At 6:50 pm government faxed out its official position after today's special Cabinet meeting. As we reported, it is a homegrown strategy called 'the Belize program of adjustment.'
It sates that Cabinet discussed "the decisions necessary to avert...any financial crisis." The emphasis is on: maintaining the currency peg, fiscal sustainability and debt stabilization. Most notably, the release says, government will "develop in consultation with the IMF a medium term adjustment program including fiscal and monetary adjustment measures without entering into a formal IMF standby program." That programme will largely mirror, while somewhat attenuating, the recommendations made in the IMF preliminary report which was released two weeks ago.
It will focus on expenditure cutting and raising additional revenue in the hope of realizing an adjustment figure of $70 million for the rest of the fiscal year. That means cuts to recurrent expenditure of $20 million, cuts in Capital II expenditure of $10 million, reduce Capital III by $10 million. That's $40 million and the remaining $30 million will be realized by closing loop holes on stamp duty transfers, imposing a moratorium on all fiscal incentives, and improving tax collection.
In the banking sector, government will also raise the reserve requirement by another 1%, further tightening the money situation, and the Social Security Board will have to transfer its deposits to the Central Bank.
On the debt side, government will seek to renegotiate its debt, a task far easier said than done with wary commercial creditors.
Again, this statement was just issued 15 minutes ago and that is just a very dry once over. We'll have more analysis of it in tomorrow's newscast. For a text of the entire document, you can click here
