“If you don’t know where you are going, any road will get you there.”
More growth is better than less. For any given level of population, the more output produced per capita, the more income is available for distribution among the citizens of a country. Therefore, growth should be a primary focus of all countries. More growth is generated by optimally employing the inputs of technology, capital, labour, and others.
At the last business forum entitled “Partnering for Growth”, Prime Minister Barrow reiterated the opportunities that exist when Government and the Private Business Sector engage in open dialogue. The underlying objective is to find ways to accelerate the ‘train’ of economic development that would expand incomes, create employment, and stimulate the general business and economic activity. Economic growth cannot solely be the concern and impetus of Government. Government can create the enabling environment, but the private sector must be emphatic and committed to its contribution to an economy that is suffering the effects of the global recession. In other words, growth can be private sector led.
An increase in economic growth does not necessarily translate into improvement in the living standards for all, which in every shape or form is what all countries want to achieve and Belize is no exception. The production function states that improvements in the stock of capital, labour, and technology will produce more. Research indicates that a stable and conducive economic environment, adequate access to and the provision of financial resources, adequate intuitional frameworks, better governance and the rule of law, induces the growth process.
There have been some plausible efforts to reduce the cost of doing business, primarily the reduction of utility costs namely: water and electricity. Belize continues to see vibrant movements in terms of the tourist industry, which is the number one export industry. This brings in much needed foreign reserves and can be accessed by the private sector, especially for businesses that are more import driven. It is worthwhile to mention that economic expansion in 2011, for Belize, was 2.5%; it might seem modest, but the great United States recently showed quarterly growth of approximately 2 % and economists were predicting 1.7% growth. Many other countries have been suffering from inflation, hyper-inflation, and zero growth, which increased the cost of living, with a simultaneous scarcity in supply of much needed goods and services and rising price levels.
Partnering for growth is opportune because the private sector needs to invest more and to demonstrate confidence about the future or Government will have to spend more. Of course, the environment must be conducive to ensure a reasonable return on investment (ROI). Government spending has to be financed; it can generate savings from efficiency, rationalizing its present activities, or a process of re-prioritization of existing funds, or it can borrow. If domestic or external borrowing is essential, the Government will need to consider the costs and benefits in the short, medium, and long term.
Belize still faces challenges, especially with its external debt capital and in the media. Belizeans have been monitoring the negotiations of the Superbond, which is still a priority for Government to resolve with the bondholders. Only last week, the IDB reneged on its intention to provide a cushion of support to help to allay the fears of the bondholders and the pulling of the rug from under the country, and I say country, because the Superbond’s successful resolution will benefit the people of Belize, not the Executive arm of Government. If none of the indicative scenarios or some restructuring of the scenarios, with the same relief is not agreed upon, then a few options may be meeting the agreed payment schedule of 2007 or litigation, which can be very costly. Let’s hope that both parties can find a compromise that ensures payment, though reduced to the bondholders and the Government gets the relief it seeks to ensure that other debt obligations can be met. We must be mindful that Government expenditure is still necessary to meet its budgetary allocations for growth and development.
With all the challenges brought on by the global recession, there are glimmers of hope and progress. Crime remains a major domestic issue; this has meant far more efforts and expenditure to arrest this scourge. Arresting the crime situation cannot be solely the objective of the Government, because the private sector is not charged for Police or BDF protection. There has to be consensus on the interventions taking place and future initiatives, whether it’s creating employment, entrepreneurial activities, or other initiatives. The private sector cannot be so profit-driven that social responsibility is aborted. The role of each player is conditional on the starting position. A country that is booming, according the waves of the business cycle, does not need the same thrust as one affected by recession. The role of the private sector and public sector players will affect the economy in different ways and have different short, medium, and long term effects. The roles should be complimentary, even orchestrated to produce the best results for national growth.