Budget Addresses National Stability; Belize Still Short of National Fiscal Targets
The long-awaited first and second reading of the General Revenue and Appropriation Bill dominated today’s proceedings at the House of Representatives. The budget for the 2018-2019 financial year is for one point one eight three billion dollars in revenue, which is slightly less than last year. The Government’s total spending comes up to slightly more than one point two billion dollars. Prime Minister and Minister of Finance Dean Barrow readily pointed out that with fiscal consolidation the watchword in Belmopan, don’t expect “pyrotechnics.” Belize is expected to miss its own projections for fiscal consolidations, but meet the targets set by the bondholders. And twenty million dollars are to be raised in new measures including GST on data. Much of the half-hour plus address concerned counting the country’s blessings, or as it was officially titled, “Maintaining Steadiness; Consolidating Stability; Advancing Growth.” Aaron Humes tells us how the government plans to do all three.
Aaron Humes, Reporting
Prime Minister and Minister of Finance Dean Barrow says he is getting quite a bit of advice when it comes to managing the economy. But Belize is only just starting to recover from the first contraction of growth in his administration. National debt swelled on the back of the B.T.L. acquisition and magnifying of arbitration debts. There were bumps in the road with Petrocaribe. His own legacy is at stake and time is quickly running out. In the coming fiscal year, he announced today, his inclination is not to rock the boat.
Dean Barrow
Prime Minister Dean Barrow
“We have kept a keen ear to the ground throughout our shepherding of the economy and the public finances. There are those in the private sector who advocate an approach that would shrivel tax collections and shrink the social safety net upon the premise of compensatory growth: slash taxes these Supply Siders shout, and collections will rise. Then there is for us, the bootless cry of the IFIs, in particular the IMF, whose recipe, though unproven, remains unrelenting: gut the public service, pay down the debt, privatize any activity that is or can be profitable and the economy will swell. And there even remains a constituency whose clamor is for the other extreme – broaden the subsidies, confine taxation to the upper echelons of the economy, ignore debt limits and generally make government-sponsored programs the answer to every societal challenge. Our philosophy, the defining economic outlook of the U.D.P. decade, does not envision government as either the problem or the panacea; rather, we view government as the activist enabler.”
So how did Belize do in the 2017-2018 fiscal year? It was not the best of times, but according to the Prime Minister, not the worst either. Agriculture’s rebound and tourism’s endurance boosted an otherwise weak economy, along with Government’s own belt-tightening.
Prime Minister Dean Barrow
“Mr. Speaker, with only a few weeks to go before the end of the current fiscal year, preliminary data shows a mixed picture. There is clear evidence that successful fiscal consolidation is underway. But it is also clear that we will not meet the perhaps overly ambitious budgeted Primary Surplus Target of three point one percent of GDP which we had set for ourselves at the beginning of the fiscal year. Instead the outturn is likely to be closer to one point eight percent of GDP. It is extremely noteworthy, though, that this is still within the commitment of a three percent of GDP turnaround in the Primary Balance which we made to our creditors last year as a term and condition of the 2017 Super Bond restructuring. The lower than expected out-turn is due to revenue shortfalls arising from weaker than expected economic activity and some slowdown [in government investment.] Total expenditure less interest payments to the end of the fiscal year is projected to stand at one point zero-three-seven billion [dollars] while total revenue and grants is expected to come in at one point one-zero-six billion [dollars}. This would yield a positive primary surplus of sixty-nine point two million dollars, or about one point eight percent of GDP, and is to be compared with the primary deficit of one point eight percent of GDP in the prior fiscal year, so it is really a complete turnaround. Altogether it represents a turnaround of three point six percent of GDP in the primary balance between the two years. It is to this we point, and of this we boast, when we claim fiscal consolidation success.”
The Prime Minister announced some twenty-point-five million dollars in what he called “adjustments” to revenue collection. This follows a similar collection of around eighty million last year that proved mostly effective. Exemptions have been removed for activities related to land clearing, crop dusting and harvesting; the General Sales Tax will be applied to Government contracts, imports and purchases as well as operating expenses for business process outsourcing companies; and imports of kerosene and fuel oils will be subject to the same excise tax applied to jet fuel and diesel respectively. Finally, there are ‘social fees’ modified to goods in the Free Zone other than cigarettes, liquor and fuel and inbound duty free merchandize at the PGIA. But the one most likely to hit the average pocket is the introduction of general sales tax to purchase of data services.
Prime Minister Dean Barrow
“GST is to apply to the purchase of data services by telecom clients. For some time now, this sector has been in a dynamic transition where revenues have shifted dramatically from voice to data, and with this shift has come a commensurate reduction in GST collections. Making tax application even more difficult is the bundling of services, effectively obfuscating taxable elements from those untaxed. This proposed alteration will simply restore GST revenues lost in this voice to data transition. Of course, the measure will not affect internet to schools as this service will continue to be provided free of cost by the proudly Belizean-owned B.T.L.”
But the P.M. was quick to re-assure that government remains pro-poor and in support of its people-centered initiatives.
Prime Minister Dean Barrow
“We grasp the nettle with both hands, we rise to meet the challenges, and we will overcome them. This year’s budget is structured accordingly and there therefore can and will be no retreat from our signature pro-poor policies. (Applause) No retreat from BOOST and Food Pantry; no retreat from the Apprenticeship Program; no retreat from the High School Subsidies; no retreat from the Payment by GOB for students’ CXC exams; no retreat from the Funding of the Second Chance Opportunities; no retreat from Tuition Assistance (Applause); no retreat from the plethora of Full Scholarships; no retreat from the Construction of New Classrooms, no retreat from new Rural Water Supply Systems, Health Posts and Hospitals. Certainly in San Pedro, which we hope to fund from a public/private mix, and also from P.G. That’s the next priority.”
From the National Assembly, Belmopan, Aaron Humes reporting for News Five.
The budget debate takes place on Thursday, March twenty-second, and Friday, March twenty-third.
