Friday, September 4, 2009


*** Pensive Finance Minister, Dean Barrow. Is it LADY LUCK? Or shrewd foresight and planning?

By Ray Auxillou ( September 2009 )

So far the performance of the UDP Government DEBT ECONOMICS policy seems to be working? Here in Western Belize, the middle class continue to do well. Construction is still ongoing at a steady pace. There is the occasional lull, but often you have a back order of cement blocks running on a waiting list of 50 customers for two weeks. New block makers are starting up. Hardware stores continue to replace stock on a weekly, or twice a week basis.
Nice cars are being driven, despite vehicle fuel prices rising. The middle class seem to be broad based. Western Belize is blessed with a mixed economy. Agriculture, tourism, and such. The Tourism sector has suffered this past season and is expected to really hurt marginal tour operators and hotels in the next three months during our dead season. I would not be surprised to see many of them close up shop. I had one favorite tour operator the other day asking me for alternative business ideas. Most tourist hotels and resorts are for sale. Many are not seriously for sale, only if you pay their price. Otherwise the owners are quite content to sit out the hard times. They have no intention of selling out cheap, they like the life style. Next tourist season is expected to be the SAME, or very slightly better, but not enough to change the dynamics much. Many tourist businesses will not be able to carry the cost of losing another season. We don’t expect to see much improvement until 2012 and 2013.
It is on the national scene that any stress is occurring. Mostly in the government bureaucracies. The system of political patronage party allocated jobs is giving us BAD GOVERNMENT. Overall in a general sense, the political party practice of nepotism and party hack hiring, is a ruinous system for the nation using patronage party politics, versus the needs of the nation, to hire only civil servants who are the brightest and smartest. It is a common complaint among citizens that in many government offices, only one or two people are doing the work, while four others are chatting, socializing, or on the government phone with their friends all day. My brother-in-law has had to go through the police interview routine twice in the past year and he just got told this week, they have lost his file again. Another third round of police interviews again, I guess? This makes his PERMANENT RESIDENCY process stretch into years. With PM BARROW retiring at the end of this term, I have HOPES that he will professionalize the Belize Civil Service through a Human Resources Department and a variety of Civil Service Exams, done anonymously and with the highest test candidate offered the job. This would go a long way to bringing up the professional level of how we are governed and our bureaucracies perform. The current system is terrible as a working model. It only serves the interests of the political gang or party being elected, as a vote catcher. For the nation it is a ruinous method of doing things efficiently with professionalism. Belize needs the best people we can find and hire. Not the leavings of party patronage, low quality people.
Mostly, the effects of the WORLD DEPRESSION seem to be felt in government tax revenues, which are dropping. If the numbers being reported in the AMANDALA newspaper are anywhere near accurate, then the government bureaucracy set up and expanded during the PUP boom years are going to contract fiercely soon. Government tax revenues seem to be about back to what they were around 14 years ago.
That said, subjectively, the feel in Western Belize outside of the tourism sector, is that things are bright and the local economy strong. A lot of that is supported by the FOREIGN LOAN borrowing for specific projects, along with a lot of GRANTS. So money is circulating.
PM Barrow who is also the Finance Minister seems to be in luck. At least as far as the West here. He might argue with that and we don’t know if it is good foresight on his part, or blind luck? Still, give credit where it is due! For me to acknowledge that opinion, as an avowed opponent against borrowing, means I’m impressed at how the Belize Recession and revenue retraction is working in the economic private sector, by slowly feeding in loan development infra-structure projects. BARROW seems to be borrowing and feeding slowly into the system, FOREIGN LOAN financed projects on a small but steady slow basis. If he can keep this up through the remaining three years of his term, the whole nation of Belize may come out of this WORLD DEPRESSION with nothing more than a shrinkage in government workers in the bureaucracies, and the elimination of a lot of government jobs, that were created in BOOM times and are no longer self sustainable. We can expect an exodus of the salaried government worker types in the port town, to migrate abroad to Europe, Canada and the USA for greener pastures in their desires. This should be balanced with an inflow of immigrants seeking the climate and business entrepreneurial atmosphere of a well managed economy in a depression, if the UDP can achieve it? The government dependence on tourist tax revenues seems to have been replaced by oil tax revenues, or dividends? Eventually tourism will come back in three to six years from now and will be a useful addition to our economy again. Though of less importance as in times past, as we diversify our economy. I think the Agriculture Department are on the right track teaching world trade, exporting, entrepreneurial skills to a new generation of youngsters. That is the future for Belize, in my opinion. The necessary shrinkage in government size and increased efficient performance will be the crux of the matter over the remainder of the UDP term. Can BARROW slowly feed the work paid for, by LOANS and GRANTS into the system, slowly enough, not to let our economy slide downhill? The art is to keep the private sector vibrant and producing for good national health. The verdict is out on that and it is a little early to judge. As far as this year, it can be said his DEBT ECONOMICS policy is working. The national government is being forced to shrink though. That seems unavoidable, as that is a direct function of tax revenues and those are falling, due to external conditions, not from local conditions. We don’t seem to be as bad off as the USA though, or England? The next two years are going to be the toughest for this UDP Administration. 2010 and 2011.
There are at least 15 States in the USA reporting 25% unemployment since the last 1930’s DEPRESSION. An unheard of situation. Doubtful if anybody is still alive remembering that DEPRESSION? In the U.K. they are going to cut the military defense budget by 2/3 rds. CHINA is reviewing their overseas investment policies for all that cash they have in their foreign reserves. Wonder if there isn’t some mechanism we can attract Chinese Foreign Reserves for safety here in Belize? Our financial experts need to ponder those challenges and opportunities. Risks and rewards and how to set it up, so it will work. I can smell the opportunity here, but it will take a more experienced mixed task force of professionals, to explore how to diddle with international currencies and end up making money off it in Belize, as a haven for trillions of Chinese foreign reserves. Lichenstein, Luxemburg, Switzerland and other small places seem to be able to do it, why not Belize? We would need some invited speakers to present papers at a forum on the HOW? Some BOND TRADERS, CURRENCY TRADERS and BANKERS, perhaps Goldman Sachs people. Give them a free holiday here in Belize, in return for presenting suggestion papers at a private financial forum, on how we as a country can go about this opportunity?
If we don’t get a hurricane strike in the next month and a half, we can count that as BARROW LUCK also, and it will mean an extra $150 million in disaster work, that can be more effectively used.

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