Robbery foiled; gunman at B.T.B. shot
In economic indicators tonight, we look at the Impact of Rising Electricity Rates on the Productive and Business Sectors.
The electricity sector promised significant reforms in recent years. These reforms were to bring about higher efficiency and productivity, lower and better services. But that has not been the case. The Public Utilities Commission has announced a significant increase on already high electricity rates. The new year started with a spike in electricity rates of sixteen point eight-seven percent; an increase from forty-one point six cents to now forty-eight cents per kilowatt hour. With an average inflation rate of close to two percent the hike will have a double negative effect on every Belizean consumer and will worsen inflation and the cost of living. A drastic effect will be felt primarily in the already struggling productive sector and will likely drag productivity into further decline. Ballooning expenditure has more than doubled rates. The government, however, is expected to rake in rising dividends and income taxes from profits while productivity will be hard hit. The negative repercussions and trickle-down effect will be felt from the productive to the business sectors to the small and medium enterprises and eventually passed on in higher prices to the ordinary consumer.
It is noted that rates were decreased to forty-one point six cents just before the general elections but the new increase still puts it above where it stood last February before the decrease. It is argued that the increase is to recover additional costs of power for 2012 and to cover expected costs for the first six months of this year. So why have costs risen so much under the government-run company? This analysis concludes that rather than cutting expenditure which would have a significant impact on prices and efficiency, the opposite is taking place. In sum, most will agree that the most important contributor to the reduction of poverty is improved productivity and growth; not higher prices.