Prime Minister Manuel Esquivel in his opening remarks to the National Assembly on Friday, March 7, 1997 began, "In presenting the budget for the Fiscal Year 1996/97 I stated, and I quote: "The decline in the Belizean economy has been arrested and we are now well on the way to recovery." He continued by stating, "1996 was a year of consolidation of all the gains achieved through the restoration of fiscal discipline within the Government."
Esquivel summarized the growth and decline of the productive sectors in Belize (bananas, citrus, sugar expanded; forestry and fishing recorded slight declines as did trade and tourism). Citing some of the global difficulties Belize is presently coping with i.e. a narrow range of agricultural exports which enjoy preferential access to the United States and European markets; the continuing devaluation of the Mexican peso which has attracted thousands of Belizean shoppers in search of cheaper goods and has affected the retail sector of Belize and resulted in a reduction in employment in this area.
The Prime Minister said in 1996 the Gross Domestic Product (GDP) grew by an estimated 3%, that Domestic Exports increased by 7.2% to $306.5 million, up some $20.8 million from the year before.
The Money Supply expanded by 6.1% to $581.9 million during 1996 due mainly to a substantial increase in net foreign assets.
Net credit to the private sector expanded by $39.9 million while net domestic credit to Central Government fell by $41.2 million.
The overall balance of payments showed a marked improvement of US$23.9 million over 1995 as official capital inflows significantly offset the US$9.5 million deficit in the current account which resulted from a reduction in services receipts and in transfers from abroad.
At the end of the year Official Reserves stood at US$56.1 million, the highest year-end level since December 1990.
The operating deficit of the Central Government excluding extraordinary capital receipts narrowed for the third consecutive year to an estimated 2.1% of GDP in 1996/97 compared with 5.6% of GDP in 1995/96 and 7.0% in 1994/95. This deficit was financed entirely from external sources without recourse to the domestic banking systems.
The performance of the Economic Citizenship Program was reviewed. To date the program has yielded $8.1 million in direct revenue to the Government. A further $3.5 million was transferred to the Reconstruction and Development Corporation to administer a small-scale loan and mortgage program on behalf of Government, and to assist in meeting the cost of municipal and village lighting. It was disclosed that the Scrutinizing Committee had so far this year granted 101 applicants and their families economic citizenship.
In speaking of the Performance of Value Added Tax, Esquivel said that the introduction of VAT enabled Government to abolish $35 million in Stamp Duties, $14 million in Gross Receipts Tax, $2.5 million in Export Duties and some $11 million in Import External Tariff. He said VAT had contributed some $64.6 million in revenue in the first 10 months and is expected to yield a total of $76.7 million by the end of the fiscal year. This is better than projected and makes it possible for us to slash import duties further and to remove VAT from more commonly used goods.
The Prime Minister highlighted some of the goods on the list of over 700 items on which duty will be further reduced. The list included processed food items, appliances and clothing. The reductions range from 11 to 80%. He also presented a list of goods that VAT will be removed from including commercial aircraft, instant coffee, printing ink, toothpaste, toilet paper among others.
In his specific comments regarding tourism, the Prime Minister said, "Preliminary estimates of tourist expenditure during 1996 indicate a decline of 3.3% to US$150 million. This fall in expenditure is a result of both a reported 10.4% reduction in tourist arrivals and the fact that no cruise ships called in 1996.
This reversal in the otherwise annual growth in tourism can be accounted for by several factors. The most significant being a diversion of visitors to the Summer Olympics in Atlanta, Georgia, and the impact of an aggressive marketing campaign to promote domestic US tourism. The combined impact of these factors during 1996 was to make travel to the Caribbean less attractive to US tourists, the source of 70% of visitors to Belize."
Later in the Budget Speech in his remarks on Economic Outlook for 1997, Esquivel said, "Growth in tourism is expected to resume as the Belize Tourist Board continues its strong promotional efforts abroad especially in the European and Asian markets, emphasizing the unique attractions of Belize. Recently, Government has signed a bi-lateral agreement with Mexico to allow airlines from each country to establish regular flights between tourist destinations in Mexico and Belize which will facilitate tourists traveling the Mundo Maya circuit. The European Union has agreed to grant $1 million for the development of our tourist attractions, particularly our archaeological sites. Government also continues to assist the local tourist industry through the granting of a wide range of fiscal incentives and it is presently streamlining the Customs and Immigration procedures to encourage cruise ship and recreational sailing vessel activity in Belizean waters."