Saturday, March 21, 2009


Marcel Cardona photo


Ex-Cabinet Minister, UDP Cardona from the Orange Walk district of Belize has a feud going on, with Cabinet Minister, UDP Gaspar Vega, also of an Orange Walk District. Vega won in the internal bickering squabble and got Cardona dumped from his Cabinet post. ( I forget the reasons!) This cost Cardona $20,000 in annual income, the media said. On Friday, the media news on cable tv were showing an irate Cardona lashing out vebally at his own party during the house sitting in the capital of Belmopan. Making claims of needed development projects he wants and is not getting for his voting district. I remember a High School and a Clinic he mentioned among others. That may all be very well and good, each district has a long list of projects that need doing, so he is not alone.
When viewing the tirade and the preamble in the media leading up to the parliamentary House Sitting, one wonders a bit at what the goal of CARDONA was? He was angry, there was no doubt about that. Obviously he was accomplishing two things. He was in effect trying to blacken the eyes of Gaspar Vega and also his party leader, Prime Minister, Dean Barrow in retaliation for all the media bad publicity he has been getting over something or other. Or he could have just have been making points with his voting constituency, to reassure them he was fighting for their interests and showing that it was not his fault that the party was not investing more of scarce monies in his voting constituency. The whole thing was a sort of TEMPEST IN A TEAPOT, but the bitter rivalry between two Orange Walk area representatives of the same political party in power was plain to see.
The whole thing came over the fiscal year, budget speech for his party. In 2008 the government revenues were $717 million dollars. For 2009, the projections for annual government revenue are estimated, at $738 million dollars, up slightly from the year before, despite the loss in USA tourism ripple effects. The rise in oil from $40 a barrel to slightly over $50 a barrel this past week, with a local production of 4500 barrels a day are expected to cover any shortfalls for government revenues lost from lack of tourism overnight visitors, due to the news financial PANIC being spread by the USA news media in that country. Depending on whether we in Belize suffer Hurricane strikes this year, or flooding from Peten, Guatemala rivers in the way of natural disasters, will depend if we stay at an expected conservative annual revenue flow of $738 million for 2009, or exceed that by $20 million or so, from increased price of oil exports. You cannot forecast the future, so you can only plan for the worst.
The government during 2009 is expected to spend $860 million, the difference between $717 million earned during 2008 and incoming borrowed money from foreign lenders and some from GRANTS. Next year 2010 is expected to be an austerity year as things look right now. The interest payments on our National Debt running at 78% of GDP is a huge problem. Around $170 million a year of revenues have to go out on paying interest payments. This does not include drawdown of loan debt. As a comparison, the USA Congress and news media are lamenting the DEBT RATIO burden in the USA, which is projected in TRILLIONS of dollars, but which is only 4% of GDP for that country in comparison. Everybody is giving lip service up there, to the fact such a DEBT ratio to GDP is unsustainable. Industrial developed countries usually have limits of government debt set at a maximum of 3% of GDP. If the USA consider their debt unsustainable at 4% of GDP, Belize must be a basket case at 78% of GDP. Many of our fellow CARICOM countries are reputed to have debt ratios like 170% of GDP. Cardona will have to wait for his projects, no matter how much he needs them for his voting district. Government actually needs about $980 million a year at current population levels, which are growing exponentially. A lot of effort is being put into expanding the agriculture sector, along with food processing. CARICOM is supposed to be a market for food products and observer countries like Venezuela also for our food products. The trouble is; there is no transportation between the island and coastal countries of CARICOM, scattered all over the Caribbean. Distances are greater than crossing the North Atlantic from Nova Scotia to Ireland. In this regard we attempted to start CARICOM AIRLINES on a low budget speculative shoe string, startup level, some nine months ago, headquartered out of Belize and had located our first airplane ( see several articles previous on this newsletter with photos ) and made numerous moves and investigations as to fuel and banking and maintainance and some cursory market studies. Unfortunately, the only choices to building an airline internal transportation system within CARICOM are either subsidies, or investment capital. The AUXILLOU TOURIST GROUP with scattered very small investments in Belize our home base, Honduras and the USA, did put a proposal to our own government, but they cannot afford the fuel subsidies and did not even bother to respond. Most CARICOM member countries are broke. Venezuela through their Embassy expressed interest and we put a proposal for an offer of start up capital for $25 million USD, for what is a speculative risky unproved venture, but a necessary one to bootstrap and get going, if CARICOM is ever to develop a COMMON MARKET as the academics keep saying. So far, they have not responded from ALBA Bank, a supposedly socialist development bank. This bank apparently from negotiations, deals only with government to government deals and is reluctant we are informed, to partner with a private sector company. Recently the CARICOM SECRETARIAT bureaucrats were in Western Belize and supposedly said there were two investment banks in a couple of the Eastern Caribbean countries and we shall follow up on that. The interesting thing in what seems to be an exercise in futility, of a disorganized individual NATIONALISTIC scattering of autocratic feudal type countries trying to form a new Caribbean nation, is that bank offers are coming in from all over to us, to LEND MONEY for a CARICOM AIRLINES bootstrap startup. This we will not do! We want RISK INVESTMENT VENTURE CAPITAL from somebody to grow with the market and economy of CARICOM trade. The first 3 to 5 years are expected to be difficult as a bootstrap operation, but we have no doubt eventually, an internal CARICOM AIRLINE could become profitable and much bigger in the $300 to $400 million asset range.
All that said, simply indicates that Belize and our economy should by rights be concentrating on developing our Central American trade ties and put CARICOM on hold until internal affordable transportation is created, after the different countries get themselves better organized than they are now, in the trade and economics field. We in Belize, cannot seem to exploit any COMMON MARKET of CARICOM, with preferential tariffs, to boost our GDP and annual government revenues for the moment. Nor raise minimal RISK VENTURE CAPITAL. Loans are too big a risk, especially with a bunch of greedy, feudal type governments that are all nationalistic, rather than going for the greater good and development they talk about in public! Some of them have been subsidizing national island airlines to the tune of $300 million to $500 million a year out of tax revenues, run by losing government bureaucrat style management. CARICOM has lots of LOAN type banks, but no INVESTMENT VENTURE type institutions. Without which, bootstrap development of trade and commerce is probably not going to go anywhere very fast.

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