Saturday, March 20, 2010


Belize statistics are in, printed in the Amandala and some in the Guardian newspapers.
The total GDP for 2009 was $2.9 billion Belize currency.

The total in Belize currency for all debts was $3.8 billion of Belize currency

The 2009 Debt to GDP ratio is 107%

When the UDP came into office, they inherited a debt to Gdp ratio of 76% from the previous PUP administration. During the two term PUP administration, the debt ratio had risen as high as 127%. During their second five year term, they went on an austerity binge for the five years and handed over the 76% Debt to GDP ratio to the UDP after the UDP won the elections.

Normally by European Union standards, no country should have a debt to GDP ratio of more than 3% for good government standards.

The above debt to ratio standards show what is happening. The UDP came in after the PUP austerity five years with the expressed intention of borrowing foreign loans and servicing the infra-structure and increasing government spending. This they have done. When they came into office, they almost immediately got hit with devastating floods that swept across the central part of the industrial sector of the nation. This cost them money they didn't have. On the good side, we did not get any HURRICANE strikes over the past two UDP years. Belize is at the end of the bowling alley for Hurricanes in the Western Caribbean. Getting hit by hurricanes is a cyclical disaster that occurs regularly. Floods in the past have not been this serious before, but the change in climate and conditions on the land tenure in the Peten of Guatemala is making them more common cyclical disasters. Disasters cost money in recovery and lost economic activity. Couple that with a general world collapse because of WALL STREET that hit around the world, with countries falling like houses built with a pack of playing cards in a wind storm, and the recession hit Belize hard last year. Mostly to do with TOURISM reductions, a tax earner responsible for 25% of the government revenues in good years. Enter 2010 and the tourist season has finally come back to normal. GDP is expected to recover from 2009 during 2010. Forecasts for 2010 are optimistic at 1.5% GDP growth. I think personally we will be doing good to reach neutral, a ZERO rate, last year was negative GDP.
On the good side, the increase in Debt to GDP ratio from 76% to 107% has seen considerable government spending and improvement in small but effective ways for improvements in living standards. There are two economies in Belize. One economy is government growth and government employees. This has been growing during the past two years. The other economy is the private productive sector and for the most part that has been staying stagnant, if not shrinking just slightly. What government spending has been done by the UDP government during these past two years has met with public approval, with one or two minor exceptions.
There is the factor though that government growth is not the answer to GDP statistical growth, through borrowed loans. Increased taxes are part of the new budget package. The private sector is to pay for increased government growth and employment. The debate on that choice will probably be hot and can cut both ways. Needless to say, the most ignorant uneducated farmer, or campesino understands this loan borrowing financed GDP growth is unsustainable practice.
What the UDP government will do about it remains to be seen. We of course sometime have to get our DEBT to GDP RATIO down to below 3% of GDP. To be a well managed country. Therein lies the challenge for this current UDP government.

No comments: