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IMF Provides Initial Report on Belize’s Economic Performance #538654
10/09/19 05:33 AM
10/09/19 05:33 AM
Joined: Oct 1999
Posts: 76,487
oregon, spr
Marty Offline OP

Marty  Offline OP

The latest IMF report, though in preliminary stages, says that while economic recovery is underway, the pace is slowing. It reports heightened spending on wages and public investment and weaker revenue than expected, putting the 2019 budget’s target at risk. As to the macroeconomic outlook; the news is bleak. Elevated public debt is as high as one hundred percent of G.D.P., even as Belize faces external risks from a host of issues such as black listing. News Five’s Isani Cayetano. 

Isani Cayetano, Reporting

The International Monetary Fund has released a report describing initial findings following an official staff visit to Belize between September twenty-third and October fourth.  Led by Deputy Division Chief Daniel Leigh, from the Western Hemisphere Department of the IMF, meetings were held with Prime Minister Dean Barrow, Central Bank Governor Joy Grant and Financial Secretary Joseph Waight, among other representatives of government, as well as the public and private sectors.

The preliminary results indicate that Belize’s economic recovery maintains a slow pace, a fact highlighted in PM Barrow’s Independence Day address.

Prime Minister Dean Barrow [File: September 21st, 2019]

“Belize’s economic performance in the first quarter of this year has been spectacular.  GDP grew in the three months from January through March, by an unusual 5.2 percent.  And the even better accompanying news was that the unemployment rate fell to a historic low of 7.6 percent.  Admittedly, second quarter GDP greatly lagged the first quarter and an actual decline of 0.8 percent was recorded.  But when the two quarters are put together, in aggregate we are still much ahead of par and much ahead of our peers in the region.”

While the prime minister touted double-digit growth in tourism arrivals in 2018, pointing to marketing initiatives, more flights from major cities and strong trade relations, recent data from the Statistical Institute of Belize indicate a decline in economic activity.

Prime Minister Dean Barrow

“Growth and development, however, have always been recognized as two different things.  One does not necessarily include the other and in fact they can sometimes sharply diverge.  When Belize therefore experiences a happy confluence of growth and development proceeding in tandem; of increased GDP resulting in increased jobs; of more people being put to work and being lifted out of poverty, it is indeed a conjuncture of which we can be proud.”

Despite carrying out significant fiscal consolidation since 2017, the rate of adjustment has slowed to a snail’s pace.  The approved budget for the financial year 2019/2020 focused on a primary fiscal surplus of a little over two percent of the gross domestic product, however, the latest figures show increased expenditure in wages and public investment.  The result has been weaker revenue than what was anticipated, placing the target of the financial plan in jeopardy.

John Briceño, Leader of the Opposition

“The result of all this is a people wary from worry, worry about their personal safety, worry about their economic security, about poverty and deprivation, worry about an uncertain future and more so, worried about the kind of nation we are building for our children.  How could they not feel this way when our poor, instead of being lifted up, are being dragged into greater poverty due to an all but stagnant economy?  How could they not feel this way when our middle class is shrinking and collapsing under burdensome taxes and the lack of vision by their government?”

To reduce public debt from where it stood one year ago, a primary fiscal surplus that is greater than what was intended in the 2019/2020 budget is necessary in order to achieve practical levels over the long term so as to safeguard against shocks.  External risks, nonetheless, are ever present.  Belize’s inclusion on the European Union list of non-cooperative tax jurisdictions could disrupt investment and trade flows.

Prime Minister Dean Barrow [File: October 4th, 2019]

“We have been trying to work with the European Union to in fact produce the legislation that they require in a form acceptable to them because that is what is necessary in order to get us removed from the blacklist.  It is time sensitive.  Their next meeting is being held just after, I think, the middle of this month and that is why we would wish to pass the required legislation in the case of the house today and hopefully the legislation can also get through the senate next week so that we would then be able to offer proof of the assent by His Excellence the Governor General to the European Union.”

That piece of legislation goes before the upper house on Wednesday.  The IMF Executive Board meets in November to discuss Belize’s Article IV consultation.

Channel 5

Here is the whole report on the IMF website.

Re: IMF Provides Initial Report on Belize’s Economic Performance [Re: Marty] #538716
10/12/19 06:13 AM
10/12/19 06:13 AM
Joined: Oct 1999
Posts: 76,487
oregon, spr
Marty Offline OP

Marty  Offline OP

IMF mission notes Belize’s slowed growth and massive public debt

The International Monetary Fund (IMF) has just completed its annual country visit to Belize in accordance with its Article IV consultation and published its preliminary findings on October 7 on its website. Daniel Leigh was the leader of the IMF team, which visited Belize from September 23 to October 4.

The IMF team met with Prime Minister Dean Barrow, Central Bank Governor Joy Grant, Financial Secretary Joseph Waight and other senior government officials. The team also met with representatives of the Opposition, the private sector and public sector unions.

The IMF said that Belize’s economic recovery is slowing down and real GDP grew by a mere 3.2 percent in 2018.

The IMF stated, “…recent data indicate a slowdown in economic activity, with a minor contraction in 2019 in Q2, reflecting a severe drought. Growth for 2019 as a whole is projected at 1½ percent. The current account deficit widened to 7.9 percent of GDP in 2018 from 7.7 percent in 2017, despite higher tourism earnings.”

Belize’s primary surplus reached 2.1 percent of GDP, the IMF noted, but recent data indicate more spending on wages and public investment and weaker revenue than expected, putting the budget target at risk, the IMF report said.

The report went on to say that real GDP growth is projected to be just under 2 percent. “The current account deficit is projected to remain large, reflecting structural weaknesses, with international reserves projected at about 3 months of imports of goods and services over the medium term,” the IMF said.

The IMF said the external factors that would affect Belize are a weaker US growth, which would impact tourism, and higher oil prices, and natural disasters, to which Belize is prone.

“Elevated rates of crime pose risks to growth and competitiveness. Reputational risks from potential financial misuse of the international financial services sector’s entities, and governance concerns, could weaken investor confidence and renew pressures on correspondent banking relationships (CBRs),” the report said.

“Belize’s listing as a non-cooperative tax jurisdiction and uncertainty regarding standard setters’ expectations could disrupt investment and trade flows. The government continues to contest legacy claims which could lead to large public and external financing needs,” said the European Union after recently blacklisting Belize.

The IMF pointed out that “Improving Belize’s economic growth hinges on improving the business environment. Reform priorities include facilitating access to credit by establishing credit bureau and collateral registry; streamlining regulations for starting business, expanding technical and vocational training programs; fighting corruption by implementing and enforcing the asset declaration regime through the Integrity Commission and strengthening the rules on conflict of interest; and ensuring public safety, including through community programs and steering youth toward formal employment and away from crime…”

The IMF said Belize’s last poverty assessment is almost 10 years old and an update is needed for improving the targeting and effectiveness of social policies.

Belize needs to reform its tax system to make it more equitable and less distortionary and to mobilize additional revenues, said the IMF. The IMF said the turnover, based on business tax, is inefficient, and inequitable, and discourages investment, and a more efficient corporate income tax should be introduced over the medium term.

The IMF said it will discuss the Belize Article IV report in November.


Re: IMF Provides Initial Report on Belize’s Economic Performance [Re: Marty] #538806
10/19/19 05:49 AM
10/19/19 05:49 AM
Joined: Oct 1999
Posts: 76,487
oregon, spr
Marty Offline OP

Marty  Offline OP
Tourism doing well, but too much crime and corruption

Editorial in Amandala:

An IMF (International Monetary Fund) team recently concluded their annual look at the economy of Belize, and while we at this newspaper don’t look to them for our blueprint for the future, we believe it is good to pay attention to what others have to say, whether they are enemies or friends. Our government leaders, we know, have to hold their breaths, pray for a passing grade from that organization, because they are an important key to the FDI (foreign direct investment) and loans without which our economy, as it is presently designed, would collapse. There is only so much that Taiwan can do to prop us up.

The IMF report noted that although there were some positive initiatives, the economy was slowing down, and crime and bad governance were persistent problems. On the economic front, tourism is still the only bright star. What would we do without tourism, fragile as it is, in this country? We know the industry is mostly foreign-owned, but for sure it provides a lot of employment.

The Central Bank cannot tell us how much of the earnings from tourism stay here, but the tourists are coming. The IMF report says that tourist arrivals were up double digits, but, despite that, our “current account deficit widened to 7.9 percent of GDP in 2018 from 7.7 percent in 2017.” This means that the other main engines of our economy are not firing on all cylinders. We had a papaya industry, but not anymore. Citrus is way down. Sugar cane is struggling. Banana and marine products are holding steady. Shrimp production is increasing, incrementally.

With tourism being the hottest item in our country, it is not hard to understand why our government is sinking more investment into that industry, and the biggest example of that is the project for the Caracol Road. This newspaper supports improving the Caracol Road, but we cannot support the government constructing a highway to that destination that is near the equal of the main thoroughfares that link our district capitals and Belmopan, because that is wasteful.

We have noted that this government is keeping its head above water by borrowing, and it seems the only money it can get is for road construction; loans, however, are not gifts, and neither is to be squandered.

The IMF report said that despite our not earning as much as we expected, we spent more on wages and public projects, and that puts our “budget’s target at risk.” The IMF says we have to earn more, so that we can reduce our large public debt (94% of GDP at the end of 2018), and so that we can build our reserves to “buffer against shocks.”

Crime and corruption remain big negatives for Belize. The IMF warned that our failure to contain crime and “reputational risks from potential financial misuse of the international financial services sector’s entities, and governance concerns”, do not bode well for our future. The IMF was euphemistic when it spoke about “reputational risks from potential financial misuse.” Our reputation is shot to hell, and that’s not just because of the Sanctuary Bay scandal, two international banks collapsing in a year and a half, our Foreign Minister losing a major land case to a foreigner, and a senior tax agent of the government being nabbed by a foreign government on a charge of fraud.

Our reputation started sliding down the tubes when a man in a jail in Asia was reportedly “spirited here” for photos for his passport. The slide since has been at breakneck speed, with corrupt deal after corrupt deal piling so high our people suffocate under the burden, and foreigners of dubious character find us a welcome playground.

The IMF actually mentioned our Integrity Commission, saying we could improve our fight against corruption if we implemented and enforced “the asset declaration regime” through this body. The IMF said it would also do us good if we strengthened “the rules on conflict of interest”. Some of us know when we are being teased. The report said there should be “community programs that steer youth toward formal employment and away from crime”. Dear IMF, the only formal employment for youth in our country at this time, is fighting crime.

This is tough to point out, but if we are honest about what is taking place on the ground, what we are looking at almost appears to be a government economic strategy. Allow crime to grow and collect taxes off imports of padlocks, steel for safety grills, feed for guard dogs, and cameras for shops. Steer youth to “informal” employment: crime, and steer youth to formal employment: fighting crime.

The IMF advised that we must have concern about building codes and how we develop our land. They must also have been talking to Belizeans who are fed up with these huge structures going up with no concern for the rights of others who live in the neighborhood, and the lack of respect for fence lines. The recent drought and the substantial impact it has had on a number of waterways brought to the fore the reality that we are almost completely disregarding the established rules when cultivating land near to waterways.

C-SSPAR laments politicizing of Public Service

In last Friday’s publication of the Amandala, Mr. Wilfredo Novelo, a former member of the Public Service Commission who served between 1993 and 1998, shared his knowledge of our system, how it worked prior to the change from the head of the Public Service being a Permanent Secretary who came up through the ranks, to a Chief Executive Officer appointed by a Minister of government.

Mr. Novelo explained his preference for the old system, and opined that Mr. David Gibson, a former Permanent Secretary, would never have countenanced the arrangement a PUP government made for the Universal Health Services with a private bank. He also described the Joshua Perdomo write-off (the UDP excused Mr. Perdomo from a $40,000 bond) as a “sad case” of “failed public administration.”

On the heels of that letter by Mr. Novelo, we received a copy of an August 2019 discussion paper prepared by C-SSPAR (Centre for Strategic Studies, Policy Analysis and Research), a think tank headed by Mr. David Gibson, whom Mr. Novelo acclaimed as “one of the best Permanent Secretaries Belize has ever had.”

C-SSPAR said that the politicizing of leadership at the highest levels of the Public Service actually began after we became independent in 1981, and that what is being exhibited today in the main Public Service came about because of the systematic politicization (of the department) over the past ten years.

C-SSPAR says most Belizeans believe the politicians have seriously damaged the public service, “which is required by law to be impartial, fair and non-political in its delivery of public services.” The paper says “a massive erosion of the merit-based recruitment system has been inflicted by the politically directed determination of appointments at all levels of the Belize Public Service, including the Security Services. This has been accomplished by imposing direct political control over the Public Service Commission which is now chaired by a former UDP Minister of the Public Service.”

In modern Belize, the government Minister is a god. In 1981 we believed we were about making a better country, a country for all Belizeans, when we threw off the shackles of colonial government. Our political leaders had other ideas. In modern Belize, everything is about the party in power. Immediately after we elect a set of politicians, put them in government, their narrow little minds start scheming to enrich and entrench themselves. Every asset of the country is manipulated for the self-aggrandizement of the members of the party, and the perpetuation of the party in government. The politicization of the Public Service is devious, dastardly, a disgrace. It is a shame what the elected politicians have done.

Fortunately, there are too many men and women in this country who will not bow to political pressure. Indeed, many of the political appointees are not happy about what the politicians are doing either, but they bite their lips because many of us are desperate for a job and the only ones available are in the public sector.

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