We broke the story two nights ago detailing the contents of an internal government document, which states the IMF's position on the Belizean economy. Most worryingly the document, generated within and for government, states that, "a primary finding of the consultation...was that GOB's current fiscal stance is unsustainable and would result in a collapse of the fixed exchange rate regime during 2006." That "collapse" forecasted for next year would mean devaluation, which would assuredly send the country into a tailspin. Speaking today at a party press conference which we'll tell you about later Opposition Leader Dean Barrow says the IMF report and the actual condition of the economy will force an early election.
Dean Barrow, UDP Leader
"Some of the IMF recommendations I find to be astounding. That we should have come to this pass, that we should have been brought to this pass by the current government is nothing short of horrendous but some of what the IMF said are to my mind absolutely beyond pale. The IMF basically is telling you that these people are running out of money. The IMF is telling you that they need to raise taxes again by July 1. I don't see how the government can even begin to think that it would raise taxes by July 1 without going back to the people for a new mandate. That clearly is not going to fly and I'll leave it at that. Because of all that is happening, not just the pressure of the people for new elections, but the objective pressures being caused by the imminent financial collapse that government is facing, we have to feel confident that elections will be held sooner rather than later. At the latest elections have to be held by March of next year."
And while Barrow predicts an early general election before next year march, the PUP government maintains that the only election that will be held at that time are municipal elections, which by law have to be held by March of next year. Commenting today on the IMF report, which Barrow says would force an election, Minister of Information Godfrey Smith said that at this point the IMF has only made recommendations. He conceded that these are serious times and they do call for serious measures, but maybe not quite as serious as the IMF might propose.
Janelle Chanona, Channel 5 NEWS
"How do you respond to the fact that there is a growing number of people who feel that when you all go back to raise taxes all hell will literally break loose?"
Godfrey Smith, Minister of Information
"Yes we have faced the fact that we are facing a very serious economic situation but you assume that the government will go back to the people for new taxation sometime this year or next. The government has taken no such decision. The IMF, as is their duty, always puts forward recommendations to a government and invariably, just as they did the last time, those recommendations include taxation. The government has certainly not accepted that. And even if you talk to the IMF officials themselves, they are saying, 'look this is what we throw out.' If we sit with you and discuss other things that can be done that is a distinct possibility. But they have not said this is the only way you can get back on a firm economic footing; that has never been the case. That is not how the IMF operates."
And while government may reject the IMF proposals, as it has been known to do, it does so at its own peril. 7NEWS is reliably informed that senior staffers at the fund have indicated that if government were to require a standby arrangement, as is necessary in the face of a debt management crisis, the fund would be reluctant to get involved under the present political configuration.
