Running out of options…

Avoid the elaborate, the pretentious, the coy and the cute. Do not be tempted by a twenty-dollar word when there is a ten-center handy, ready and able.

Elements of Style by Strunk and White

Have you noticed that whenever the Prime Minister cannot provide the right answers for the failures of his administration, he uses a big word to obfuscate (hide) the reality?

At the Prime Minister’s recent press conference, during what was termed as the state of the nation, he presented what Belizeans now call that unsatisfactory UDP report card.  In his report on everything he tried to give reasons for the terrible state of the economy, about unemployment and under employment.  He spoke of the struggles in tourism and the total loss of investor confidence in Belize.

He was also preparing Belizeans for those harder times still to come; to explain why crime continues to spiral out of control, and why the cost of living continues to go up,

So how did he explain all this?  He announced that Belize is in a deflation.   Prices in Belize are going down and as far as the Prime Minister is concerned, that’s a good thing.  Unfortunately, the Prime Minister has no clue what he was talking about.

Deflation is a phenomenon when prices start to contract and it happens for two basic reasons:

1)  People are losing jobs and have no money to buy

2) The people who have money don’t spend it, instead they wait for prices to decrease even further, which in turn reduces overall economic activity.

This creates a deflationary spiral, which explains the reason why our economy has contracted for the last three consecutive quarters.  This was what led to the “great depression” in the 1930s in the United States.

The reality is that Belize is suffering from an economy that is contracting.

As unemployment and underemployment continue to increase, the purchasing power of Belizeans is reducing. According to the Belize Institute of Statistics, in September 2009, unemployment stood at 12.5 percent. It is estimated that 25 percent of women and our youths are unemployed. More worrisome is that the Country Poverty Assessment reported that the average Belizean family spends 90 cents of every dollar earned just to pay for food and utilities.

In the North, the Commercial Free Zone is about to collapse. In 2003, there were over four hundred businesses. Today that number has shrunk to under 200. Imports have reduced by 50 percent, down by $130 million. There were over 2,000 people employed at the Zone, today less than 1,000 Belizeans are employed full time.

The shrinkage in the economy is also evident in our domestic exports. Reports are that in 2009 our domestic exports shrunk by 20 percent. This means that there will be less foreign currency available, which is actually evident now with the long queues at the banks for US currency.

This also has a direct impact on government revenues.  With less economic activity, there are fewer imports. The latest figures from the government are that imports will contract by 23 percent.  This will erode between 20 to 30 cents of every dollar the government forecast to collect in revenues from import taxes.

This explains why the government has announced that we will have a budget deficit. At last year’s budget presentation, the Prime Minister announced a new fuel tax that was to collect $30 million. He also announced that Belize would get grants from Taiwan and from Trinidad and Tobago. This, he claimed, will help him balance the budget. Unfortunately, the Prime Minister announced that we would experience a budget deficit of $60 million!

Unfortunately the economic picture looks bleak for Belize.  According to the Inter-american Development Bank, Belize is already paying approximately 23 cents of every GDP dollar in taxes and cannot afford to pay any more taxes. The Prime Minister promised to remove the fuel tax if the prices at the fuel pump were to go up above $7.00. The price is over $9.00 and the Prime Minister conveniently doesn’t remember making that promise.

How the Prime Minister will cover this $60 million hole in the budget, will be anybody’s guess. He is certainly running out of options.

What Belizeans know for sure is that they have given the Prime Minister enough time to fix the problems he promised to fix.
Ask any of the 142,272 Belizeans that live below the poverty line whether deflation has been good for them. Every one of them will tell you no. The time for understanding and patience is over; it is time for the Prime Minister to present a clear plan of action!

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