Economic Intelligence Unit says inflation is up by 9%
Last week, the Government finally announced a two hundred million dollar loan package it called its “stimulus plan” to crank-up the economy that is being affected by the global downturn and the losses in projected revenue from various sectors. But it is still not clear how it will be implemented or if it will provide any solution to revive the staggering economy. And as technicians put pen to paper in preparations for the budget for the next financial year, tonight the news coming from the latest report on Belize by the Economic Intelligence Unit is not good for the government.
Recent statistics showed that inflation grew by nine point six percent and that the prices of basic food commodities and health care had grown considerably in some cases as much as fifty percent and the fastest in twenty-five years. The EIU January report confirms what we already know, that the total public debt burden remains high and G.D.P. growth will remain weak.
And at the end of September, sixty percent of the total public sector external debt was made up of a commercial bond issuance known as the “super bond” going back to debt restructuring in 2006. The Report indicates that global financial turmoil and the rapidly rising risk aversion among international investors have caused a sharp decline in the nominal value of Belize’s 2006 “super bond”. It also states that in the circumstances the Government’s ability to borrow commercially will remain highly restricted.
The International community’s lack of confidence in the Belizean economy has been further demonstrated by the recent confirmation that Lord Ashcroft together with the majority owner of Telemedia, have collectively been able to purchase US$ Sixteen Million one hundred thousand US dollars of the super bonds at an average price of zero point three-six cents on the dollar representing an incredible yield to redemption in 2029 of twenty-one point one percent. That is if Belize does not default before then.
According to the report, in the productive sector oil production will remain the same and sugar, citrus and shrimps are not expected to rebound. The outlook for Tourism is also poor resulting in less revenue in taxes and less dollars in foreign exchange. Capital expenditure is not expected to grow but there is a projection that government will increase the GST and keep the real value of fuel despite low prices internationally. One area which the government will seek to push sideways is the salary increases to public officers that are due shortly. All being told, the picture looks grim for Belize and a further slow down is expected for 2009.
