REPORT #291 May 2000

Produced by the Belize Development Trust

Argentina using the DOLLAR STANDARD, is being forced by law to cut the size of government. Politicians are in a bind. They have to cut $938 million in salaries from politicians and bureaucrats in the government. The public service union of course is in an uproar. But the price of fiscal responsibility, is controlling the size of government. The dollar standard which means you cannot have anymore money in circulation than is backed by foreign reserves in US dollars controls what Argentinian politicians have to spend.

The Argentinian Union workers are leading protests against the IMF officials in Buenos Aires , who are there to assess the progress of Argentina's efforts to reduce the budget deficit. The unions and labor movement who mostly look to the government to give people salaried jobs was fractured, but the new fiscal controls on what was once a runaway inflationary economy is bringing the labor movement back together again. They blame the IMF economists for high unemployment and a prolonged economic recession.

In Belize, we are way below any DOLLAR STANDARD. Current estimates of the Belizean inflation rate have ballooned from the time the UDP Esquivel government relinquished power from a Belizean dollar that was only actually worth .09 cents Bz., today under the PUP eighteen months later, the Belizean dollar is only worth an estimated .06 cents Bz. But then Belize does not have a dollar standard. Belize has an official value, whether it be wishful thinking, or reality. With a floating debt between $900 and $1200 millions Bz and foreign reserves of a miniscule $28 USA million. The Belize dollar is still traded as if it was worth a $1 bz, or .50 cents USA, but in actual real terms is worth 92% less of it's dollar value, when calculated against foreign loan indebtedness and actual foreign reserve deposits.

The prosperity balloon bubble continues to float in the sky of Belize, and like Greenspan, the Chairman of the Reserve Bank in the USA once said. "You cannot forecast the end of a BUBBLE of apparent economic prosperity; it will continue to expand and float in the wind, for as long as the consensus of public opinion thinks it is okay".

Belizean fiscal policy continues to defy gravity!

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