E.I.U. report sounds alarm bells on economy
We begin tonight’s newscast with some economic news which may not be good for the country. The latest Report by the Economic Intelligence Unit, prepared in October and fresh off the press sounds many economic and fiscal alarm bells for Belize, especially in the wake of recent storms and floods.
Firstly, the E.I.U. says that the high level of public sector debt, at around ninety-five percent of G.D.P., ranks as the foremost risk to Belize’s political and economic stability.
Not only does the E.I.U. project that G.O.B. will be forced to reduce its capital spending for the year 2008-2009, but it predicts an overall fiscal deficit of some sixty-eight million dollars by March thirty-first, 2009. This is sixty-one million more than G.O.B projected in the Budget. What this means is that Belmopan will either have to spend sixty-one million less or find sixty-one million more in taxes. Neither option comes without political consequences.
Then, in respect of inflation, the report confirms that the cost of living has ballooned to seven point eight percent, up from two point three percent last year. This increase is one of the highest on record.
Another worrisome trend is the widening of the trade imbalance or the current account deficit, as they call it, which is expected to widen from four percent of G.D.P. this year to six point six percent in 2009, a trend that may well trigger a foreign exchange crunch.
Finally, the forecast for tourism is dismal. The report cites declining arrivals in the region especially for destinations like Belize that depend upon U.S. visitors, who are now cutting back on travel as they suffer from an economic recession.
And if G.O.B.’s sixty-one million dollar projected budget shortfall is not enough of a pickle, the Report points to the imminent salary negotiations between the Public Service Union and G.O.B., a bargaining that is certain to result in a hike to G.O.B.’s wage bill. We’ll keep you posted as the financial and economic drama unfolds.
