BELIZE GOVERNMENT 2010 BUDGET SPEECH

BELIZE GOVERNMENT’S 2010 BUDGET SPEECH

There were some interesting developments in the budget speech. Former PM MUSA of the PUP, now in the front bench of the Opposition PUP declared that the changes to the amount of Treasury Bills that Central Bank can issue, increases the amount of money that the Government of the day, under the UDP can borrow from Central Bank. Talked about was a 10 year Treasury BOND. Don’t quite remember the amount of expansion in domestic money borrowing was authorized in the new legislation, but MUSA the infamous architect along with his consiglieure Fonseco, have indebted the country of Belize for at least another forty years effects, in what is called the SUPER BOND.
The interest on the SUPER BOND is killing the government of the day and is expected to have effects going out another 50 years now.
Former PM Musa called the new domestic debt expansion by Treasury Bonds, the BARROW BOND. Which probably is what it is?
The difference is that the MUSA/FONSECA BOND debt, some $1.9 billion I think, if I remember it rightly, cannot be retired and paid off early. We must go to expiration , somewhere around 2029 and continue to pay the INTEREST to the COMMERCIAL BANKS abroad ( mostly the USA ). The interest on the SUPER BOND is killing the country of Belize and taking up a huge amount of revenues.
What is interesting is that the MUSA SUPERBOND is in FOREIGN EXCHANGE. The new UDP government has come up with an imaginative twist to deal with this interest. They are going to borrow domestic debt in the BARROW BOND as in a set of 10 year TREASURY BONDS, which in turn will replace those things before, bought by the government in FOREIGN EXCHANGE, needed to run the government and buy locally in local currency, using the proceeds from the BARROW BOND, freeing up FOREIGN EXCHANGE to pay the MUSA SUPER BOND interest payments.
A very imaginative solution and postponing facing the crisis of the SUPERBOND IN 2029, for at least 10 more years, as it is only the INTEREST right now on the SUPERBOND that will be paid in a round-about way with the proceeds from the BARROW BOND to start in MAY, 2010. That is the way I read it.

The DEBT to GDP RATIO of the country finances remain CLASSIFIED TOP SECRET by the Prime Minister and the only thing we have to judge the financial status of the country was the mention that the DEBT to GDP ratio will increase this coming fiscal year by 2.11% of GDP. There are many estimates of the DEBT to GDP ratio in the Private SECTOR, but because the rising debt is a chain and ball choking off our economy, the UDP government and Prime Minister Barrow refuses to tell the public what it is? Estimate guesses run anywhere from 83% DEBT of GDP to 102 % of GDP. Whatever it is, it will increase during the coming fiscal year by another 2.11% he says. That is the way I understand it.

Generally speaking the economy is working fairly well and the work carried out by Public Works and other pro-active infra-structure type Ministries of Government are doing well, using further BORROWED FOREIGN LOAN MONEY, up to date. This looks like it will be switched over the next ten years from foreign exchange works to being paid for by local Belizean currency. A definite improvement.

The government continues to GROW and EXPAND. There was no talk about better management, and legislation is badly needed to create a mandatory BALANCED BUDGET system for government fiscal responsibility. Both by central government and by government individual departments and institutions.
Interestingly, we can forsee the day when like Guatemala and Honduras, the time will come, when our teachers are not going to get paid for six months or more at a time, as the strangulation on revenues by DEBT interest payments. Sad but amusing was a USA TV announcement on their news, that some huge metropolitan city in the EASTERN USA, has closed HALF of their school system, as they lack the money to keep them open.

TAXES are going to rise. The biggest one is in the VAT, a sort of SALES Tax, going up to 12%.

It was interesting to hear that people earning below $25,000 bz a year, ( $12,500 usa ) are regarded to be below the poverty level. Me and my family are in this lower poverty bracket apparently? Anyway, families below poverty level will not pay any income tax.

There was no mention of three day work weeks, or half day work weeks for the government of Belize, as some sort of solution to meeting the crisis caused by excessive government debt.