Musa’s “FACING, FIXING, MOVING ahead” budget reaches the House
Posted: 06/03/2007 - 10:05 AM
Author: Adele Ramos
Prime Minister, Hon. Said Musa, presented his $700 million pre-election budget to the House of Representatives on Friday, March 2, 2007. Like last year’s budget, this one promised to put Government’s finances on a stronger, more sustainable footing. With the refinancing of the bulk of the country’s commercial debt this February, Government pledges to further shrink the budget deficit to just under 1% of GDP. Meanwhile, Musa says that strict expenditure control would help to rein in the deficit.
Reporting on the closing budget year, 2006-2007, P.M. Musa said, “Overall performance for the year, I am pleased to report, is generally good with the outturn expected to exceed the targets set in most cases.”
Central Government’s accounts have not been audited for an extensive period, but on Friday the Prime Minister reported that “The Accountant General has submitted financial statements to the Office of the Auditor General for all outstanding years, including 2005-2006…The fact is, that some of the un-audited statements go back to the 1990’s and this is presenting some major challenges to the audit.”
He added that in the new budget proposals for 2007-2008, Belizeans would see that GOB is not only securing the gains made in public finances, but also addressing the country’s priority needs. Those areas of priority were identified as education, health and poverty alleviation.
The new budget, Musa said, includes 25% more spending on education in the recurrent budget – a total of $143 million; a 24% increase for the Ministry of Health; and housing initiatives that would cap mortgage payments at $200 monthly for low-income houses.
Infrastructural works listed in this year’s budget include the paving of the Placencia Road, and the rebuilding or upgrading of the roads from Blue Creek to Orange Walk Town and from San Estevan to Progresso, the Old Northern Highway and the Crooked Tree Causeway.
“It is a budget that ensures our country continues to grow in a steady sustainable way: a budget that will generate more and better paying jobs; a budget that invests more in the human capital of Belize through education and training for more productive living; a budget that tackles the challenges facing families right now by creating healthier and stronger communities; a budget that invests in our nation’s economic infrastructure; and a budget that still ends the year with a much reduced deficit and another primary surplus,” Musa told the House.
But Opposition Leader, Hon. Dean Barrow, rebutted that the Government was only to earn some points now after having wrecked the economy.
“They are not really saving it, because the improvements come at the cost of the bone cutting that has been done with respect to expenditure,” Barrow commented.
Reporting on the performance of the Belize economy for 2006, Prime Minister Musa said that the real GDP (adjusted for inflation) grew roughly 4% (compared to his original projection of 2.5% to 2.8% for 2006). He said GOB is projecting real GDP growth of 1.5% to 2% for 2007.
According to Musa, the unemployment rate fell from 11% to 9.4%, particularly due to gains in the tourism sector, but the consumer price index (the statistical way to measure the change in the cost of living for consumers) rose 4.3%, with “transport and communications” and “rent, water, fuel and power” being the sectors most rocked by inflationary forces.
Barrow said that the staggering rise in inflation confirmed that people are suffering terribly from a high cost of living.
Most of the country’s export sectors performed well in 2006, Musa reported. Here is a summary of the data:
* Marine exports fell from $98 million to $84.9 million.
* Sugarcane deliveries were up by 26% to 1,173,469 long tons for the crop year.
* Papaya production rose by 20% to 76 million pounds.
* The petroleum industry produced 811,199 barrels of crude oil. Of this, 715,872 barrels were exported and 45,692 barrels were sold locally.
* Citrus exports rose by 19.9%, but stocks had to be drawn down due to decline in production. Citrus export earnings rose by 55.0% to $120.1 million, breaking all previous records.
* Overnight tourism saw a 4.7% increase (or 237,716 visitors more), but there was a decline in the number of cruise ship calls that contributed to a fall in cruise ship visitor arrivals to 590,336. (This is a further decline from the 631,695 cruise tourist arrivals the P.M. reported last year, when a 6.1% decline was registered in his budget. This year’s decline amounts to a further 6.5%) Still, earnings from tourism, overall, increased by 23.7% because of the gains in the overnight sector.
Prime Minister Musa also reported that GOB’s royalty payments for petroleum from Belize Natural Energy are $6 million for 2006, and Central Government would receive an injection of $20 million from petroleum income tax revenues.
“Petroleum income taxes will be collected with effect from assessment year 2006, but will factor into revenues for fiscal year 2007/2008,” said Musa.
The size of the public debt as of December 2006 totaled $2.2 billion—well over 90% of the country’s GDP, but Musa noted that Government has restructured 98.1% of its commercial debt, thereby easing debt service payments in the budget.
“The restructuring has resulted in an improved outlook for the future. Belize’s debt service profile has been transformed from one that was unsustainable to one that is certainly sustainable,” Musa said.
Notwithstanding the recent refinancing, GOB will take on more debt to finance the new budget. The projected overall deficit is $86.4 million, with $61 million needed to make amortization payments on debts. P.M. Musa said that this financing gap would be covered with disbursements from concessionary loans as follows:
* US$15 million from the Inter-American Development Bank
* US$12.5 million from the Caribbean Development Bank
* BZ $40.8 million from project loans not specified in the presentation
The House debates the budget in two weeks.
(More on Friday’s House meeting and the proposed budget in the weekend issue of Amandala.)
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