PM says falling oil prices and reducing yields from BNE production will result in a $30 million shortfall in government revenue in the coming year. The next budget will be a "austerity" one.
Brace up for austerity. Speaking at a press conference this morning, the Prime Minister sounded the alarm that a gaping thirty million dollar hole is expected in the new and delayed budget that will be presented to the House on June twenty-ninth. It means that government will be spending less and that cuts and tougher times are expected. The PM touched on a myriad of issues, including an update on his wife’s health, crime and what the recent court ruling on the nationalization of Telemedia means for the government. News Five’s Jose Sanchez begins with the national budget.
Jose Sanchez, Reporting
The P.M. held his first press conference since March seventh. He began on a personal note with an update on the health of his wife Kim Simplis Barrow.
Kim Simplis Barrow
“Dr. Bernard Bulwer in Boston and Dr. Dorita Arzu in Houston have arranged for us to see a cutting edge specialist at the M.D. Anderson Cancer Center at the Texas Medical Complex in Houston. That doctor’s expertise is in treating heart failure arising secondary to radiation and chemotherapy damage. And we should be able to see him as early as next week. Doctor Adrian Coye, here at home, is ready to take over as soon as Kim can come back to Belize. And Doctor Elsworth Grant, the founder of the Dangriga Cancer Unit, remains always ready to advise and assist.”
Official business then began with the announcement of draft budget estimates to be announced at the next House Meeting on June twenty-ninth. Barrow indicated that austere measures would be implemented since oil revenues has dipped by thirty million dollars.
“You know when I was writing this I saw that I had made a typo and instead of draft estimates, I had written daft estimates. I hope that’s not a Freudian slip. Anyway, Cabinet will tomorrow approve the draft estimates for presentation to the House on Friday, June twenty-ninth. And while certainly with respect to agriculture and tourism the economy is doing well, there is no doubt that this will be a difficult budget. Reason number one is what is happening with global oil prices. Their steep drop is good news for consumers at the pump, but our country’s export earnings are being hammered and government will experience a thirty million dollar fall off in tax revenue as a result of this—the far lower oil prices and also as a result of declining B.N.E. production. Oil is of course a finite resource and we are already beginning to see production trailing off. We need to find more oil.”
As oil reduces, so does an incremental increase in interest rates on the super bond which will reach eight point five percent after August 2012’s payment. The government is hoping to broker a deal with international creditors such as the I.M.F. and the I.D.B. to partially guarantee a restructured Superbond.
“We are seeking relief from the Superbond holders. Now, we clearly need the assistance of the international financial institutions in this regard; particularly from the I.M.F. We need them to certify our numbers, as well as, our friends from Inter-American Development bank. I said last week in an interview at the airport just after I got off the plane is that one of the things we are asking I.D.B. to do is to provide a partial guarantee to the restructured debt. Now I must stress that this is something that ultimately will have to be proved by I.D.B. board and there is no certainty at all that we will secure this. But I repeat that initially the talks are going well and there is clearly a tremendous degree of I.D.B. goodwill—at least on the part of the officials with whom we have been speaking. In the context of all that, we locally—in terms of our national budget—must demonstrate fiscal discipline as proof that we are doing our part in the equation that we say then requires sacrifices from our commercial creditors. So we cannot, as an article of faith now, engage in any kind of excessive spending and that’s putting it mildly. Far more practically though, we cannot do that because with the calamitous plunge in our petroleum revenues, we simply don’t have any extra money to spend. So, the trick now will be to manage operationally with less, far less, by way of government influence. The challenge and the preoccupation is how to reign in local expenditure without compromising our signature pro-poor programs. For these, must and will remain the social and political lifeblood of our administration and this nation. Conundrum though it is, let there be no doubt that we will do this. And we will do this and we will do this while absolutely refusing to implement any growth stifling tax increases on the Belizean people.”
With no tax increases, and expected shortfalls in revenue, cuts are imminent. However, ministries are expected to implement some austerity measures. Reporting for News Five, Jose Sanchez.
PM Dean Says 2012-2013 Budget Will Be Lean And Mean
Prime Minister Dean Barrow held the first Press Conference of his second term today. It comes at nearly the 100 day mark for the second term - but there's not much to celebrate.
That's because Oil revenues are expected to go down sharply in the coming fiscal year - making the long delayed budget, a difficult one.
He opened up with that explanation:
Prime Minister Dean Barrow - Prime Minister Of Belize
"There is no doubt that this will be a difficult budget. Reason 1 is what is happening with global oil prices. Their steep drop is good news for consumers at the pump, but our country's export earnings are being hammered, and Government will experience a $30 million fall- off in tax revenue, as a result of this, the far lower oil prices, and also as a result of declining BNE production. Oil is, of course, a finite resource, and we are already beginning to see production trailing off. We need to find more oil. So, the trick now will be to manage operationally with far less by way of Government influx. The challenge and the pre-occupation is how to reign in local expenditure without compromising our signature pro-poor programs. Let there be no doubt that we will do this, and we will do it while absolutely refusing to implement any growth stifling tax increases on the Belizean people. There is no way we're going to raise taxes. Clearly, something has to give, so we will have to curb expenditure. I am glad you're asking this question. My colleagues are here this morning, and they've heard me say this over and over again. Since tomorrow is the day in which the exercise will be done, that will have to result in the expenditure curbs, they will know that the gravity and the absolutely imperative nature of doing this It will be highlighted here."
The Budget will be presented on June 29th, not the 22nd as was previously projected.
The good news is though that Tourism is expected to have another record year and sugar had the best year in memory, with over 1 million tonnes delivered, and 115 tonnes of sugar milled.