Belize in recession but ruling out IMF help

BELMOPAN, Belize, October 30, 2009 –Belize Prime Minister Dean Barrow says the country is officially in the grips of a recession, but he’s adamant that he won’t be sending out any SOS call to the International Monetary Fund (IMF).

Instead, he said, the country would ride out the storm and wait for the upturn.

In his quarterly press conference yesterday, which was broadcast to the nation, Prime Minister Barrow was frank about the situation the country is now in.

“To be blunt the news is not good. I think that we all in this country, including the experts, underestimated the effects of the global economic crisis on Belize. Of most importance is what it has done to our tax revenue collections,” he said.

Barrow reported that tax revenue stood at BZ$295.3 million (US$151.4 million) as of September, a 9.4 per cent decline when compared to the same time last year.

“This was caused primarily by the sharp decrease in tax receipts most acutely with respect to the collections at the Customs and the GST Departments. Collections there are heavily reliant on imports to source the revenue and there has been a sharp decline in imports,” he said, explaining that statistics from the Statistical Institute of Belize (SIB) show gross imports at BZ$648.9 million (US$332.8 million) during the first half of the year – a 21.2 per cent decrease over the comparable period of 2008.

Prime Minister Barrow said the SIB had also forecast growth for this fiscal year at 2.5 per cent, marginally more than the IMF had predicted, but indicators now suggest a dramatic swing of at least three per cent which will result in a contraction in negative GDP growth for 2009.

“In effect, it has to be well and truly said that our economy is in recession. Now, this clearly means that we are facing tremendous operational difficulties,” he said, noting that this would seriously affect the ability of Belize to service its debt.

In spite of the major challenges clearly ahead, Barrow said that seeking assistance from the IMF was totally off the table.

“All the help that we want from the IMF we have had; that is, the help that comes without the conditionalities,” Barrow said. “You see what took place in the case of Jamaica which included wage freezes and layoffs, that is not going to happen here.”

He pointed to recent news that the US economy was beginning to grow again and said that would eventually reflect in the local economy.

“There is obviously a lag between what happens in the developed world and the effects on us and that is seen most clearly in terms of the negative aspect of the process. As the world economy begins to recover so will our economy,” Barrow said. “Generally, as our major trading partner, the United States, recovers so will we.”

“In the meantime…we will make every effort to do better with tax collection and on that basis we simply batten down the hatches and ride out the storm…because the turnaround is going to take place.”

The good news delivered by Prime Minister Barrow though, even as he painted the bleak economic picture, was that the country’s foreign exchange reserves were healthy – standing at BZ$415.3 million (US$212.9 million).

“That is the highest that the reserves have been in a decade. For sure, our currency is not under any threat and the kind of months of import cover that this gives us is comforting,” the Belize leader said.