IDB document paints ugly picture of Bz’s economy
An important and highly confidential document has been changing hands this week and tonight, the people who produced it are staunchly defending their exposed findings. It’s called a policy dialogue paper and entitled “Towards Sustainable Growth and Competitiveness.” It is in essence a review of the social and economic climate of Belize and is compiled every five years by the Inter-American Development Bank through its Regional Operations Department. But what is different about this year’s report is that it comes across highly critical of the Government of Belize. Due to time constraints we won’t disclose the entire document, but here are a couple of excerpts from its executive summary.
According to the I.D.B.:
“During the last five years, the Government maintained strong economic performance through important public investments, the provision of subsidized credit to the private sector and lower taxation. However, lack of fiscal discipline together with unpredictable exogenous events, gave rise to large fiscal deficits and an unsustainable accumulation of debt. This macro-economic imbalance is affecting economic growth and raising serious doubts about the country’s development perspectives.”
On the issue of debt, the I.D.B. document declares that:
“It is important to reduce debt to sustainable levels. At present foreign debt is over eighty percent of Gross Domestic Product. There is an urgent need to correct this situation to reduce Belize’s vulnerability to external shocks. Besides, the country has to maintain a margin for taking on external debt when struck by natural catastrophes or adverse terms of trade. Current levels of external debt test the upper limits of the country’s ability to borrow.”
Of note, News 5 understands that contrary to the sixty-one percent external debt reported by the Government in 2002 when it floated the U.S. one hundred and twenty-five million dollar bond issue, the Inter-American Development Bank has factored in loans guaranteed by the Government of Belize, which would include those to institutions like the Development Finance Corporation…and that’s how the they came up with an eighty percent figure for external debt.
And lastly, the I.D.B. states that:
“One serious problem encountered in all the analysis of economic, environmental and social issues in Belize is the paucity (that’s the lack of) and poor quality of statistics. If Government is to monitor adequately the progress towards its own development goals, it needs to make an investment to improve the quality and timeliness of statistical information. Lack of accurate information not only affects the quality of policy making, but also prevents serious evaluation of past actions.”
Now these statements are hardly earth shattering, because other financial organizations, like the International Monetary Fund, have already made similar criticisms. Why this document is of news value is because if the Inter American Development Bank joins that queue, the image projected to the international community would hardly be positive. This morning News 5 sought out I.D.B. country representative in Belize, Hugo Souza, who was keen to say that the internal memo was never meant to be published. He says the document was presented as part of a closed-door meeting between officials from the Government of Belize and a visiting delegation from the I.D.B. at a meeting held in San Pedro in June of this year. But Souza says because someone has given copies to the press, it must be clearly understood that the I.D.B. has verified that at least some of the technical information contained in the document is erroneous.
Hugo Souza, Country Representative, I.D.B.
“It’s not the Bible because it’s that what we think and we may be wrong. As a matter of fact, there are some paragraphs on some pages that wrong information was there, so the government joined us in a very frank meeting and the tell us, this is wrong, this is right, we agree with this, we don’t agree with that. And we come up with a conclusion at the end of the day which is gonna be our action together. We are on the same boat for future of next five years in Belize.”
Janelle Chanona
“This document, and I’ve had a chance to read it this morning, it seems highly critical of the Government of Belize. Is this the view the Inter-American Development Bank at this time?”
Hugo Souza
“Well I have a different opinion. I don’t see it was highly critical, I think if you just check any of the…for instance of the graphics, and there are graphics all over the place, for instance this one graphic on page number two show for instance the income per capita of Belize compared with Central America and it’s very clear that after Costa Rica Belize has a high income per capita than Guatemala, Salvador, Nicaragua and Honduras. So Belize is doing very well. So that’s our opinion, but nothing is perfect in the world and a lot of things have to be improved.”
Janelle Chanona
“What’s the bank’s view on our external debt?”
Hugo Souza
“Well the external debt is, well that wasn’t a major discussion in the meeting. We think that it’s important, but we also think that the government is taking the necessary measures to reduce it. And if you look at the date of the report, I think it’s April or May, one month later the government went to Wall Street to borrow a hundred million U.S. dollars to continue refinancing the debt. So the government is doing the right thing, they’re trying to pay their short-term debt in order to alleviate the burden in the future.”
Janelle Chanona
“Overall then Mr. Souza, you are saying that Belize wouldn’t have any problem getting any additional monies from the I.D.B. It wouldn’t be a problem even though the report says that our foreign debt is over eighty percent of G.D.P. I think government is saying it’s sixty, but I think your qualifiers that you’ve included government guaranteed loans as well, which would take it up to eighty, as per this report I think.”
Hugo Souza
“Well this is not a I.D.B. discussion, this is an I.M.F. discussion. This is a discussion, this twenty percent is or not debt and regretfully we have only one system of international accounts…it is sixty, but for a lot of international organisations like the I.M.F. it’s eighty. But this percentage is…we are doing projections right now and if the government continues the policy of containment of the fiscal deficit and we have some projections there, in three or four, five years, this percentage will be reduced and of course we continue lending money to Belize.”
According to Souza, representatives from I.D.B. and government are scheduled to meet in a series of meetings throughout the year to discuss several development issues and projects of interest to both parties.
