VZCZCXRO9327
RR RUEHGR
DE RUEHBE #0005/01 0041949
ZNR UUUUU ZZH
R 041949Z JAN 07
FM AMEMBASSY BELMOPAN
TO RUEHC/SECSTATE WASHDC 0122
INFO RUEHGT/AMEMBASSY GUATEMALA 0007
RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUCNCOM/EC CARICOM COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 BELMOPAN 000005 
 
SIPDIS 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR WHA/CEN (MACK, CRAIG) 
 
TREASURY FOR IA/WHA (LEVINE) 
 
E.O. 12958:  N/A 
TAGS: PGOV ECON EFIN BH
SUBJECT:  BELIZE:  PM MUSA OPTIMISTIC ABOUT 2007 
 
Ref:  06 Belmopan 45 
 
This cable is sensitive but unclassified.  Please handle 
accordingly. 
 
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Summary 
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¶1.  (U) In his New Year's Message, published in the December 31 
edition of The Reporter (one of Belize's weekly newspapers), Prime 
Minister and Minister of Finance Said Musa was optimistic about the 
country's future - particularly in the areas of the economy and the 
border dispute with Guatemala.  End Summary. 
 
------------------------- 
Belize's "Robust" Economy 
------------------------- 
 
¶2.  (U) The message - which covered a full page and included a photo 
of a smiling Prime Minister Musa - began with a review of the high 
points of 2006.  Namely, the country's celebration of 25 years of 
independence, its rich and diverse culture, and the fact that Belize 
avoided the damage and destruction brought on by natural disasters. 
End summary. 
 
¶3.  (U) Musa then moved on to his vision for the future, stating 
that "there is a strong feeling of optimism" in Belize.  He 
applauded his government's "bold strategic decision" to restructure 
the public debt despite the "negative noise" from the critics. 
(Note:  Belize's debt, which was close to 100 percent of GDP, had to 
be restructured in order to avoid a sovereign default.  End note). 
Musa noted that the debt restructuring plan had been received 
positively by the international financial community and, as a result 
of this and other fiscal decisions, the country's deficit is down 
and there is a primary surplus of three percent of GDP.  (Note: 
There has been no public announcement yet regarding acceptance of 
the proposed debt restructuring by existing creditors.  End note.) 
 
 
¶4.  (U) Musa also touted the strength of the Belize dollar, which 
has been pegged to the U.S. dollar since 1976 (Note:  The current 
rate of exchange is US $1 equals BZ $2.  End note) and pointed to 
economic expansion and job creation as proof of his success in 
overcoming the nation's economic challenges.  Specifically, Musa 
highlighted the agricultural industry - including citrus, sugar, 
livestock, and poultry - as strong performers, emphasized continued 
investment in the tourism sector, and stressed that prospects in the 
country's nascent oil industry are "very encouraging" and will 
provide additional growth to the economy. (Note: The GoB recently 
passed an amendment to the Income and Business Tax Act which imposes 
- retroactively to January 2006 - a 40 percent tax on income for 
companies engaged in petroleum operations in Belize [reftel].  End 
note). 
 
------------------- 
Belize vs. Guatemala 
------------------- 
 
¶5.  (U) Next, Musa turned to the border dispute between Belize and 
Guatemala, which has been going on for decades.  Musa stated that 
Belizeans have been "anguished" by Guatemala's territorial claim but 
predicted that during 2007 the two nations would "likely reach 
agreement on a course that will bring an end to the Guatemalan 
claim" within a few years.  He went on to say that Belize would soon 
be rid of a "problem" that has been a "thorn in our side for two 
decades."  Musa said that all parties had agreed to resettle 
Guatemalan citizens living in the Belize-claimed town of Santa Rosa 
to a site within Guatemala, and he expected the resettlement to be 
complete in the first half of 2007.  (Musa also mentioned the 
important role of the OAS, as well as the financial assistance of 
Mexico, the U.S., and the United Kingdom, in moving forward on this 
dispute).  Although Musa stated that relations between the two 
countries are "better than they have ever been," he noted that he 
did not believe the border dispute would ever be resolved by 
negotiation.  Instead, he expected that the issue would have to be 
addressed by an "independent international tribunal." 
 
---------------------------------- 
Domestic Issues - An Afterthought? 
---------------------------------- 
 
¶6.  (U) Although the economy and the border dispute were covered in 
more detail, Musa also touched on a few domestic issues such as 
 
BELMOPAN 00000005  002 OF 002 
 
 
crime, education, poverty, and health care.  He stated that 
education would continue to be top priority for the government, and 
pledged new investments in education that would focus on "character 
building and positive attitudes for productive living."  He noted 
that the National Health Insurance program would expand to include 
the entire population during 2007 and sang the praises of ongoing 
rural development and poverty alleviation programs.  Finally, Musa 
said that crime remains a "serious challenge" and that the community 
must provide the police and the Belize Defence Force with full 
cooperation in order to maintain the peace. Unfortunately, Musa's 
address made no mention of how his government would fund these 
programs or address the growing crime problem in Belize. 
 
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Comment 
------- 
 
¶7.  (SBU) While the PM was trumpeting his success in avoiding a 
sovereign default, he failed to mention that he did so by borrowing 
more money from Venezuela (US $50 million), the Inter-American 
Development Bank (US $25 million), and the Caribbean Development 
Bank (US $25 million) and imposing a retroactive tax that could 
discourage future oil exploration as well as other foreign direct 
investment.  In addition, in his review of the Belize-Guatemala 
border dispute, Musa fails to address the potentially negative 
effect of his government's support (and active campaigning) for 
Venezuela during the recent UNSC vote. 
 
¶8.  (SBU) Comment continued.  During 2006, Musa's government faced a 
number of financial scandals, including the collapse of the 
country's housing and agricultural development bank and the suspect 
dealings of the Social Security Board.  Musa makes no mention of 
these issues in his message nor does he offer any explanation as to 
how he will fund his domestic agenda.  Elections must be held by 
March 2008 (although there have been some rumblings from the 
opposition to call early elections) and Musa's promises to invest 
heavily in education, health care, and poverty reduction are likely 
part of the pre-election promises.  End comment. 
 
DIETER