Specific Wage Cuts Not Part of I.M.F. Recommendations, but Reduction of Wage Bill Was

Jaime Guajardo

When it comes to the government’s decision to implement a wage cut, the I.M.F. says this was not a part of its recommendation to local authorities in its 2021 country report.  According to Guajardo, mention was only made that there needs to be a reduction in the wage bill.  Doctor Guajardo says this is a difference in views between the I.M.F. and the Government of Belize.

Dr. Jaime Guajardo, I.M.F. Mission Chief of Belize

“In this article four, we did not do a specific recommendation on how to cut the age bill. We did mention that it needs to be reduced. It is one of the items that sticks out as being too high in Belize when compared to other countries, as we have mentioned before. However, if you look at article four in the 2018 consultation, there we have more specific recommendation on how to cut the wage bill. The recommendation there was to do a combination of a freeze on the wage, also a reduction on public service employment through attrition. In other words, when people start retiring from public sector, not everyone that retires gets replaced. Now, the government took a bit of a different approach. I think the logic is twofold. The first one is that the economy is not doing great, so there is not a lot of opportunities if you start reducing the size of public sector employment. So, they decided to address the issue of wage bill through wages. The second consideration that went through their minds, they need to do these adjustments are credible as possible. Especially, they need to get the credibility from the market and the creditors, because they are engaging them in restricting negotiations. The way to do that is to show they are willing to make sure they are going to provide significant savings, even though they may be difficult and costly in such times.”