Tuesday, October 28, 2008



One of the problems when we switch politicians in Belize , is the need to teach them a bit about economics, budgeting, borrowing, and the longer term effects, from what we call CAUSE and EFFECT of public policy decisions, both at the CABINET level and at the area representative level. Many politicians are either academically uneducated, or rely solely on gut instinct and leave the worrying about money to spend, up to the PARTY LEADER, who usually holds tight the keys to the government revenues and the TREASURY.

In the outside world, the effects of interest rates, foreign loan borrowing, credit use, immediate gratification for area representatives, concerned primarily about their reelection chances and image, can be absorbed by the larger economies of scale in the very short term. For the outside world, improper policy decisions can take three or four years to work out, the unexpected UNINTENDED CONSEQUENCES on the public and market place. In Belize , our National Economy is often only the size of a small town in either Europe, or the USA . Maybe not even as big as a University, or Community College system. Here in Belize the policy decisions by both, either the local area representative, or the CABINET as a whole, or even by the individual in charge of the keys to the TREASURY can have much more RAPID results in such a small economy. We don’t have to wait YEARS like large countries outside, to see the results of wrong policy making decisions. Area Representative CASTRO’s lagoon bridge comes to mind. The CAUSE and EFFECT of this expenditure occurred within six months or less. The newspapers have pointed out this week, it was $4 million of our scarce revenues, blown away on a whim.

Our politicians need to understand the CAUSE and EFFECT of their financial policies. The results will be felt usually within three months. If they are wrong, they effect the future of the political party and the nation, in the same year. In the outside world, things like wrongful policies that are causing the current RECESSION to become probably a WORLD DEPRESSION are postponed for years sometimes. Here in Belize that is not so. A wrong financial policy decision can be felt in Belize within one year, and often in less time than that. We are already in the seventh year of our PUP caused RECESSION and there is at least seven more years to work our way out of it.

That is why some time ago, we recommended the new UDP government put in place by LAWS, some sort of budgeting policy based on percentages, or ratios, to govern spending by the government, the party, the CABINET, the area representative and the Finance Minister / Party Leader. For example our National Debt to GDP ratio is about 82% of GDP and should be under 3% of GDP. Our corruption ratio is 17% of GDP and needs to be lowered, or factored into annual budgets. We had suggested the GST monthly, or quarterly tax revenues be used, to allocate the amounts available to be used for the following six months, or year. Sort of a rule by law and spending controls. We cannot allow gut reaction and personal emotions, or pressures from the electorate on area representatives, to get things done for some local pet project, influence how the government spends money, under the care of the PARTY LEADER. Who may have his own problems with internal fights within his or her own party while in office.

Already we see the UDP were not financially ready to manage the tax revenues of the country on a self sustainable basis, even though there is enough money to do so; properly managed to a system of ratios, percentages and laws. The way we do business in Belize has to change to a more academic, structured type of money management fiscal system. The small size of our nation requires that the emotional aspects of how we spend our government revenues be regulated in a more coherent policy manner. We are continuing to look at our government, that is fiscally unprepared, at the CABINET and Finance Ministerial level. That the fundamentals of leaving something in reserve for the unexpected like Hurricanes and floods, or any other emergencies, be prepared and planned, in a logical sane manner. Infra-structure is required, repairs and replacements must be maintained, disasters and emergencies should have budget allocations in reserves. We need to change from broad wishful emergency knee jerk, planning type operations, to a different system, set up to govern, quarterly and perhaps monthly on how we spend our money. Think of every conceivable thing that can happen, check against your priority lists of things to do and budget accordingly. The amounts government can spend by department, in proportion to some guideline like the GST revenues, or something like that. Always budget something for emergencies like right now.

Let us manage our country properly and become wealthy, ALL OF US !

Certainly there should be workshops and seminars for politicians on CAUSE and EFFECT. You could start a series of such workshops based on logical planning, on the future depression effects of foreign loan borrowing and the detrimental cost effects this has, a few years later, by causing a dampened recessionist economy lingering years into the future. Instead of building from strength to strength by controls on spending allocations. We must do things by increments.

Our problem in Belize is our small size. What takes years to occur in the USA , happens in months in Belize . Our elected representatives need to understand the cause and effect of interest rates, foreign loan borrowing, size of government and costs, priority lists, budgeting and allocations and even the making of lists, to divide up the available money in proportion to what is available any given month, or fiscal quarter. Educate them, run some seminars and workshops. We can manage our country a lot better, if we TRY!

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