2013/2104 proposed Budget speech presented today

The 2nd Sitting of the House of Representatives for 2013 took place this morning. The Prime Minister presented his budget speech for Fiscal Year 2013/2014 at this morning’s sitting. In his presentation, PM Barrow stated that the global economic recovery since the financial crisis of 2008-2009 continues to be sluggish and that global growth is estimated to have weakened from 3.9% in 2011 to 3.2% in 2012 in advanced economies such as Japan, China and the United States. Even closer to home though, the Prime Minister says that several Caribbean countries were challenged by high levels of debt, rising unemployment, high import prices for energy and food and a fall-off in tourism demand from Europe in particular. Using the example of Guyana, Bahamas and Trinidad and Tobago, the Prime Minister says that the estimated growth in these countries were 3.3%, 2.5% and 0.7%, respectively. In comparison to those statistics, PM says that Belize’s performance was rather stellar and the best in the Caribbean.

DEAN BARROW – Prime Minister:
vlcsnap-2013-03-01-19h47m17s144Preliminary estimates compiled by the Statistical Institute of Belize indicate that our economy grew by 5.3% during 2012, well above the 1.9% recorded for 2011 and just about the best in the Anglophone Caribbean. The growth is attributable to brisk activity in agriculture, agro-manufacturing, tourism, construction and telecommunications, which more than compensated for the sharp downturn in petroleum extraction, domestic electricity generation and cruise-ship disembarkations. Also, and to broaden the point about how comparatively stellar our performance was, the Central Bank reports that this growth is notably above the entire Latin American and Caribbean Region’s estimated average of 3.0%.

The Primary sector of Belize’s economy; namely the Banana, Citrus and Sugar industry is also doing well.
DEAN BARROW – Prime Minister:
The rehabilitation of storm-damaged acreages and favourable agronomic conditions helped banana production to increase by 39.9%, while citrus also recovered from weather-related damages to post a 14.3% increase in deliveries. A relatively uneventful season that was not plagued by the difficulties of the previous year because Government had helped to solve those problems, facilitated a 22.6% increase in sugarcane deliveries. The strong outturn of citrus fruit and sugarcane deliveries bolstered agro-manufacturing activity so that production of citrus juices and sugar production rose by 12.8% and 15.4%, respectively. Notably, sugar production for the 2011/2012 crop year exceeded the 100,000 long ton mark for the first time since the 2005/2006 crop; and the average price paid to farmers was adjusted upward from $68.12 to $72.12 per long ton of sugarcane.

The services sector also saw its fair share of growth with an increase of 10.2% of overnight tourists.

DEAN BARROW – Prime Minister:
The services sector was supported by superb growth of 10.2% in arrivals of overnight tourists, with visitors from the US and Canada, Belize’s primary markets, up by 14.8% and 29.2% respectively. The performance of the overnight segment contributed to upswings across the “Wholesale and Retail Trade”, “Hotels and Restaurants” and “Transport and Communication” sub-sectors. The latter was also boosted by BTL’s investment in 4G technology. Construction activity was buoyant owing largely to public sector infrastructural projects, condominium development and residential housing construction that was fueled by the fall in interest rates on housing loans.

On the downside though oil production has reduced considerably as well as electricity generation and the onshore visits of passengers from cruise ships.

DEAN BARROW – Prime Minister:
On the downside, four additional wells at the Spanish Lookout Field could not stabilize slipping oil production and output fell by 26.8% to 1,029,938 barrels, significantly steeper than the 10.0% annual average decline that had been projected. Cruise ship disembarkations fell by 11.9% to 576,661 visitors due to fewer port calls and the use of smaller ships for the Belize route. Underpinning this decline were the expansion of routes by North American cruise ships to long-haul, non-traditional destinations in Asia and Brazil. These are substitutes for the Caribbean and also contain an advantage vis-a-vis the lack of adequate deep water docking facilities in Belize. It is noteworthy, though, that at least one new Cruise Terminal with landslide berthing facilities, will start construction this year.
Meanwhile the surge in domestic electricity generation that occurred over the first half of 2012 could not be sustained. A lack of rainfall in the catchment areas of the hydroelectric plants arrested production during the second half of the year and resulted in an overall reduction of 15.8% in domestic electricity generation in 2012.

The surplus on capital and financial account for 2012 was notably larger as Belize saw foreign investments amounting to $386.6 million which is well above the $189.4 million recorded in 2011 and higher than the $360.0 million registered in 2008.  The most significant of these flows went to the Agriculture and Aquaculture sector totalling 38.4%. In terms of Monetary and Financial Developments; Credit unions continue to play a leading role in Belize’s Development.

DEAN BARROW – Prime Minister:
Mr. Speaker, credit unions continue to play a leading role in Belize’s development. Lending by the five largest credit unions rose by $36.2mn to $403.0 million during 2012, and this was almost twice the $20.8 million recorded for 2011. The loans extended for agriculture, individuals, real estate and residential construction overshadowed the repayments for home improvement and manufacturing. The quality of the credit union sector’s loan portfolio continues to improve, and as of December 2012, the NPLs ratio fell well below the 5.0% threshold to 3.5%.

Mr. Barrow says that GDP growth is projected to decelerate to about 3.0% in 2013 due to the lessening impact of the factors that boosted activity in 2012. In that light, PM Barrow highlighted the underlying priorities of the budget for fiscal year 2013/2014 and maintained that there will be no new introduction of taxes.

DEAN BARROW – Prime Minister:
Fiscal discipline must continue, and expenditure restraint-though not wholesale contraction- must remain at the front of our agenda as we manage our public finances into the medium term.
Over the last year, we have negotiated bondholder relief.
Over the last year, we have also negotiated continuing IFI partnerships.
Both these are necessary but not sufficient conditions for our onward progress.
We must now do our share. Even as we reject austerity we do not embrace profligacy.
We therefore walk the fine line of, on the one hand,
i. responding to the pressing social and citizen security needs at home;
ii. responding to any reasonable and affordable wage concerns of our public officers and teachers;
iii. responding to the need for investment in new physical infrastructure;
While, on the other hand,
i. ensuring that we organize our fiscal affairs prudently and with proper husbandry;
ii. ensuring that we produce sufficient savings to meet our debt payments;
iii. ensuring that we limit our new borrowing so as to maintain repayments on a manageable footing.
On the revenue side, I say again with great pride that we do not propose to increase any taxes in this new budget. Instead, we sound the tocsin of improved administration and efficiency of collection. And we believe that Public Officers will answer the call. For they, and we, know that, in the face of declining petroleum revenues and grants, it on this that the salary increases depend; it is this that must carry the day.

Government continues to hail its pro poor programmes and one of the areas for continued priority attention will be the food pantry and BOOST program.

DEAN BARROW – Prime Minister:
Poverty Reduction and Social Protection – We will expand our support to the indigent and the working poor through the Food Pantry Program, giving this basic nutritional and survival assistance to more citizens, including now in some rural areas. We will also widen the range of the Conditional Cash Transfer initiative, known as BOOST, to empower more youths and single mothers with incentives to engage in productive and socially responsible lifestyles.

Citizen security is also one of the critical points highlighted in today’s presentation.

DEAN BARROW – Prime Minister:
We will continue to fight the scourge of crime, which despite our best efforts, casts its increasingly long shadow over our entire society, but especially our urban youth. We will not slacken in our resolve to restore sanity and safety to our Cities, Towns and Communities.
In this new budget we have accordingly pledged more resources to our police and security forces, to provide more weapons, vehicles, and surveillance and communication equipment. At the same time, we will upgrade our intelligence-gathering capabilities. We will strengthen the coordination between the Ministry of National Security, the Attorney General’s Ministry, and the Office of the Director of Public Prosecution, all in a concerted effort toward more effective crime investigation, prosecution and conviction.

Education, Health and Physical infrastructure will also be focal points for the government going into the new financial year

DEAN BARROW – Prime Minister:
Education –With the assistance of our development partners, we will continue to implement reforms in education financing and in teacher education and curriculum development. All this with the intention of ensuring more access and improved quality in the education system, particularly at the secondary level. At the same time we maintain our support to tertiary level education, and certainly to our national University of Belize.
Health – In this budget, we will protect the level of funding for the National Health Insurance. We will also provide the counterpart resources for two major initiatives supported by the World Bank and the IDB for primary health care and education especially in the southern districts.
Physical Infrastructure- we will continue to expand and upgrade the primary and secondary road network throughout Belize, and allocate as much as we can toward the all-important maintenance of streets and drains in our cities and main towns. In this regard, the Ministry of Works has articulated a Maintenance Plan for the road network countrywide. We have secured funding from the CDB for a new Road Safety Project for the George Price Highway; funding from the IDB for the Drainage Project for the North-side of Belize City; and from the World Bank for the Municipal Infrastructure Project. The latter is already in full implementation in many district towns.

In closing Prime Minister Barrow made reference to the Super bond and government’s recent accomplishments and how those accomplishments will affect the upcoming fiscal year.

DEAN BARROW – Prime Minister:
Mr. Speaker, on Friday, February 15, the Government officially launched an offer to restructure the country’s outstanding external commercial debt – the so-called Super Bond – proposing new bonds for those that were to mature in 2029. The offer period is to close on March 8, and the transaction completed by March 20. Bondholders have been advised that the offer for exchange will be consummated only if 75% of holders participate, a threshold triggering the collective action clause that then ropes in the remaining Bondholders thereby guaranteeing a 100% subscription.  

In real terms, the debt repayment relief are as follows; BZ$22 million in 2012, $66 million for this year, $236 million in the five year period to 2017, and BZ$494 million over the coming decade. The Budget will be debated on the 21st and 22nd of March.

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