Yesterday the PM presented the 2009-2010 fiscal budget and announced fuel prices are going up again. The opposition leader and deputy gave their analysis:

Originally Posted by Channel5
PM presents 2009-2010 fiscal budget…

[Linked Image] This morning Prime Minister Dean Barrow presented his second budget to the House of Representatives for the fiscal year beginning April first. For 2009-2010 the Prime Minister is budgeting over eight hundred and seven million dollars in revenues and grants, with eight hundred and fifty-nine million in expenditures. When you do the math, that means a deficit of fifty-two million dollars... the bad news continued with the announcement that the fuel tax will be increased, which is expected to yield thirty million dollars, but more on that later. Before he got into the meat of his future plans, the PM looked back at 2008. In that economic report, Barrow noted that banana and citrus held their own, but that things were not great for sugar, papaya and tourism. This resulted in G.D.P. growth and a reduction in the debt... all in all, the PM was upbeat about his first year, despite the challenges.

Prime Minister Dean Barrow

“We recognized the constraints, but refused to be overcome by them. Our education subsidies; our assistance to the poor; our tax breaks on medicines and medical services; our great leap forward on infrastructure rehabilitation; all these were things that, as the record now shows, we succeeded handsomely in doing. The shackles of the P.U.P. legacy and world circumstances could not restrain us. We became Prometheus unbound and all of us on this side of the House will remain immeasurably proud of our first year in office.”

“The Statistical Institute of Belize is reporting that the economy grew by 3.8% during 2008. For that, congratulations and thanks are due. The Statistical Institute of Belize also reports a contraction in the unemployment rate to 8.1% from 8.5% in 2007—must be die to all the infrastructure jobs that we are creating—but there is a spike, unfortunately Mr. Speaker, in the consumer price inflation to 6.4% from 2.3% in 2007.”

“Annual banana production, in response to greater input usage, better agronomic management and improved prices, rose by 26.1% to 77,934 metric tons. Contrary to initial predictions that we would only see a marginal growth in production, the 2007/2008 citrus crop had a bumper harvest. Deliveries for the crop year increased by 5.6% to 7.1 million boxes as an 8.4% increase in orange deliveries outweighed a 4.3% decline in that of grapefruit.”

“In contrast, annual papaya production was down 12.7% to 63.7 million pounds, still below pre-hurricane levels. Affected also by floods from tropical storm Arthur and froghopper infestation, the 2007/2008 sugarcane deliveries declined by 18.4% to 980,114 long tons, compared to the 2006/2007 crop. The fall in sugar output to 78,235 long tons—the lowest output in the last twelve years—was even sharper at 19.5% due to a 2.9% worsening in the cane/sugar ratio, meaning of course that more sugarcane was required to produce a ton of sugar.”

“While the global economic downturn will be affecting some sectors like tourism and may weaken international prices for our exports, the Statistical Institute of Belize is still projecting G.D.P. growth to be between 2.5% and 3.0% for 2009.”

“At the end of December 2008, the Central Government’s debt and guaranteed debt stood at $2,198.8 million, the equivalent of 78% of G.D.P. This was down by $76.2 million from the 2007 position.”
“The debt restructuring of 2007 has resulted in a significant portion, 60.2% or $1,093.5 million, of Central Government’s external debt now being held in bonds, the “super-bond effect”. Currently, the annual interest rate on the super-bond is at 4.25% the equivalent of $46 million per annum that we have to find. The super-bond effect does not stop there as, the annual interest rate rises to 6.00% next year costing an additional $20 million in annual interest payments for all the money that those people borrowed for which there is nothing to show.”

Originally Posted by Channel5
…And announces fuel prices to go up again

According to Prime Minister Barrow, the economic challenges facing the country are even greater for 2009-2010 due to the two natural disasters of 2008, the rapid slump in the world price of petroleum and the financial meltdown occurring across the world. Nonetheless, the P.M. says his government will bring the nation out of the crisis… and while public servants will see their wages unfrozen, some pain will be felt in the pocketbooks when it comes to fuel prices.

Prime Minister Dean Barrow

“The Government is holding high its commitment to the education, health, social and physical wellbeing of the Belizean public. To this end, we are allocating additional budget expenditures to those priority areas of education, health, food security and physical infrastructure.”

“On the revenue side, Mr. Speaker, we do not propose to introduce any new tax measures apart from an increase in the rate of Import Duty leviable on Gasolines and Diesel Oil. There is, of course, a complementary increase in the Excise Tax on local production of these same items in order to maintain equity in the rate of taxes applied to these products regardless of origin. It is not expected that this latter—that is, the excise on local production—will yield significant additions to revenue as it is projected that higher sales of local petroleum product will be offset by lower sales of similar imported products.”

“The increase we are proposing is only $1.00 per gallon on gasolines and diesel. This amounts to less than one half of the taxes that were removed over the last year alone. It will still keep diesel at below the $6.00 per gallon mark, and gasoline at below $7.00 per gallon mark. Butane, on which there is no tax, will not be affected. In doing our calculation we were guided by best estimates of where the acquisition costs for the refined products will be over the next year. If for any reason these turn out to be significantly higher than the experts predict, it is my promise that we would then come back and take off as much of this dollar increase as would put things back in alignment for the Belizean people. This revenue measure is, despite the $60 million financing gap that we needed to close, and which we have closed, the only increase we are implementing. It is as painless as we can make it. This single step will yield thirty million dollars. And that took us halfway to closing the financing gap. Government’s economic diplomacy did the rest and we are now, so to speak, home free.”

“We’re proposing an allocation of $276.6 million for Personal Emoluments. This reflects an addition of $16.6 million, but it is to provide for the full year effect of the U.D.P.’s restoration of the salary increment frozen in the year 2005. It also to provide for the normal salary increments, which we are committed to maintain which fall due in 2009.”

“Government is proposing to increase capital expenditures significantly to $163.5 million for fiscal year 09-10. In the Capital II, the locally funded program, Government proposes to expend $63.4 million from its own resources. This is to carry out small local projects but, more so, to provide for adequate levels of counterpart funds for the externally financed projects in the Capital III Program.”

The one dollar fuel increase will not be applied to Kerosene. An increase of four point eight million dollars has been budgeted to finance the National Health Insurance, K.H.M.H. will receive three million dollars more in grants, educational institutions will get two million more, while five million dollars is slated for social assistance and community support programs. There were several motions for loans including six million from the International Fund for Agricultural Development and just under four million from the CABEI, both for rural financing; ten million from the I.D.B. for emergency road rehabilitation due to the 2008 floods; and approximately seven million from the OPEC Fund for International Development for the Solid Waste Management Project.

Opposition leader and deputy give analysis

[Linked Image] The Opposition will get a chance to put Barrow’s offering under the microscope when they debate the budget on March nineteenth. But today we asked Party Leader John Briceño and Deputy Leader Mark Espat for their initial impressions.

Mark Espat, Deputy Leader, P.U.P.

“I think there are two sides to the coin, so to speak. There is the issue of the old budget and there is the issue of the new budget. First to the performance of the 08-09 budget, as we had predicted there would have been a significant deficit if they didn’t slow down investments in capital two and three. So while they will show a thirty-six million dollar overall surplus, the reason for that is simply because they did not implement the projects the promised they would last July when that budget was presented. The new budget, I think is more realistic. The government is projecting a fifty-two million deficit and so we will have a shortfall. But I think more ominously is the thirty million, thirty-two million in additional taxes that will come from fuel and so Belizeans will see the price at the pump go up on April first.”

John Briceño, Party Leader, P.U.P.
“He had to do some juggling to be able to show a surplus in the budget and it certainly did not work out the way he promised when he made his budget presentation in July. So certainly he will have to continue his juggling act. We all know, especially those in the private sector, can tell you we are going to be going through a difficult time; international and certainly locally whereby tourism continues to decline, our cultural outputs continue to decline, our prices that we get continue to decline. It’s going o be very difficult and the government will have to be very careful on how it is going to be targeting spending especially in the agricultural sector. For instance, in the sugar industry, where we continue to need a lot of help and where you have over six thousand cane farmers in the industry. We hope that it can get better at the end of the day, all of us live here and we want it to get better, but it is going to be a tough time.”

Mark Espat
“The question on the mind of Belizeans right now is what is in this budget for them, what is in it for our public officers, what is in it for our farmers, what is in it for our small businesses, what is in it for our single mothers and those were the questions that there were no answers to. We know there's thirty million dollars more in petroleum taxes but we did not get a very clear picture of how this budget will benefit the Belizean people.”

Live and let live