Musa optimistic about creditor negotiations

When future historians interpret the period from 1998 to 2008 they will no doubt have a lot to say about the man at the top. And while they may disagree over how to weigh the hope of the early years against the scandals and financial problems that followed, all will be forced to agree that at no time did Prime Minister Said Musa hesitate to face the often pointed inquires of the press … and by extension, the public. Late this afternoon the P.M. elaborated on yesterday’s embarrassing official announcement that the Belize government will seek a “rearrangement” with international creditors. Admitting that if nothing was done soon, the country would run out of money to pay its debts, Musa chose to look forward and not back.

Prime Minister Said Musa
?I wish to underscore the fact that Belize has met all its external debt service obligations to date. We are committed to servicing our debt as long as the cash flow allows. Our decision to seek a rearrangement of Belize?s debt reflects our commitment to a long term sustainable debt profile, a prerequisite for long term economic growth and stability for Belize. In just the last twenty-four months we have slashed the fiscal deficit from eight point seven percent of G.D.P. to three point one of G.D.P. and cut capital expenditure severely. The primary deficit of two percent of G.D.P. has been reversed to a primary surplus of over three point one percent of G.D.P. as a result of revenue enhancement measures and tight expenditure control. In support of these fiscal advances the Central Bank simultaneously implemented a tightening of liquidity in the banking system to protect the international reserves. It is now clear, however, that all these measure alone are not enough, and that we required immediate support of our creditors to arrive at a long term solution.?

But the need for a long term solution was occasioned by long term problems. When asked by News Five’s Stewart Krohn how we got in this mess in the first place, the Prime Minister stuck to the same script … the one that airs regularly on the Weather Channel.

Prime Minister Said Musa
?The primary reason for where we are today has a lot to do with the hurricanes that we have suffered between ?98 and 2002 or ?99 and 2003. Clearly that is not the only; we are faced with a situation where our government has carried out an expansionary programme, when we came into office in 1998. We believe and we maintain that we did so and we had to do so because the economy was in deep recession. The country was broke?although to use that language loosely. We had to get the economy moving again. We had to get the private sector moving again, and yes we expanded the economy by stimulating it whether through the Development Finance Corporation or whether through the government?s major housing construction programme, which played a big part in accumulating debt. A lot of this money had to be borrowed, so that is the second. The expansionary programme, the disasters we suffered and in more recent times of course we have been facing a severe difficulty with the high oil prices. When we came into office in ?98 Stewart, the prices for a barrel of oil was fifteen dollars a barrel U.S.; today it is approaching eighty dollars a barrel. That has taken a severe toll on the foreign exchange capability of Belize. Just to give an example, last year alone it is estimated that it cost us a hundred million dollars more in meeting or fifty-million U.S. in meeting our oil bill for the imported oil. Of course then you have to bear in mind too that during this period Belize has suffered terribly from the lost in preferential markets or in prices anyway. In the terms of trade it estimated that all our export commodities sugar, citrus and bananas?citrus has come up a bit this year–but historically over the past ten years the price has fallen by one third compared to ?95 to what it is now for sugar, citrus, bananas and shrimps. So all these factors played a big part in where we are today.?

Stewart Krohn, Reporting
?But Prime Minister virtually all of our sister countries in the Caribbean and Central America have gone through these exact same shocks, yet they don?t seem to find themselves in the situation we are in. You talk about expansionary economics?in fact your government bankrupted the Development Finance Corporation was that part of the plan??

Said Musa
?Part of what plan??

Stewart Krohn
?In other words, I get the impression that you used the D.F.C. to expand the economy. The fact that D.F.C. has been bankrupted was this a deliberate part of the policy??

Said Musa
?No. Of course it was no deliberate policy. The D.F.C. has been going through an orderly liquidation. But you said just a while ago that Belize is unique in terms of having difficulties??

Stewart Krohn
?No, I said Belize is not unique? I?m sorry.?

Said Musa
?I thought you said it was unique in having this debt problem. The fact of the matter is that we are far from being unique. There are many courtiers in our region, to name just a few Jamaica, Grenada and Dominica went through similar problems that Belize is now going through. If you look at the figures in the countries of Central America they have far more severe problems than we do, but a couple of them like Honduras in particular are actually getting debt forgiveness, because of the (unintelligible text). So we are not in any unique position when it comes to the debt level situation. What we are saying is that we are facing up to it and we are dealing with for a long term solution.?