Belize: Prime Minister of Belize John Briceno stated a declaration on a recovery plan for the nation’s development.
GOVT ISSUED THE RECOVERY PLAN:
Before outlining the broad contours of the new Budget that I table today, I wish to outline the rationale and the framework for the wider Medium Term Recovery Plan.
Erroneously, in some quarters, it has been suggested, perhaps assumed, that the salary adjustment is the sole pillar upon which the fiscal recovery rests. Nothing could be farther from the truth.
The salary adjustment is necessary, but it is no fiscal elixir; that alone is far from sufficient to reverse the public finance morass left behind by the last UDP Administration.
Painful as it surely is, the $60 million in salary adjustments and the $20 million foregone for increments and allowances in this Budget is one step in the hard slog back to fiscal fitness.
A correlative to this cost curtailment measure is the drastic reduction in this Budget of spending on goods & services, which is being slashed by $78 million compared to the previous Budget.
A second step is a reduction in interest payments which for this Budget is being operated at around $53 million less than what was allotted by the authorities for the previous financial; year. I have already addressed the subject of public debt management substantially earlier in my ppt. The third measure must be the augmentation of revenues.
As the administration and the Joint Unions have agreed, this can be achieved by sparing no attempt to collect current taxes from all resources from whom such taxes are pending. At the same time, by guaranteeing that legitimate, outstanding taxes are recovered immediately.
Whether current tariffs will suffice without the requirement for incremental revenue steps will depend on those who pay and those people who collect. To those who evade the tax-system, thereby imposing a disproportionate burden on the rest, I signal hereby, without hesitation, that the state’s enforcement agencies will hereafter adopt a muscular approach to revenue collection and enforcement.
As a fourth and final step, the Government and all stakeholders, especially the public service and the private sector, must seed and reap higher, more equitable economic growth.
Enabling investment, both domestic and foreign, is of the highest priority for this Administration. I will outline some specific structural reforms we will adopt to foster high growth conditions later this morning.
These four essentials form a carefully calibrated composite for our Recovery Plan: spending reductions, revenue enhancements, comprehensive debt restructuring and above-average economic expansion, all intertwined with underpinning a renaissance of sturdy public finance.
I am compelled to signal one other major imperative of our Recovery Plan, which is the urgent need for public pension reform. Noncontributory pension payments in the Budget have neared $100 million for a single year. That level of spending is simply untenable. When we left office in 2008, the annual cost of pensions was $38 million.
Today that has virtually tripled. Government must move now to transform the public pension scheme to a contributory structure, either standing on its own with payments from both employer and beneficiary, or a merger of the public pension program and the Social Security System.
To be completely clear, this Recovery Plan is not without its downside risks, some risks recognizable as being so grave as to imperil the Plan itself.
If, for example, some variant of Covid-19 defies the vaccine campaign and tourism fails to gradually recover, or if hurricanes, floods or droughts return in the near term to extract another substantial economic toll, then all bets would be off. A more aggressive recovery program would be required.
For this year, the IMF forecasts only a modest GDP rebound of 1.9 per cent, with a steep upswing of 6.4 percent projected for 2022. They predict that a return to pre-Covid economic activity will not occur until the FY 2024/2025 period. While we are more optimistic, contingency plans will be ready if the rebound is protracted.
I am confident, though, that if we all adhere to the Recovery Plan, if we achieve our revenue and spending targets, if we restructure and re-profile the public debt and if we can catalyze sustained economic expansion, together as a nation, we would have averted default and the depreciation of our dollar. We would have protected thousands of public sector jobs and retained our fiscal sovereignty.
In subsequent years, once economic recovery takes firm root, once the debt is on a stable footing and primary surpluses are being achieved, then increments can be restored. Targeted spending, particularly on the more ambitious goals of Plan Belize, can expand.
As Prime Minister, I control the behaviour of neither viruses nor the climate. What I propose, what we are elected to coordinate, is a credible, time-bound Recovery Plan. Renewal, reform and rebound are the lodestars of this Administration.