The presentation of the 2021 budget by the Briceño administration is still a few weeks away, but putting together the financial plan, despite severe austerity, is well underway.  Earlier this week, Prime Minister John Briceño and Minister of State Christopher Coye, along with several other government officials, sat down with the business community to discuss Belize’s economic situation. The Belize Chamber of Commerce and Industry and the Belize Business Bureau shared concerns about government’s plan for economic recovery amid the COVID-19 pandemic.  The discussions are part of a series of consultations with various representative organizations, including the unions and other social partners. In the coming days, other ministers from Briceño’s cabinet will be meeting with the churches and the agro-productive sector to hammer out the way forward in the wake of what is described as chronic mismanagement of the economy. Minister Chris Coye provides additional information on the ongoing meetings.

Chris Coye, Minister of State, Finance

“That process has commenced, so at this point in time we have already met with the Chamber of Commerce and the Belize Business Bureau.  So in terms of private sector and social partners, we have met with them earlier this week and the intent is to meet with other social partners next week, as well as the agro-productive sector.  So that will include the Council of Churches and the N.G.O.s.  As far as the unions are concerned, that will be a different team comprised of Minister Fonseca, Minister Hyde and Minister Usher.  They will be meeting with the unions.  We, insofar as the prime minister and I, we are the ones meeting with the other social partners along with the C.E.O.”

Isani Cayetano

“What has been the reception of the business community to what you guys are presenting?  I know the prime minister has gone one record to say that the country and the government, by extension, is essentially cash-strapped.  In terms of what you guys are bringing to the table to the business community, how well was that received and what were some of the concerns on their end?”

Chris Coye

“I think it was important for us to set out the context, the current state of affairs, both in terms of the overall economy, as well as the state of public finances.  So we went into some level of detail with the business community on that to lay out where things stand in terms of the economy and the numbers are reflecting, according to the Central Bank that there was roughly a seventeen percent contraction in the economy.  We went through the impact that has in terms of unemployment.  The unemployment rate jumping from roughly ten percent in the prior year to almost thirty percent, so a triple increase and as well the underemployment rate jumping from thirty-two percent to thirty-eight percent.  We have sixty-eight percent of our labor force looking for work.”

Things Look Dread fi 2021!

The outlook for the upcoming financial year is not promising. The Government of Belize has been operating in the red before the COVID-19 pandemic, which has only made matters worse for our local economy. A new fiscal calendar will be rolled out on April first, but there won’t be any celebration. Those twelve months will be dedicated to paying debts and steering the economy in a positive direction. As it stands, a debt of two billion dollars has accrued over the past ten years, which does not include the Super Bond. According to Minister of State Chris Coye, there is an existing shortfall of thirty percent in government revenues.

Chris Coye, Minister of State, Finance “We have the debt, in a matter of a decade, having increased by roughly two billion dollars, so we have roughly close to four point two billion dollars in debt. This is not all external debt. Our external debt is in the range of, with the commercial creditors one point two billion, but the total is around one point seven and we have a domestic debt now which skyrocketed over the past few years to around one point three or one point four billion dollars. That puts us in a difficult situation as day in day out we have a shortfall. Thirty-six cents out of every dollar that is spent is being borrowed right now and that’s where we have a truly difficult situation so far as government finances are concerned. We really have a shortfall of thirty percent in revenues, over three hundred million in revenues but not a comparable shortfall in expenditures. So because of that, because of expenditures in emoluments, for example, wages and salaries having actually gone up, marginally so but having gone up slightly and capital expenditures having gone up around seventy million dollars to three hundred and forty-six million, the imbalance is further exacerbated.”

Super Bond Payment Due in May, Hard Times Notwithstanding

The perpetual albatross that is the Super Bond also stands at roughly one point two billion Belize dollars, with an interest payment of twelve million dollars due in May. In 2020, when the COVID-19 pandemic began affecting the government’s bottom line, the Barrow administration turned to bondholders seeking permission to capitalize interest on five hundred and twenty-five million U.S. dollars. It effectively avoided paying interest at the time; however, that borrowing charge was simply delayed. Instead, the interest was added on. Belize has since gone from meeting the payments on a semiannual basis to quarterly.

Chris Coye, Minister of State, Finance “With respect to the external debt, the bulk of it is what has been referred to as the Super Bond and that is now over five hundred and fifty million U.S. because last year, I think it was roughly around, say five hundred and twenty-five million U.S. dollars, a little more or a little less. But government went to the bondholders and got an agreement for the capitalization of the interest. That means that it didn’t have to be paid then, but that doesn’t mean that that interest disappeared. That interest was an add-on. So now that additional interest now has to be paid as well, so that puts us to over five hundred and fifty million [dollars] in debt. A quarterly payment, because it was initially a semi-annual payment that was being made, but because Belize effectively had its challenges there were immediate adjustments to how Belize had to pay and that meant it had to start paying quarterly. That first quarterly payment will become due in May of this year and that will be six and a half million U.S. [dollars].”

Channel 5