Fonseca: debt is in line with ability to pay
On Tuesday’s newscast, Minister of Budget Management Ralph Fonseca spoke about the changing telecommunications industry and the need for Belize to take the long view. Tonight, in the continuation of that interview I asked the nation’s point man on finance how the strategy of “growth economics” was doing more than four years into his term of office.
Ralph Fonseca, Minister of Budget Management
“The only way to grow the economy was to do three things. One was we had to borrow and invest in those areas that are productive; in the areas that needed, in order to give confidence to the second thing, the private sector, which was create the right enabling environment for the private sector. We did that by making the right investments so that we could have shrimp farms, citrus farms, banana farms, et cetera, et cetera, data information business that sort of thing. And then we privatized, and we accelerated the privatization process. But it wasn’t the only for revenue, it was also to bring other technologies into Belize, other management into Belize. Because we realize that as we grew, the utilities would need hundreds of millions of dollars to keep up with the growth.”
Janelle Chanona
“What about the criticism too much money being borrowed?”
Ralph Fonseca
“Well, again it depends on who is criticizing. You know if you don’t do anything they will criticize, if you do they criticize. I much prefer when they criticize when you do. The last administration could not borrow money because the financial markets had no confidence in them. Our administration, we’ve got the confidence of the international financial markets…nobody can question that when you can raise a hundred and twenty-five million dollars in two days, with a two day road show. And in fact, we had it oversubscribed because in fact over two hundred million dollars in orders were put in for it. And we can still go some more if we wanted to. So we’ve shown to the international community and to Belizeans that there is confidence in the economy and the direction that we’re going even with the challenges that we had. Anybody that knows anything about debt management knows that it is not how much you borrow, it’s your ability to repay. And right now, our repayment is less than fifteen percent of our exports. It’s about twenty-five percent of our current revenue, so we’re well within those areas of threats, if you like, to the overall fiscal position.”
Janelle Chanona
“With less than a year before general elections, is government going to do be doing any major projects financially, major investments or any more borrowing?”
Ralph Fonseca
“We have lots of projects that are ongoing that will continue. We have to continue with the Southern Highway, we only have to two more sections to complete. As you know, one is ongoing, the other one we’ve already made the arrangements with the Kuwait fund. We are completing the Burrell Boom road. We have started the Orange Walk bypass, and January first, we’ll be starting the La Union as the Prime Minister promised, along with the bridges that are required there. Tomorrow, I think they start on the bridge in Valley of Peace, Young Gyal. So there are lots of projects that are ongoing, but don’t forget we are paying off debt at the same time. We pay on external debt about seventy-five million dollars a year in external debt, so it means that as we are paying off that debt, we can replace it with other debt. The important thing with the debt is the ability to repay and the fact that you’re investing it in the productive sector.”
While the latest I.M.F. report had generally good things to say about steps being taken by government to put its economic house in order, it did express concern about excessive borrowing, particularly by the Development Finance Corporation.
