Even with bond relief, Belize faces potential fiscal cliff
Dean Barrow
The Prime Minister mentioned that the deal was struck primarily because the Speaker of the House, Michael Peyrefitte, intervened where the team couldn’t. But each rousing speech was ended with sobering declarations. The bond is just one issue that the country is facing. Belize is facing tough financial times and balancing the budget, finding capital to grow the economy are just some of headaches that the government faces in 2013. The Prime Minister, the team members, including the Financial Secretary Joe Waight said so at the press conference.
Prime Minister Dean Barrow
“Into this picture not too very long ago stepped the Honorable Michael Peyrefitte; whose reach it seems is as great as his height and his breadth. Mike has a client in New York and when he went up there for Park Fest and met with his client, he was introduced to Mr. A.J. Mediratta, who as I said represented Greylock—one of the co-chairs of the committee and who really was the key person for the creditor committee; really was the moving force; the driving force behind the creditor committee. After Mister Mediratta was introduced to Mike and they struck up a relationship, Mike the speaker, acted like a kind of back channel, if you will, and would convey various messages to me from Mr. Mediratta. After Mark and I discussed it further though, we agreed that since ultimately it was all on me if we failed, the people of this country would lay blame squarely at my feet. It was agreed that I should take the chance, take the plunge and actually get involved with face to face negotiations with Mister Mediratta. I got involved through as I said, the Speaker and ultimately the full support of Ambassador Espat and that’s how we came to the point where we have been able to secure a deal.”
Jose Sanchez
“I know you can’t speak specifics; however, can you say if they are looking at—initially there were step up interest rates for some years. Are we looking at rates being decreased over many years? what are we looking at?”
Prime Minister Dean Barrow
“Well as I said, we certainly expect that there is going to be a reduction in the coupon rates. Now, how that ultimately plays out in terms of the actual numbers is a matter for finalization when the term sheet is agreed and made public.”
Mark Espat
Mark Espat
“I can say what the Prime Minister has said; that the debt relief that we will be getting as part of what has been agreed to in principle between the Prime Minister and Mister Mediratta and as a consequence between Belize and the creditor committee will be material, consequential significant savings compared to what we would have paid without this exercise. The debt relief is significant, it will provide material measurable relief and it will allow as the governor said and the financial secretary said, it will allow a period for macro-economic consolidation and expansion so that we will be able to meet these new terms. The Prime Minister has always said and the government’s position in negotiations have been seeking sustainability so that we do not have to do this a third time. And I believe that the terms will get us—if not there, very close—to that point in addition to the other things that we need to do.”
Glen Ysaguirre
Glen Ysaguirre, Governor, Central Bank of Belize
“The Prime Minister mentioned that this does not put us out of the woods and that there will still be need for serious fiscal reform. There will also be need for continued macro-economic consolidation and in that, the Central bank has been doing a lot of work, well in advance of the debt negotiations. They were very timely and complimented the negotiation process. So we have several initiatives that we will continue to work on that would seek to bring about the macro-economic stability that will be necessary to compliment the relief that we will get from the debt negotiation. In closing I would like to say that to confirm what the P.M. said; that this is a much needed respite for the country of Belize and it comes at a very opportune moment as we move forward into 2013. I would imagine that many people would have thought that today the world would have ended. We know that that is not so and that we will have to face the future.”
Joseph Waight, Financial Secretary
Joseph Waight
“But I would like to add the word of caution that the Prime Minister echoed; the caution the Prime Minister said. This really helps us to close the physical gap; it does not in any way gives us fresh money or new money to reallocate. The work of fiscal consolidation has to continue. The budget still has to be very tight; there may be a sliver of resources that we can redirect, but really this puts us back in a position of having to choose every dollar, how to spend it, rather than to worry about every dollar that we do not have. This is a deficit reduction exercise. It has not and will not immediately yield surplus funds to spend. I am sure my colleagues understand that and with continued hard work we will be able to get well beyond this and in three or four years you will see the fruits of our efforts.”
While no specifics were offered, on the restructuring, the hundred and fifty million US dollars in debt relief to be gained is similar in amount to the November offer by the bondholders that was rejected by Belize.
There is and will be no respite to eliminate Belize debts despite what Central Bank says, nor will any ” Macro-economic consolidation and expansion to meet new terms” whatever that is meant to mean , help Belize out of this grave. The only tool that will help Belize is the economic tool of the shovel to employ the 33% unemployed Belizeans with gainful, meaningful, and productive employment, significant reduction of the taxes, elimination of CORRUPTION, further reduction of Bank loans to 6 or 7 percent, place a “cease and desist” order on the banks from further residential and business foreclosures until rational measures can be forged and implemented to save the market. Additionally, we must probe into increasing production of sugar, citrus, bananas, rice, beans, and all agricultural products. We must do this in a nonmonopolistic manner so that all Belizeans can participate in the economy. We must give back the retail industry to Belizeans, give back the “BOLEDO” industry to Belizeans, give back the fishing industry without all the impediments, etc.,etc.,. Anything less is unadulterated BS and Barrow must be made to clean up the Augean stables.
How do you know if its similar when you said that the details aren’t given?
Sounds like we did not a debt relief team, just needed Michael Peyrefitte. According to the PM report, what the team took almost 9 months to do, Mike did over one weekend over a couple of beers.
Achieving temporary relief from the obligation of repaying money that was largely wasted and stolen is only one step on the path top economic recovery for the Jewel.
I believe the surest way to create prosperity, and all the good that comes with it [personal security, greater happiness, and eventually a reduction in crime] is to have policies that create good jobs at fair wages. Working people are happy people under those conditions.
We need to attract foreign capital investment. Large foreign companies of many industries invest all around us, but not here. Why? Is it the corruption, the climate of violence, or some other economic policies that scare them away?
We need to reduce government spending to truly legitimate, necessary government purposes — (a) national security and law enforcement, (b) education, (c) basic health care, and (d) infrastructure like roads, bridges, and airports. GOB should not be taking money from hardworking Belizeans for any other reasons. If GOB limited its spending to legitimate purposes, I’m sure it would have a balanced budget, and coukld even reduce tax rates.
If those things happen, the people of Belize would have money to invest in businesses and create new jobs — a cycle of prosperity. What we have now is a cycle of poverty.
Politicians will never learn that if you spend more than you take in,you will have financial problems and economic collapse.Where is the billion dollars that they have borrowed over the years and what does this country have to show for it.All politicians are millionairs now and their relative,friends and compadres.That is where the money is.I have travelled some rurals roads and they are are worse that they were 40 years ago,Mexico has rampant corruption,but at least you see progress every year.In Belize,every village,Town decays every year.People are poorer.As I said only the ones with political connections are doing OK.What a shame that for a country of 300K persons with so much natural resources from north to south you find more than 50% of the population below poverty levels.This will never change until people use their heads when they vote and not vote for immediate expediency.No country on earth have ever prospered on taxation.People prosper on hard work,freedom to choose, with government providing the infrastructure,roads,communications,schools just to mention a few and not depend on their budget solely on taxes.There is so many areas in which to raise the budget every year,but the only thing you hear is raise the taxes some more.The savings from the superbond should be put to practical uses like,better roads,schools, etc.This is a few of the things that would make belize a better place for their citizens.