PRAYER ALERT on Belize financial crunch. Belize is scrambling to find funds to pay the next hefty installment of its huge Superbond debt. The total debt amounts to $2.3 billion. To put that figure in perspective, Belize’s annual budget is only half as much.
The Government of Belize (GOB) has been able to postpone its next Superbond payment deadline until February 24. Now it can no longer avoid the Belize financial crunch. GOB is still seeks to renegotiate the terms of its Superbond debt—for the third time in nine years. But the terms may prove painful. Bondholders are insisting that Belize enact austerity measures prescribed by the IMF. They include dreaded hikes in taxes and import duties, as well as a wage freeze, at the same time that Belize unions are demanding wage increases.
How will Belize reassure its anxious creditors that it has a plan for raising the needed funds, when it is suffering through a recession? In the past year all its major exports have recorded serious declines. Oil resources are drying up. Disease hit the agricultural sector. Hurricane Earl caused $183.6 in damages and intensified the Belize financial crunch. So did the US $279 million arbitration award against Belize for its nationalization of Belize Telemedia Ltd. GOB faces further arbitration judgments in US courts totaling almost US $100 million. Moreover, the nation’s foreign reserves are falling so low as to threaten the devaluation of its currency.
GOB aims to turn the economy around from a decline of -0.6% of GDP to +2.4% of GDP. But how? GOB’s 2017-2018 budget is due in mid-March. Late last week Financial Secretary Joseph Waight consulted with both the business community and unions on ways to tighten the budget, increase revenues, and get through this Belize financial crunch.
Businesses criticized GOB for digging itself into its deep debt hole by overspending. Unions called for GOB to support subsistence farming, diversified agriculture and other methods of increasing exports and decreasing imports. Both business and labor leaders vigorously opposed the increases in taxes and import duties that the IMF spells out. Both demanded better pursuit of customs- and tax-evaders instead. Both also called for anti-corruption enforcement and more frugal and efficient government operation.
Waight concluded: “it is inevitable that there will be increases in some taxes. We are trying to see what items can least impact the economy but at the same time generate the resources needed. There are some rigidities in the expenditure profile. Wages, transfers, interest payments, pensions–those things are very hard to compress. What may be more compressible may be goods and services. You go back to the usual things – fuel, utility usage, and…more efficient procurement of goods and services for GOB. But there’s a small menu of things you can really look at to squeeze down expenditure because there is so much rigidity in the system.”
PRAY WITH US. Father God, all honor and riches and glory belong to You. In heaven You have unlimited resources. You told us to pray that Your will be done on earth as it is in heaven. So we pray that You forgive our debts. Forgive the reckless borrowing and spending that got us so deep in arrears. Show us how steward what You give us instead of waste it.
You say You have plans to prosper us and not to harm us. Show us Your plans for making wealth and paying our debt. Give us favor with creditors. Enlarge our reserves. Show the world that You have power to lift the needy from the ash-pit. Turn the Belize financial crush into a Belize financial boom. Thank You that it was all paid for by the priceless blood of Your Son Jesus Christ. Show us how to live by faith in Your mercy and Your grace. And lead us in paths of righteousness for Your name’s sake. In Jesus’ name, amen.
DailyInsight. GRACE stands for God’s Riches At Christ’s Expense (see 1 Pet. 5:10).
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Keyword: Belize financial crush.
Overborrowing and overspending have led to this Belize financial crush.