BELMOPAN, Belize, CMC- Less than 24 hours after indicating that Belize would seek concessions from its private sector and international creditors to offset the impact of servicing its US$960 million debt, Prime Minister Said Musa is informing that nation that the country “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,” he told reporters.
While Musa, who is also Finance Minister did not give details of the concessions his administration was seeking an official statement said government expected most of its external commercial debts and public sector entities to be affected by the debt rearrangement which it was seeking to have implemented by the fourth quarter of 2006.
Musa said that in the past two years, Belize have slashed its fiscal deficit from 8.7 per cent of Gross Domestic Product (GDP) to 3.1 per cent. He said his administration had also cut capital expenditure “severely”.
“The primary deficit of two per cent of GDP has been reversed to a primary surplus of over 3.1 per cent of GDP as a result of revenue enhancement measures and tight expenditure control,” he said.
“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.”
Musa said that the primary reason for the country’s economic problems were the hurricanes that severely affected the Belize between 1998 and 2003.
“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.”
Musa said most of the money for revitalising the economy had to be borrowed adding that apart from the natural disasters, Belize also had to cope with rising oil prices on the global market.
“When we came into office in 1998, the prices for a barrel of oil was 15 US dollars a barrel, today it is approaching 80 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 100 US million dollars more in meeting or 50 US million 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.but historically over the past 10 years the price has fallen by one third compared to 1995 to what it is now for sugar, citrus, bananas and shrimps. So all these factors played a big part in where we are today,” Musa added.
Musa dismissed suggestions that the economic problems now confronting Belize was unique to the country and pointed to other Caribbean Community (CARICOM) states with similar problems.
“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. 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,” he added.