Government's planned austerity, including a wage freeze, firing 56 contract officers, retrenching of open vote workers, and across the board cost cutting is all in the name of saving $70 million in the budget and bringing the overall deficit down to 3% of GDP. Well, a new document revealed by freebelize.org shows that won't be happening, not by a long shot. In fact, the document proves that Belize is heading for another overall deficit that could be at least 7% of GDP.
The internal Cabinet document shows debt service payments that were not included in the budget but that government will likely have to pay. The document discloses possible shortfalls in loan and guarantee arrangements that up until the revelation of this document had been kept secret. Most alarming are the payments government will have to make for the Glenn Godfrey Group, a total of $21.2 million. $14.4 million of that will go to the Provident Bank and Trust, a bank in which Godfrey has had interests. Provident had arranged an significant loan to Intelco and government guaranteed it. Now that Intelco's gone bankrupt, government is using your taxpayer dollars to pay the loan.
Another alarming revelation in the document is the cost of the BTL wrangle. Legal fees paid to Hunton and Williams in Miami are projected in this internal document to finish up at $2 million while fines and penalties will be another $4 million.
Another bombshell disclosure in the document is the $16 million that government will have to pay for the Port of Belize Limited under another secret buyback arrangement. Those loans aren't disclosed but our information is that $16 million is being used to service debt that the private owner Luke Espat is not paying, including the debt for the controversial dredging project.
The total adds up to $92 million dollars, the disparity between what government had budgeted for those loans $41 million, and what it will actually have to pay, $130 million. That $92 million is just about 4% of GDP so add that to the projected deficit of 3% which did not factor in these new revelations and you'll see that if all these contingencies come through, government is again heading for a 7% deficit a figure that will not impress the already doubtful IFI's, including the IMF. Also, this new revelation takes government financing obligations from $228 million to $323 million. That means 65 cents out of every dollar government earns goes to debt servicing. To know how bad that is, you'll see that salaries and pensions add up to another 55 cents out of every dollar. Those two "must-pay" obligations add up to $1.16 out of every one dollar government earns meaning that with just salaries, pensions and loans alone, GOB is 16 cents short on every dollar which is the definition of a recurrent deficit. And that's not the end of it, because government is already 16 cents down and hasn't even started paying for goods and services showing an acute recurrent deficit.
