Barrow is bogus

by glenntillett@yahoo.com

Oil prices have spiked sharply over the past ten days and despite a small decline to US$86.74 per barrel as I write this, most of the talking heads (experts) on CNBC and on the internet are saying that US$100 is likely in the short term.

Coupled with the just imposed 25% increase in the General Sales Tax and the 12.1% increase in water rates it will also mean a sharp jump in the cost of goods and services as the inflationary consequences of these factors kick in.

The seemingly inexorable rise in fuel prices over the past year has almost wiped out the respite and memory of the fall from US$147 per barrel oil and nearly $12.00 per gallon gas at the pump, and we may not have recovered from the effects of historically high inflation.

That huge blow knocked a Belize economy that was struggling but still buoyant into decline and then recession. We may have bitten the bullet when the elevator plunged down faster and lower than the escalator ride to the peak, and just in time because the first tsunami waves from the world economic earthquake had only just appeared onshore.

Belize’s economy declined in the third quarter of 2008 as stratospherically high oil prices had sledge-hammered the economy into submission. The high growth of the preceding years had started to dampen in 2007 due to the deleterious effects of the loss of Williamson and Nova, coupled with the damages from Hurricane Dean and Tropical Depression Eight and the three-year and continuing escalation in energy prices.

The economy had proven resilient to that point though, as continued high foreign direct investment, the advent of multi-million dollar investments in new telecommunication systems by both BTL and Smart, increasing oil production (and prices), and the onset of construction on the Vaca Falls hydroelectric facility and the Belcogen co-generation electricity plant helped to offset.

But nothing could shield us forever from high oil prices, the single greatest inflationary multiplier. The economy rebounded in the fourth and last quarter of 2008 as oil prices plunged, banana and shrimp production and prices bounced, and a citrus bumper crop appeared.

By October, however, the rest of the world was beginning to report the damaging effect of an economic storm the likes of which the world had not seen in a hundred years. The Barrow administration still on a spending spree that would have done any drunken sailor proud, “pooh-poohed” the warnings.

Having historically bayed at the former PUP administration’s storm damage estimates as exaggerated, the UDP administration also fell all over itself to declare storm damage to be far less than 10 million dollars.

It wasn’t until he actually met with other leaders at the Summit of the Americas that Dean Barrow realized that there was something going on called the world economic recession and that it was blowing like an untrammeled gale through other economies.

He decided then that he could handle it through his version of a “stimulus package.” Most of us thought it was far too little, too late and was more evidence of his lack of understanding than anything else.

As the economy began to lose ground early in 2009 he did nothing other than to announce his “cure all”  “stimulus package.” He never took it seriously and if we’re to judge by the last two budgets, he still doesn’t.

After a year of decline Barrow still seems disinclined to accept that we are in serious and worsening economic straits. Despite having seen how soaring oil prices ravaged what was a far healthier economy, he seems instead to be waiting for another fortuitous turn of events to rescue us.

My assessment of the status quo is this. Historically the New Year’s to Easter months used to be our “mawga” season but in our restructured economy around these times we would get a tremendous boost from the tourism high season and the sugar and citrus harvest. I don’t have any figures but the tourist, sugar and citrus seasons all had their share of problems this time around, and the evidences of my senses is that an economy in the doldrums may have hoisted sail but is still waiting for the breeze.

Dean Barrow’s economic stewardship has been that of an inexperienced captain who has dammed the torpedoes and pushed full steam ahead with a disastrous-to-investment “quitar” policy. I estimate that the Barrow Administration may have “quitared” thousands of parcels of lands, or otherwise extorted tens of millions of dollars from land owners who were accused of having “underpaid” for their property and could only avert the threat of “quitar” by paying into both government coffers and the pockets of the so-called “agents”.

And certainly the yet unpaid bill for the expropriated majority shareholding of Belize Telemedia Limited starts by all accounting at three hundred million and could yet triple that. The passage of the odious Supreme Court of Judicature (Amendment) Bill 2010 has no doubt scared away any sensible but brave soul who may have been willing to risk money in Belize.

Where, I wonder, will job creation and economic growth now come from?

Just last month Belize’s business sector representatives said: “In a survey conducted by the Belize Chamber of Commerce in March of 2010, businesses were reeling from the effect (of the recession). Of the sample, sixty percent (60%) indicated that they had to borrow from a financial institution in the past year to cover recurrent expenses. Forty-Five percent (45%) have had to downsize and reduce staff in the past year, and roughly ninety-five percent (95%) indicate that the cost of doing business has increased in the past year.”

Now throw in 25% GST tax increase, 12.1% water rate increase, likely increased electricity rates, soaring oil prices, continued evidence of endemic police corruption, escalating violent crime, and oh, “The Colorado State University hurricane team said the Atlantic season will produce an above-average eight hurricanes, four of them major. In its latest revised forecast, the team, founded by pioneer William Gray, also predicted a 58% percent chance of a major hurricane tracking into the Caribbean.”

Isn’t that a forecast for things getting worse? You do your own forecast. You decide for yourself if Barrow is on the ball or bogus.

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