Saturday, April 25, 2009



While Prime Minister Barrow in interviews this week, admitted his government has a cash crunch, he still showed the UDP and what he, as Finance Minister were thinking, of having more borrowing of Foreign Loans for a solution. There was no mention of smarter more efficient government, de-centralization, using part time workers as a civil service solution. Slashed work week hours, or any solutions like that. It quickly became obvious Finance Minister Barrow hasn’t really got a handle on the real CASH CRUNCH coming down the line shortly. He is going to learn the hard way, like PM Musa did, by the end of his first term.

Predictions had been for a tough financial year in 2010, with expected recovery to start in 2011 and 2012 the end of their UDP term. It looks like the SHOCK and AWE in financial crisis will hit the UDP and our country in October this year. One thing about economic recoveries that one tends to ignore in the precipitous drop of a RECESSION, the recovery is a heck of a lot slower coming back, than the recession going down. It will probably be the term after the next national election, before anything more than any small incremental financial revenue improvements will even be noticed, and even then they are going to be small steps, not big steps for increases in available finances.

Looking at the numbers, the current budget is around $738 million, of which a little less than $500 million goes just to maintain the cost of governing. The rest goes to pay the interest on the Belize foreign currency bonds. It is not enough for spending this year and indeed the UDP under Finance Minister Barrow borrowed another $200 million from foreign lenders, as part of his pre-election promises for infra-structure works. Now we hear PM Barrow hinting the UDP Cabinet are talking about having to go borrowing MORE foreign debt. Our foreign debt interest payment load is currently a quarter of all government annual revenues in the formal sense. In the informal sense there are another $150 million Bz of loans out there, that are not being counted, borrowed on special circumstances. With the Belize Bond balloon interest payments, our debt load is going to total at least a third of our total government revenues in 2010, if not sooner. We owe over $2 billion bz. By the third quarter of 2010 we might be looking at 45% of our government revenues going to pay interest on our debt load. We are in big financial trouble.

I haven’t heard anything about a freeze on government hiring. I haven’t heard about a shorter 3 day work week. I haven’t heard anything about dispersing some of the Central Government functions to local Town and Village governments on a volunteer basis, or part time worker basis. There does not yet seem to be any solutions offered to allow our nation to stand on our own two feet and be financially self sufficient.

Past PM Musa is looking better all the time. He may actually get re-elected again for his leadership in austerity governing if he chooses to run, which I doubt. After the PUP had that disastrous first term, in their borrowing spree that went awry and saddled our government revenues with 30 years of debt, Musa did give the government a freeze on almost everything and went to a five year austerity program on government finances for his second term. This worked, but cost him the election.

Barrow and his cabinet has to be innovative and imaginative. Further borrowing is not a solution. ( an opinion ) The UDP haven’t learned this lesson yet and it is looking like it will be 2012 before they do learn it. By then we as a nation are going to be in worse financial doo –doo!

We have a bigger and better government with better academically trained bureaucrats, many with fancy degrees from Universities. The problem is these salaried bureaucrats are not HUSTLERS. They don’t know how to make do! Fat and happy on salaried jobs and perks, they do not know how to innovate or do the same job on less MONEY. Indeed the projections are, that the cost of government MUST be slashed to HALF the current cost. Some of these costs are; built in and cannot be changed, like pensions. So how will you run a government on a package deal of $250 million available for everything, the rest of this year and for next year? We are going to see how good the UDP are as financial managers over the next three years for sure. I don’t envy them the job!

When times are good, I like to see my 41 year old daughter Tina at work on the beach at Caye Caulker. When she is full, or nearly so at Tina’s Backpackers Hostel, she relaxes and plays. When her hostel is nearly empty and times are tough, she has her sign in her hand and is mixing it in, with all the Rastafarans, other hotels and their reps, the taxi drivers with their commissions for special accommodations, in the hustling crowd meeting the few tourists coming in on the Water Taxi’s to the main pier. In those times, the hustlers on the pier outnumber the available tourists coming in by water taxi, about 6 to 1. She is going to fill her hostel somehow and pay her bills. We call that hustling! Not something one likes to do, but in times of famine, you better hustle, or starve. As an analogy can our UDP Cabinet hustle? Can our better educated Masters Degrees and Ph’ds running our bureaucracies and institutions learn to hustle for their government departments? They better learn quick, or look for other work. Hard times seem to be coming! News and photos of Western Belize .

“Life in a Banana Republic”. The story of Caye Caulker living on a small island inside the barrier reef.

No comments: