Cabinet will meet in a special Thursday session tomorrow to decide whether it should enter a Standby Agreement with the IMF. That's the quite stunning news coming out of Belmopan today. Under a Standby Agreement, the IMF would loan Belize money to help it out of its debt crisis and lend expertise to manage the economy. That would mean the imposition of strictly monitored and adhered to quarterly fiscal targets. That would translate into tight controls over government spending, and close monitoring of tax collection, in other words, austerity with a capital "A".
If government does decide to go with a Standby Agreement it would be a massive indictment of the fiscal policy of the Musa/Fonseca finance tandem, but on the other hand it would provide some relief from a crushing debt service schedule and a staggering $150 million overall deficit. Which way will government go? We today asked Education Minister and Attorney General Francis Fonseca. He sits on the Cabinet's Finance Committee and told us there's no room for face saving or game saving, government must act decisively but he's not sure that means going to the IMF.
Jules Vasquez,
We understand that the Cabinet will be having a special meeting tomorrow and that meeting will be held to consider the option of entering a standby agreement with the IMF. Could you comment on that?
Francis Fonseca, Attorney General & Education Minister
"Yes the Prime Minister has called a special meeting of the Cabinet for tomorrow and yes, one of the subject matters on the agenda for the Cabinet meeting is to discuss the options available to Belize in terms of our economic future."
Jules Vasquez,
Is the government of the feeling that to enter a standby agreement would be, to say it bluntly, would be too embarrassing because it would be an admission that we are unable to manage our own finances effectively, we're out of money, we're in threat of a default?
Francis Fonseca,
"Well I wouldn't use the word embarrassing because I don't think we can engage in that sort of discussion about being embarrassed as a government; we have to deal with the realities of the work ahead. We have obviously serious economic challenges and as a government we have to sit down in a very sober and a deliberate manner as the elected representatives of the people, and we have to make the decisions that we feel will be in the best interest of the Belizean people. So there's no room for embarrassment, it's a question of dealing with the problems we're faced with and finding the best solution to those problems, and that's what we intend to do."
Jules Vasquez,
Would you say a standby agreement, from your assessment personally as a Minister of Government and as a Minister with some influence, would you say that a standby agreement right now is our best option?
Francis Fonseca,
"No, I think I am obviously open to discussion and we're going to have that long discussion, and discuss in an open and frank way on Thursday. My own feelings as an individual is that no, that perhaps is not the best option available to us now. I believe there are other options available to us that we have to look at very critically. But obviously at the end of the day it will be a Cabinet decision and that decision will then be shared with the Belizean people."
Again, that Cabinet decision is expected tomorrow. If the government does decide to go standby, it would be the second time Belize would have entered into such an arrangement, the other time being during the last days of the Price administration in 1984.