the PUP government in the last 18 months? If it was, they should be crowing about it and taking credit, because it would be a marvelous accomplishment! Or perhaps we are playing semantics with words and juggling figures to paint a bright picture. The true answers would be interesting to know.
Bank rates for loans with collateral and downgraded the customary 50% of collateral value are running at interest rates of 16.3% says the Prime Minister. Yet, private borrowers on the belize culture list debating forum ( [email protected]) ( enter the word subscribe in the body of the e-mail message to subscribe ) say otherwise. They say the EFFECTIVE loan rate from foreign banks operating in Belize have an effective interest rate of 34% for loans under $40,000. We have asked for more details on these interest rates. The interesting thing about all this, is that no government of any political party persuasion has encouraged through legislation, development of any Belizean local banks in the country. The onerous banking qualification legislation only permits foreign international banks from operating in what is a captive slave market. Perhaps the lack of local competition in banking is one reason for such high interest rates? Loan interest rates should run about double of interest rates paid on savings accounts. There are other ways of gouging the customer, with point systems, fees of imaginative labels and so forth.
What I find puzzling, is where did the $408 million of foreign debt disappear too? And how? The next conclusion in summary, is that according to the whipsaw economics of the last 20 years, it is now known with reasonable certainty that a sustainable government of Belize can only operate on a government budget of around $280 million a year. " Sustainable government!"
Some food for thought to budding economics students of Belize, in that renowned accounting institution of St. John's College, of the port Belize City.