It's All About the Economy, Stupid.
According to the statistical institute of Belize, (SIB) February 2017 statistics released consumers prices up by 2.3%, both imports and exports down.
The economy contracts by 1.2% for fourth quarter of 2016.
The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP).
Belize has had at least five consecutive quarters of negative economic growth.
That's tethering on a economic depression.
There are no noticeable economic downturn worldwide. Yet, Belize's economy saw a 1.2% decline.
In the US such dire economic outlook would be grounds for dismissal of any sitting government. Thus, it raises the question - is it gross micro economic mismanagement or just happenstance?
An economic depression is a severe downturn
that lasts several years.
How can anyone argue definitively that the country is heading in the right direction with such an abysmal economic outlook?
The bondholders at the recent negotiations secured important commitments from the government of Belize regarding fiscal adjustment and its continued adherence to fiscal discipline over the next four years.
Under these commitments, Belize undertakes to (i) implement a fiscal consolidation equal to at least 3.0% of GDP in its forthcoming fiscal year 2017/2018 budget, and (ii) achieve a primary surplus target of at least 2.0% of GDP in each of the subsequent three fiscal years, namely 2018/2019, 2019/2020 and 2020/2021.
In short, at least a 2% primary surplus target or savings will be striven for.
Given the recent SIB release that shows a contracted economy of 1.2%.
With such negative GDP decline, it will be hard pressed to imagine a 2% primary surplus with such limited growth prospects.
Based on figures released to the bondholders, Belize GDP/ Debt ratio is at 94%.
Simply put for every dollar earned $0.94 goes to debt servicing.
In economics, the debt-to-GDP ratio is the ratio between a country's government debt (a cumulative amount) and its gross domestic product (GDP) (measured in years). A low debt-to-GDP ratio indicates an economy that produces and sells goods and services sufficient to pay back debts without incurring further debt.
It will not be sufficient to put the debt burden on a firmly downward trajectory.
It's difficult to find a silver lining.
However, it's safe to argue the IMF will be knocking at the door with their austere prescription sooner rather than later.