To the United Nations ECOSOC who invited Belize to participate in today’s Special High Level Meeting, we record our deep gratitude for their confidence in us, but even more so for the confirmation, by our presence here, that our recent debt re-structuring was a compellingly valid and just one.
Belize derives its voice in this forum, and indeed its standing as a member among equals in this venerable Institution, from the sacrosanct democratic principle so cherished at the founding of the UN – that the rights and responsibilities of each nation state shall be apportioned equitably.
Fulfilling the promise of an equitable stake in global economic governance for all nations stands at the core of today’s Special High Level Meeting.
With 360,000 citizens and an economy of US$ 1.6 billion, Belize is a great little nation, epitomizing middle-income, small and vulnerable. Without any extraordinary support from multilateral institutions, Belize weathered the raging storms of the Great Recession with confidence, grit, focus, and refreshing Belizean optimism. With a blend of targeted stimulus and pre-emptive debt restructuring, Belize not only avoided economic contraction but last year she registered a remarkable 5.3% GDP growth.
Our recent debt restructuring, concluded on 20 March 2012, affords Belize a unique vantage point from which to assess the multilateral ‘emergency room services’ available to the swelling ranks of countries afflicted by the lethal brew of high debt and low growth. Mr. Chairman, we come as friends but these MFI facilities are shamefully inadequate for small states.
Let us in haste be unambiguously clear – sovereign states are inherently responsible for credible economic and prudent fiscal policies, which, so evidently, are as pressing as 2100 years ago when the Statesman Marcus Tullius Cicero proclaimed: “The budget should be balanced, the treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled…lest Rome become bankrupt.”
Not craving commercial credit and refusing to submit to the tested and failed IMF cocktail of austerity, higher taxation and unbridled privatization, no MFI support mechanism was made available to Belize. Even with an approach supported by Belize’s private creditors, a formal IMF Fund Program was the only option offered. We asked only for a partial guarantee of our restructured debt, collaterized by the future flow of official sector oil income but all we got was a demand to implement policies that would have amplified the impacts of the recession and driven more Belizeans into poverty. This demand for MORE austerity came from the same IMF that, according to recent media reports, is about to demand LESS austerity from the UK. Usable credit facilities that parade the halls of power of developed countries’ corridors should have been forthcoming to Belize. But Belize was simply too small to save.
We felt the force of Mark Twain’s pen, “A banker is a fellow who lends you his umbrella when the sun is shining and wants it back the minute it begins to rain.”
Surely the balance sheets of the World Bank, the International Monetary Fund, and sister institutions such as the IDB can further support the fragile economies of small middle-income states like Belize.
The world – this Institution and its members – simply cannot allow for global economic governance to evolve at the glacial pace which has characterized the evolution of global political governance.
Now then, Belize advocates a few priorities, Mr. Chairman:
1. Emerging economies deserve urgent and greater voice in the operation of the MFIs. The system where our representatives at the World Bank and IMF owe their primary allegiance to countries whose interests diverge dramatically from ours is patently undemocratic and untenable.
2. If the G7 or G20 are elephants, small countries like Belize, as one economist framed it, are certainly not small elephants. Solutions must be tailored to small states, a case that was put forward, in the instance of the Caribbean, in 1965 by an early President of the CDB, William G. Demas. The UN General Assembly provides the optimal anti-club model, guarding against the rule of the jungle. Global economic governance ultimately rests upon constructive engagement and judicious deliberation. Opportunities for sovereign states as equals to make use of a broader mix of development financing and debt instruments are critically important.
3. The post 2015 development agenda must reward conduct that is conducive to the very survival of the Planet. With a third of Belize’s land and sea resources dedicated to conservation, with so many World Heritage Sites properly managed, with conservatorship of the Hemisphere’s longest Barrier Reef, Belize’s balance sheet should reflect as assets these timeless treasures of humanity.
4. Small states need a ‘fiscal recovery room’, not just an ‘emergency room.’ Emerging economies would welcome the issuance by MFIs of financial instruments denominated in emerging economies’ currencies, assistance with the development of financial markets for such instruments, access to efficient and affordable liquidity facilities, and more equitable management of key macro and international risks. It is most obvious that the best way of avoiding the gargantuan costs of financial crises is to prevent them in the first place. In this regard, it is fair to suggest that the international financial architecture of the Bretton Woods era is medieval.
5. There can be no examination of and resolution for global economic management without addressing the volatility of small states’ economic fundamentals – GDP, tax revenues, exchange rates, and terms of trade. Debt structures that make public finances less susceptible to externalities should be debated as should indexing repayment of principal and interest to small states’ exports, commodity prices, stage of development, terms of trade, rate of economic growth, and even to incidents of natural disasters or the inescapable business cycles, like recessions.
6. In most instances, unsustainable debt was unsustainable from the outset of lending. Global economic management must match the fetters now available for borrowers with fetters for unscrupulous lenders. A seminal lesson of the Great Recession is the unchecked greed of credit markets chasing yield. Ineligibility should not invite predatory lending and a choke-hold of states’ survivability.
Mr. President, our recent debt operation underlines a tale of two extremes. On the one side is a system that rewards the profligacy of developed countries with massive amounts of bilateral and multilateral money to repay and protect creditors of developed nations. At the other extreme, small states, like Belize, are left to restructure their debt unaided, and without a dime of direct assistance from multilateral or bilateral sources. EXTREMES, Mr. President, NEVER LAST, NEVER SUCCEED.
New global economic management requires oneness, not separateness. This is the great challenge of our generation.
On behalf of Belize and Prime Minister, Rt. Hon. Dean Barrow, these are the best times for sharing and launching new global initiatives that benefit economic management and preclude the precipitation of new crises.