Via IMF (Den Internationale Valutafond)

IMF Executive Board Concludes Article IV Consultation with Belize







December 9, 2019















On November 27, 2019, the Executive Board of the International Monetary
Fund (IMF) concluded the Article IV consultation with Belize.

[1]

Belize’s economic recovery continues but the pace is slowing. Real GDP grew by 3.2 percent in 2018 and unemployment has
reached at a historic low amid near-zero inflation. However, recent data
indicate a slowdown in economic activity, reflecting a severe drought.
Growth for 2019 as a whole is projected at 1½ percent. The current account
deficit remained large in 2018, at 7.9 percent of GDP. The financial sector
is stable. The government implemented significant fiscal consolidation over
the past two years, but the primary fiscal surplus is expected to narrow
this year and remain below 2 percent of GDP for the following two years.

The medium-term outlook remains challenging. Real GDP growth is projected
at just below 2 percent over the medium term. The current account deficit
is expected to remain large, with international reserves at about 3 months
of imports of goods and services. Public debt remains elevated, at above 90
percent of GDP. Belize is vulnerable to weaker U.S. growth, which would
impact tourism, to higher oil prices, and weather-induced natural
disasters. Violent crime poses risks to growth, competitiveness, and
macroeconomic stability. The financial system remains vulnerable to a loss
of CBRs. The government continues to contest legacy claims, which could
lead to large public financing needs. On the upside, an intensification of
structural reform could further raise investment, income, and employment.

Executive Board Assessment

[2]

Executive Directors commended the authorities’ ongoing efforts to enhance
Belize’s policy and regulatory frameworks, noting the historically low
unemployment and near zero inflation. Directors, nevertheless, acknowledged
that the country continues to face challenges, including high public debt
and external imbalances, modest potential growth, and vulnerability to
natural disasters and climate change. They encouraged the authorities to
accelerate structural reforms to strengthen inclusive growth; reduce public
debt; strengthen financial sector oversight; and build resilience to
climate change.

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While welcoming the significant fiscal adjustment achieved over the past
two years, Directors called for continued fiscal consolidation over the
medium term to ensure Belize’s external stability and debt sustainability.
In this regard, Directors encouraged further efforts to broaden the tax
base, phase out exemptions and tax incentives, restrain current spending,
including through the wage bill and pension reforms, and improve the
efficiency of spending through public financial management reforms. These
measures could provide fiscal space for social programs to alleviate
poverty and needed infrastructure. To support the fiscal adjustment,
Directors encouraged the authorities to consider a rule based fiscal
framework based on a debt anchor.

Directors welcomed the significant progress in enhancing financial
soundness. They encouraged further efforts to strengthen bank supervision
and the resolution framework for financial stability. In this context,
Directors welcomed the authorities’ commitment to conduct an asset quality
review to assess banks’ capital buffers and underscored the importance of
intensifying supervision and enforcement in the international financial
services sector to bolster investor confidence and prevent a loss of
Correspondent Banking Relationships. Directors emphasized the need to
further strengthen the AML/CFT framework and implement international
standards on virtual assets.

Executive Directors encouraged the authorities to accelerate structural
reforms to improve the business climate and address supply side bottlenecks
to promote inclusive economic growth. While welcoming the recently launched
National Financial Inclusion Strategy and the planned establishment of a
credit bureau, Directors called for further reforms to facilitate access to
credit, streamline procedures for starting a business, fight corruption and
crime, and expand training programs, particularly for the youth.

Directors commended the authorities’ efforts and commitment towards natural
disaster resilience, including their plan to develop a Disaster Resilience
Strategy based on a multi-year macro fiscal framework which would provide a
comprehensive guide to Belize’s resilience building needs and plans.
Directors also encouraged the authorities to continue making investments
into climate resilient infrastructure and to optimize the use of risk
management instruments.


Table 1. Belize: Selected Social and Economic
Indicators 2015–2024


I. Population and Social Indicators

Area (sq.km.)

22,860

Human development index (rank), 2017

106

Population (thousands), June 2019

408.5

Under-five mortality rate (per
thousand), 2017

14

GDP per capita, (current US$), 2018

5,025

Unemployment rate (percent), April,
2019

7.6

Life expectancy at birth (years), 2017

70.6

Poverty (percent of total population),
2009

42.0


II. Economic Indicators, 2015-24

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

Prel.

Proj.

Proj.

Proj.

Proj.

Proj.

Proj.


National income and prices

(Annual percentage changes, calendar
year)

GDP at constant prices

3.4

-0.6

1.4

3.2

1.5

2.5

1.8

1.7

1.7

1.7

Consumer prices (average)

-0.9

0.7

1.1

0.3

0.4

1.2

1.7

1.8

2.0

2.0

Central government 1/

(In percent of fiscal year GDP)

Revenue and grants

28.2

28.9

29.5

30.6

30.5

30.7

30.8

31.0

31.0

31.0

Current non-interest expenditure

23.1

23.8

24.1

24.2

24.4

24.4

24.4

24.4

24.4

24.4

Interest payment

2.5

3.3

3.1

3.1

3.2

3.1

3.1

3.1

3.0

2.9

Domestic

0.4

0.5

0.9

0.9

0.9

0.8

0.8

0.8

0.8

0.9

External

2.1

2.8

2.2

2.2

2.3

2.3

2.3

2.3

2.2

2.0

Capital expenditure and net lending

10.2

7.0

6.5

4.3

4.6

4.6

4.6

4.6

4.6

4.6

Capital expenditure

7.3

6.9

4.0

4.0

4.4

4.4

4.4

4.4

4.4

4.4

Net lending

2.8

0.1

2.5

0.3

0.2

0.2

0.2

0.2

0.2

0.2

Primary balance

-5.1

-1.9

-1.1

2.1

1.5

1.7

1.9

2.0

2.0

2.0

Overall balance

-7.5

-4.2

-3.9

-1.0

-1.7

-1.5

-1.3

-1.1

-1.0

-1.0

Public debt

(In percent of calendar year GDP)

Central government debt

78.5

84.8

92.3

90.4

89.8

89.1

87.7

85.0

80.9

76.4

Public debt 2/

80.8

94.7

94.5

93.8

94.2

93.6

92.4

90.0

87.6

84.8

Domestic debt

14.0

28.3

27.1

27.1

26.6

24.8

23.2

22.2

22.4

23.1

External debt

66.8

66.4

67.4

66.7

67.6

68.8

69.2

67.9

65.2

61.7

Principal payment

2.1

2.2

2.4

2.2

2.4

3.4

3.6

4.7

4.8

4.6

Domestic

0.0

0.0

0.0

0.0

0.0

0.8

0.7

1.7

1.8

1.7

External

2.1

2.1

2.4

2.2

2.4

2.5

2.9

3.0

3.0

2.9

Money and credit

(Annual percentage changes, calendar
year)

Credit to the private sector

4.8

-3.0

3.9

3.2

1.9

3.7

3.5

3.6

3.8

3.8

Money and quasi-money (M2)

7.3

2.6

-0.3

2.6

1.9

3.7

3.5

3.6

3.8

3.8

External sector

(Annual percentage changes, unless
otherwise indicated)

External current account (percent of
GDP) 3/

-9.8

-8.4

-7.7

-7.9

-8.0

-8.1

-7.6

-7.4

-7.0

-6.7

Real effective exchange rate (+ =
depreciation)

6.5

1.7

-1.7

Gross international reserves (US$
millions)

437

377

312

294

286

315

326

339

349

360

In months of imports

4.8

4.2

3.3

3.0

2.8

3.0

3.0

3.0

3.0

3.0

Memorandum items

Primary balance (excl. one-off capital
transfer) 4/

-5.1

-1.9

1.3

2.1

1.5

1.7

1.9

2.0

2.0

2.0

Nominal GDP (BZ$ millions)

3,525

3,613

3,725

3,857

3,930

4,077

4,221

4,373

4,538

4,710

Sources: Belize authorities; UNDP Human
Development Report; World Development
Indicators, World Bank; 2009 Poverty
Country Assessment; and Fund staff
estimates.

1/ Fiscal year (April to March).

2/ Public debt includes central
government debt as well as external
financial and non-financial public
sector debt.

3/ Including official grants.

4/ Excludes assumption of UHS debt by
the government in FY 2017/18 (2.5
percent of GDP).

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[1]

Under Article IV of the IMF’s Articles of Agreement, the IMF holds
bilateral discussions with members, usually every year. A staff
team visits the country, collects economic and financial
information, and discusses with officials the country’s economic
developments and policies. On return to headquarters, the staff
prepares a report, which forms the basis for discussion by the
Executive Board.


[2]

At the conclusion of the discussion, the Managing Director, as
Chairman of the Board, summarizes the views of Executive Directors,
and this summary is transmitted to the country’s authorities. An
explanation of any qualifiers used in summings up can be found
here:

https://www.imf.org/external/np/sec/misc/qualifiers.htm

.


IMF Communications Department
MEDIA RELATIONS

PRESS OFFICER: Randa Elnagar

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@IMFSpokesperson