The Dangers Of Devaluation In Belize (Updated 2017)
"Continual devaluation of the Jamaican dollar against hard currencies such as the US dollar hurts Jamaican exports and impoverishes the people." William Mahfood, former president of the Private Sector Organisation of Jamaica (PSOJ) and chairman of Wisynco, a manufacturing and distribution company.
He noted that while devaluation could help an economy such as Colombia, which has a major reliance on commodities such as coal, oil and coffee, “60 per cent of the Jamaican eonomy is based on services.”
THE REALITIES OF BELIZE
What We Make:
Belize, basically has a small, mostly, private enterprise economy that is based primarily on agriculture, tourism, and services.
In other words we don't make much of anything.
Because We Don't Make Anything, Really:
Belize's trade deficit has been growing, mostly as a result of low export prices for sugar and bananas.
Why We Don't Make Anything:
This United Democratic Party (UDP) government continues to face a critically unstable economy.
Why? Domestic industry is limited, constrained by relatively high-cost labour and energy and a small domestic market.
Why? For 36 years Government Of Belize, ran and operated thus far by only the PUP and UDP, did not invest in any domestic industry, as a matter of fact we lost some industries (papaya) and on the brink of losing others (sugar, banana, citrus, shrimp).
Why? Uncontrolled spending.
Why? The electorate keep electing people that uphold this failed, dysfunctional political and economic system.
How GOB Plans To Address This Problem:
1. Devalue Your Spending Power
Raising taxes on YOU. GOB is in a rapid-action mode to improve tax collection and also raising General Sales Tax.
GST is a consumer tax. Taxing goods and services. In other words, because our country doen't produce much of anything to export, the GOB will focus on increasing taxes on consumer items (most of which are imported junk) - Ramen Noodles, fry chicken and Coke are going up - this translates into...
...higher cost of living for you...and higher cost on your life...yes, diabetes is the number one killer in Belize...not guns...we eat too much imported junk...a topic for another article.
Oh, fuel cost will continue to go up, too, and thus, bus fares and your weekend family trips, are going to put a huge dent in your pocket.
You know what these factors also do? It brings a lot of stress on the exchange rate. And remember, technically, the Belize Dollar is fixed to the U.S. dollar at a rate 2:1.
Our dollar has already directly devalued, take a US dollar to any bank in Belize and ask to exchange it to Belize dollars...you are NOT going to get $2 Belize dollars.
There is more.
Inflation, which is defined as a sustained increase in the general level of prices for goods and services...go to the stores and tell me if you get the same amount of goods you did compared to just five years ago, hell, just 2 years ago...
...it doesn't matter what kind of definition or fancy words any politician use to define inflation, the fact is: that your black plastic bag is getting lighter and lighter every year, isn't it?
By the way, inflation is considered an indirect devaluation. So, in actuality, the Belize dollar has long lost a lot of its value.
2. Kill The Goose Laying Golden Eggs
Tourism: ever seen the one-foot skank, easy skanking? Because tourism now attracts the most foreign direct investment, and creates one out of every 5 jobs, and growing...what is GOB doing to nurture this industry?
They are trying to squeeze the life-blood out of this industry, with all sorts of ridiculous policies - setting us on a path in the "The race to the bottom."
In other words, instead of creating policies to boost our tourism industry product quality, they are creating an environment where this is inhibited, thus putting many tourism-related business competing with prices (race to the bottom)...
...because they simply don't have the retained earnings or access to cheap capital to improve the quality of their business and service.
What the Ministry of Tourism and BTB should be focused on.
Making Sure The Tourism Industry, Not Only Survives, But Thrives:
New Niche Markets: Actively seek and encourage new niche markets, such as the exploding Bed & Breakfast worldwide phenomena, which AirBnB is the number one platform, and also act as a very efficient, effective Property Management System (at no extra cost), combined with www.Payoneer.com, can help any Belizean get their business up and running with minimal investment, and training, and can run their business from just about any internet-ready computer.
Acute Seasonality: Fight acute seasonality by -
reducing hotel taxes for the slow season for all hotels that invest a certain amount of their profits into community projects. This will increase social benefits and the hotels benefit by being able to better compete regionally by charging lower rates and still keep a comfortable profit margin;
subsidizing electricity so as to further reduce operational costs;
subsidize fuel for tour guides and operators who form a functional cooperative in their area;
Caye Caulker, Hopkins and Placencia needs to become townships.
These top tourist destinations have local Government's functioning on financial fumes, to manage these large tourism destinations. Giving them Township status will allow them legal access to more financial resources, such as but not limited to property taxes and trade license fees.
Township status will also allow them more autonomy. The local government elected persons live in these communities, and they need to make decisions so that the destinations can remain versatile, and also, not allow themselves to be easily overridden by Central Government decisions, that are almost always way off the mark.
The GOB needs to remember that investment, the return on those investments and the taxes those investments will generate, is a private/public sector partnership...and it needs to be nurtured to become big and strong, not starved of nutrients where its growth becomes stunted.
I am not suggesting that these incentives remain permanent, but should be designed to boost the tourism industry, encourage many tourism-related businesses that are...just staying afloat...to grow.
And the better the private sector does, the more tax they have to pay government.
Fixing The The Rest Of Belize's Economic Sectors:
The simple formula of creating mutually-beneficial investment incentives, coupled with the GOB identifying and building industries that will turn our raw resources into value-added products, is not rocket science.
Singapore, which has a tropical climate, a 5 million plus multicultural population, and is 27 times smaller than Belize thus much less resources, managed to turn itself into a highly developed market economy and global financial center, with a 6% average growth rate per annum for the past 30 years, transforming its population living standards.
It has an economy that is known as one of the freest, most innovative. most competitive, most dynamic and most business-friendly.
It is the easiest country in the world to do business...for the past decade, according to the Ease Of Doing Business Index.
For several years, Singapore has been one of the few countries with an AAA credit rating from the "big three", and the only Asian country to achieve this rating.
The Corruption Perception Index consistently ranks Singapore as one of the least corrupt countries in the world, along with New Zealand and the Scandinavian countries.
To attract large foreign investments, Singapore focused on developing one of the most skilled labor force in the world, creating an attractive tax system, building advanced infrastructure, and ZERO-TOLERANCE AGAINST CORRUPTION.
Other noteworthy mentions about Singapore:
the worlds seventh largest foreign reserves.
one of the highest net international investment position per capita.
more than 7,000 multinational corporations from the United States, Japan, and Europe in Singapore.
it is the 14th largest exporter and the 15th largest importer in the world.
Belizeans: Singapore, a teeny country compared to Belize, which is itself teeny on the global scale, accomplished all of these feats and has been consistently done so for 30 years.
It Can Be Done In Belize:
The BPP will turn Belize into a donor nation. And it won't be a miracle, it won't take black magik, it won't take 50 years, all it will take are sound economic policies.
We want to win elections, however, we want to first focus on making sure Belizeans eat delicious (healthy) meals, live in comfortable homes, have access to state of the art (affordable) health care, drive on state of the art infrastructure, children going to school to developed advanced technical skills to continue building a mighty Belizean economy, cost of living to a bare minimum...
...and a security force focused on defending our borders, not our inner cities, which they won't have to, because a powerful economy will create hundreds of thousands of quality jobs, thus reducing hopelessness to a bare minimum, and we will make sure there are no cracks for anyone to fall through...
...with a robust economy, we will have the financial resources to do it...without ever contemplating raising taxes and cost of living on you.
Belize's physical size and population size makes us versatile, thus easily accomplishing these feats.
However, you and I both know it will never happen under the perpetual (36 years) failed economic policies of the PUDP.
With your support, we can. Together, we will. We noh have no Aschroft fi pull wi string.
Charles Leslie Jr | PR Director | Belize Progressive Party