The PUP politicians are still hanging on and still borrowing money. They haven't fired any government workers yet either. So what is going on? Did they bankrupt Belize, or not?
Without any hard quarterly reporting finances from the government it is hard to say. Couple that with the British accounting system, which lends itself to double bookkeeping and creative accounting, trying to interpret what is happening with the country of Belize financially is somewhat difficult.
What does seem apparent this past year, is that the PUP government are still borrowing. Guess work and best estimates indicate that the government is making the interest payments on the Foreign National Debt, but no Principal payment reduction. Couple that with a very minimal borrowing operating loan system to keep infra-structural projects going, additionally to cover government operating expenses; the Foreign National Debt continues to grow and the interest obligations continue to grow also. The growth of the Foreign National Debt is very worrisome to most thinking Belizeans.
The Opposition UDP claim the Foreign National Debt is around $1.8 billion dollars on an average annual government income of around $360 million. Best guess estimates indicate that the Foreign National Debt is probably not less than $1.3 Billion. Though no one knows for sure and the Financial reporting from the Cabinet cannot be trusted. This being the last year for the PUP in office and elections due a year from now, we are going to get bombarded with various numbers, most of which are likely to be inaccurate.
What happened was that a clique, or inner cabal within the People United Party under the Prime Minister, Said Musa and Ralph Fonseca and a couple of other trusted people within the Cabinet, persuaded the rest of the Cabinet PUP that GROWTH ECONOMICS could be done to boost the nation's income potential by borrowing money from Foreign Lenders to stimulate business. At the time we called it FOOLISH at the Belize Development Trust and a sales pitch given, probably from PREDATORY FOREIGN LENDERS, among which the gullible who were influenced by these false ideas in the PUP Cabinet clique, kept insisting would work. The end result after a wild three year spree of spending borrowed money failed to make using borrowed money to stimulate GROWTH ECONOMICS obvious; even to the most amateurish country bumpkins running the PUP cabinet. The governing factor was basically, that the HUMAN RESOURCES in Belize are limited. No matter how much money you throw at your limited human resources, it is not going to change the annual government revenues. Annual government revenues over forty years have oscillated between a low of $280 million per year and $460 million a year. But since these figures were probably cooked by past governing regimes, even these figures are questionable.
Promises of FREE money are never FREE! And it is the gossip on the street, that the only plan the PUP had to pay back the FOREIGN BORROWING, was a bunch of rhetoric from FOREIGN PREDATORY LENDERS that they would get DEBT FORGIVENESS. Which was the rhetorical buzz word and jargon in lending circles four years ago. But like political and sales jargon anywhere, it was all false! Now Belize sees itself with a debt that under the best of circumstances cannot be paid off inside of twenty years. Not only that, the interest alone on all this FOREIGN DEBT over that time period is expected to run about 140% of what was borrowed. The understanding of compound interest effects seems to be a shortfall of higher education among the port town political elite and the horrors thereof, that can trap Belize into PERPETUAL DEBT. If we are not in this monkey cage yet, it is very damn close. The Jesuits should have had classes on compound interest and the drawbacks, including studies, reports, excess charges, prepayment penalties, high interest rates not related to the risk and other padding and exorbitant fees on FOREIGN LOANS.
That this current batch of politicians do not understand the drawbacks of these things, show the shortfall in Jesuit Accounting Education; which they prefer to teach because of low cost investment.
An error of judgement was made for short term gain. One does not like to rub the nose of the PUP cabal in this thing, that they ventured with the best of intentions. But if any lesson can be learned by new generations in Belize from this debacle; it is the fact that probably over the next twenty years, the government of Belize and you the taxpayer are going to be stiffed with paying about $1.4 billion in interest payments and you will still owe whatever the PRINCIPAL debt is, another $1.3 to $1.8 billion. When one subtracts $1.4 billion in non-productive interest payments from the earning capacity of the Belize Government annual revenues that should not have been there, if common sense had been used; there is going to be a lot of LOST economic growth. It is going to certainly cramp the government and the economy when a large part of your average $360 million a year is wasted on interest payments to these ROGUE LENDERS and PREDATORY BANKS. One can only hope that the interest is simple interest and not compound interest. Because if it is compound interest, we the nation of Belize taxpayers are going to be in PERPETUAL DEBT.
Are there solutions? Possibly! But none of them good! An accelerated effort to get DEBT FORGIVENESS is one route. PREDATORY ROGUE LENDERS are unlikely to go that route with the PUP government, because their history is like Pavlov's dog experiments. If the PUP get DEBT FORGIVENESS history says, it will encourage them to borrow more and not switch to a self reliance type economic budget system and needed legislative changes. So, possibly a new government of UDP might get some debt forgiveness, but it is doubtful anyone in their right mind would do so for the PUP.
Another idea is that we pass legislation to create a bankruptcy law for the nation as a whole. This is certainly unpalatable to foreign lenders and probably would create some war between the debaters in the dirty tricks departments of the two major political parties, the UDP and the PUP. However, I firmly believe that bad loans and predatory lending should be subject to bankruptcy remedies equally for nations, as it is for corporations and individuals. It is my belief that lenders bear 50% of the responsibility of lending to HIGH RISK BORROWERS like third world countries. There is some hope that the UDP and the PUP can work something out on national bankruptcy legislation. They seem to be working together in the Court of Appeals and Death Penalty issue and this BANKRUPTCY legislation is every bit as important and needy. Are they smart enough and willing to bite the bullet? That is certainly another thread.
The drawbacks to Bankruptcy Legislation is the short term penalty of not being offered new loans to government by foreign lenders. But since the FOREIGN DEBT is so huge anyway, new loans are unlikely for a few years anyway. So why not go this route? Doesn't seem there is anything to lose really? " If you are going to have the name, you might as well have the game!"
Other than a crimped economy and government spending for the next twenty years, while the debt is paid off, I cannot see any other solutions. Can you?