Belize’s Economy is On the Ropes and Stiffer Punches Keep Landing

Dean Barrow

Belize’s economy, knocked down by the debilitating fiscal impact of COVID-19, is on its knees and will take a lot from the public and private sectors to get it standing firmly once the threat of the coronavirus has subsided.  In painting a grim picture of the country’s financial affairs, Prime Minister Dean Barrow laid out the deficits that government has been incurring as a result of poor tax collections resulting from the economic shutdown.  If April was bad enough, the month of May is expected to be much worse as revenue collection is projected to decline considerably, the net effect being a shortfall in the monthly wage bill.  According to the PM, business and General Sales Tax, as well as revenues from the Customs and Excise Department, will only amount to a little over forty-one million dollars, considering that salaries on a monthly basis add up to forty-five million dollars.

Prime Minister Dean Barrow

“A snapshot of the current financial picture looks like this.  For the month of April 2020 collections of business tax and GST together were just forty-eight percent of what was collected in April 2019 to only twenty-one point eight million dollars in April 2020.  Remember to that these taxes are paid in arrears, so to speak.  So, the April 2020 collections relate principally to March 2020 business activity.  March was, of course, before the lockdown.  The point being that this May month’s 2020 collections relating to April 2020 business activity, when the lockdown was in full effect, will see am even more precipitous fall.  The projection, in fact, is that April’s fall to twenty-one point eight million dollars will drop further to only eleven point two million dollars in May.  Now consider further that Customs and Excise also fell in April 2020 to twenty million dollars.  There was a ten million dollar drop over April 2019.  Again, the Customs revenue was principally for goods ordered before the lockdown.  The same pattern therefore as with business tax and GST, will be repeated with respect to the Customs revenues.  Accordingly, the reduction in goods and ordered after the lockdown this past month, will see a further fall in Customs collections in May 2020.  Consider finally that the government’s monthly wage bill is forty-five million dollars.  That means that the forty-one point two million collected from business tax, GST and Customs in April could not meet that forty-five million dollar monthly wage bill.”