Monday, March 16, 2009


UDP Prime Minister and Finance Minister, DEAN BARROW


By Ray Auxillou

The FISCAL year, April 1st from 2009 to April 1 st to 2010 reveal the planning for the UDP for their mid term year of 2010. You can draw a number of conclusions from this, both for political reasons and for short term national planning, savings and expenditures. Each person will have their own ideas of priorities, but these are my ideas. Do with them what you will.
2010 will be a mid term year for the UDP. On the political scene, after a bumper year of 2009, there should not be any overall pressing problems, as with two more years to go in their five year term, they have a chance to sit back, reflect and take a breather.
Some of the issues on the national development sense are going to be debt consolidation, immigration, and perhaps the tiny little issues beloved of area representatives for their voting districts.
Debt consolidation would seem to be the highest priority and setting something aside in our National SAVINGS, we call Foreign Reserves. At the present level of taxation and population growth, the properly managed government should have a surplus by the end of 2010 to do these things with. Being a mid year term during 2010, there should be nothing pressing, or overly urgent.
Debt draw down is probably the most important issue facing Belize today, on the road to becoming the SWITZERLAND of the Americas. Can we do it? Of course, given the political will and some legislated budget spending controls. Because of the escalating effects of the BOND debt interest rates, which will by the end of the 2012 last UDP year, exceed $100 million a year in interest payments alone. Of all the debts that Belize has and these are substantial the guaranteed debt. The GUARANTEED debt obligations stand at $2,198 billion. Or the equivalent of 78% of GDP.
The so called SUPER BONDS seem to be the easiest target for accomplishing debt drawdown, to free up more revenues for larger programs in perhaps a second term for the UDP. If there are no financial graft scandals, they stand a good chance of a second term, during which we would be able to finish off putting Belize into the solid first world financial status. Actually even better if you consider the scandal ridden debt of the USA as a comparison. How to do the BOND draw down? It would seem advantageous to me, that if a concessionary $1 billion loan could be arranged with some institutional lender ( perhaps Bahrain, Venezuela, Kuwait ? ) with a concessionary very low interest rate. I’m getting only less than 1% interest on my USA money market account right now, so getting a loan, to draw on and pay interest only as you use it, arranged this year should be easy. It is the escalating interest on the SUPER BOND debt that is OUR problem financially. The target would not be so much as to deprive or deny our bond holders, but to reduce the interest into a manageable amount, in accordance with our revenue base. Then constant quarterly offers to buy back the bonds outstanding at reduced bid prices ( .25 cents on the dollar for example ) to listed bond holders, you would create a market for Belize Bonds and not only save money on buying back bonds, but using lower interest rate loan instruments to do so. Giving you the double whammy so to speak. There is no trading of the Belize Bonds that I can find, but surely we could create our own $1 billion trading market on the foreign exchanges, if we are a bidder? Think about that double whammy for a bit?
Due to a slow down of immigration into Belize and this seems to be a rebound effect of a Caribbean black orientated UDP leadership, the economy of Belize for 2010, which grows with population growth should slow down during 2010. This means lower than expected growth in tax revenues for the government. It stands to reason, that fixing the expenditures at the SAME budget we have for 2009, or even slashing it by 15% if we could, during 2010, we would change from a debt ridden government economy, to an economy with a surplus. The goal therefore would be two fold during the 2010 -2011 fiscal year. A consolidation period, a planned expenditure slow down of spending, and the targeting of the SUPER BONDS for trading and in our case buying of those bonds, to lower primarily the interest rates. Politically speaking, if we are going to have a contraction of the economy, government revenues and spending, better to pre-plan this for the mid term year of 2010 -2011. Should the plan be successful at all, we would free up more revenues for government programs during 2011 and particularly election year of 2012.
While the UDP have been playing with the DEBT to GDP ratio a little bit. The 78% of GDP figure is most likely the actual one. This shows the costs of loans during 2009 are pushing us the wrong way. Not by much, but the numbers do indicate the need to utilize the 2010 year as a consolidation year, and contract government spending, with a one year freeze on most activities. We then hope the expected recovery in tourism occurs increasing government revenues for the winter of 2010-11 which would increase tax revenues during 2011 and 2012 and we would hope further oil exports would boost the economy and shift us from being a debtor nation to a nation building SAVINGS and FOREIGN RESERVES.
The UDP budget of Finance Minister Barrow for 2009 gives me some personal hope, this year, that he and they are capable of doing all these things. Should fortune favor Belize and we establish good fiscal management principles in budgeting and spending, then there is no reason why a second term for the UDP would not change the whole picture of what Belize is and can be in the future of the nations of the world. Perhaps who knows, we actually can then LEND money to TAIWAN and the USA to help them with their difficulties? ( grin! )

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