REPORT #543 October 2002

Produced by the Belize Development Trust

It has been something of a puzzle when you are sitting far removed from the inside political machinations of the two political parties in Belize. The big puzzle was the fact that we are not Bankrupt as a Nation yet? With a three year spending spree by the incoming PUP on borrowed money that hit about $1.8 billion in national debt and before it is over, is going to cost over $3.4 billion with interest payments. The puzzle was how were we managing as a PUP government to stave off what seemed imminent calamity?

The Opposition UDP party paper, the Guardian sheds some light on the subject this week; for those of us living far removed from any insider knowledge of political party financial machinations.

It seems that under Finance Economic Minister Fonseca under the direct supervision of the Party Leader and Prime Minister, Said Musa according to his public statements; he arranged some temporary short term loans, to divest the government of some of the debt from private lending sources. I presume these are banks? The article does not say? Then Fonseca arranged in this recent year an International Bond Issue to retire the loans taken out in turn to pay off other loans. As an analogy, we are basically using credit cards, one at a time to max out the others and pay them off and transfer the debt?

Unfortunately, the said Finance Minister did not do his homework and the Guardian the Opposition newspaper is exposing the shortcomings of the Ministry of Finance manipulations.

We are not Bankrupt as a Nation yet, because commercial loans were taken out to pay off older loans; but these newer loans before the current set, were apparently BALLOON loans. In which you only have to pay the interest payments for a period of years, believed to be about five years; enough time to rescue the current PUP government from the consequencies of poor borrowing and economic policies during this term of office.

The postponement of retribution on the huge National Debt is therefore about seven to twelve years away and public memories are short and the PUP who incurred this debt and Cabinet individuals responsible, will already be retired by then, on generous pensions and other high earning savings from various business arrangements from being in office, if the rumor mill has any truth to it?

It was a good idea to make the BOND ISSUE on the International Markets to pay off these high interest loans. But a BALLOON Loan has very serious financial penalties and high interest rates. A Balloon loan gives you a short term breather, because you only make high interest payments and do not pay the PRINCIPAL. But come a few years, the HUGE PRINCIPLE must be paid for in cash at one time. You can for a time, borrow from Peter to pay Paul. That in essence was the plan for which the International $250 million Bond Issue was taken out for. Unfortunately the Ministers in the PUP Cabinet and their lower helpers did not do their homework. It turns out, according to the Opposition newspaper the Guardian; that the penalities on the BALLOON Loans of short term use, to get the PUP party out of temporary bankruptcy trouble, plus the high interest and other clauses; make it impractical to use the now $250 million newly borrowed money by International Bonds, useless. So the PUP, it is charged by the Guardian article, are using the International Bond Money which is costing about 10% interest, to pay off other loans; that are set at lower interest rates. Which makes no logical sense at all?

Needless to say, the impression one gets from the boondocks, is that there are some seriously economic deficient elected representatives managing the PUP party and the nation. That they are politically astute, there is no argument! That their politically astuteness will postpone the inevitable financial ARMAGEDDON collapse of the financial status of the Nation of Belize, until they are safely retired and out of the picture seems also pretty cold hearted calculating? With a public memory that is short, will the next government, or the one after that, or the one after that, or the one after that; which will have to deal with this financial mess; even remember, or care who the architects of this impending disaster were, caused by this PUP Cabinet? Will their names be forgotten, or reviled in future Belizean History studies?

My bet is that their political astuteness is correctly figured. They will live out their lives in style and comfort and be forgotten by the next generations left to handle these financial and economic problems. Yup! They have it figured right for political astuteness. ( Me first! The party second! The Nation last.)

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