Belize Business News

The Office of the Prime Minister of Belize issued statement in connection with the annual report for the period from April 1, 2008 to March 31, 2009, recently published by the auditor general, and the questions concerning this report that appeared in the media. In general, auditor general’s annual report outlines operation failures of Belizean government’s system of account.

In the statement, the Belizean government accepted the critics and recommendations of the auditor general, and informed about the measures already taken to address them, including making some changes in the Finance and Audit Act and strengthening and extension of the Finance and Stores Orders.
The relevant legislation is already being drafted with the assistance of an expert through the Caribbean Development Bank, and in the nearest future it will be introduced in the House of Representatives. The improved and amended legislation and accompanying regulations will include penalties for operating failures.

As regards the critics of inadequate record-keeping included in the annual report, the Office of the Prime Minister expects the opposition member who chairs the Public Accounts Committee to make a special effort to convene a meeting of that committee at the earliest, in order to address the matter.

The issues of regional integration were discussed by presidents and high level officials of Belize, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Panama during the meetings hosted by the El Salvador government.

Among the specific measures adopted during the meetings there was the strengthening of institutions responsible for regional integration, with the assistance of the World Bank Group (WBG) training, technical and advisory services, as well as continued progress on removing customs duties between the countries. It is stated that the cost of customs procedures adds up to 40% to the price of products traded between these countries.

The meeting was sponsored by the World Bank Group, the WBG assistance services are financed through a two year $1.3 million “trade facilitation window”.

It was announced by Northern Spirit Resources Inc., a Canadian-based oil and gas exploration and production company, in a news release on April 16, 2010 that that the Corporation has entered into 2 Production Sharing Agreements with the Government of Belize.

Recently, CEO of Northern Spirit Resources Inc., Richard F. Boyd, announced that the Corporation has received regulatory approval for the compensation to arm’s length parties who were instrumental in the acquisition of the 2 Belize Production Sharing Agreements.

In contrast to those referred to in the April 16, 2010 news release, the terms have been amended and Northern Spirit will issue the following:
- 100,000 common shares of the Corporation to a Canadian individual;
- 400,000 shares to a Belize corporation controlled by a Belize resident;
- a 1.5% gross overriding royalty to Canadian residents, which royalty is convertible at the option of either party until May 11, 2011 into 300,000 shares; and
- a separate 3.5% non-convertible gross overriding royalty to the above Canadian residents and the Belize corporation.

July 1, 2010, a press release was published by the International Monetary Fund (IMF) to inform the public on the statement made by the 2010 Article IV Consultation Mission to Belize. The statement was issued by the chief of the IMF mission to Belize, Mario Garza, in Belmopan.

According to the statement, June 21-July 1, an IMF mission conducted discussions on the 2010 Article IV consultation with Belize. The mission met with Prime Minister Dean Barrow, the government’s economic team, the private sector, and civil society to hold policy discussions that had been focused on the economic outlook for 2010 and the medium term, as well as the Belize government’s macroeconomic strategy.

The statement said: “Economic activity stagnated in 2009, as a result of the global slowdown and the lingering effects from the floods in 2008. Growth has resumed since late 2009, but the recovery is still narrowly based, while inflation appears to be picking up somewhat, driven by the rise in fuel prices. For 2010, the mission expects growth to resume modestly, and export prices and tourist receipts to recover slightly, allowing foreign reserves to stabilize at just over three months of imports of goods and services. Despite the recent tax revenue actions, the overall fiscal deficit is likely to widen in FY2010/11, owing largely to upward pressure on primary current spending and increased investment, while the public debt would remain high. The overall banking system appears liquid and well capitalized, but the mission is concerned about the rise in nonperforming loans (NPLs).”

Strategies aimed to promote sustainable growth and to reduce poverty were the focal point of the consultation discussions. The need to strengthen fiscal and external buffers in order to deal with future shocks was underscored by the mission.

It was also noted in the statement that the IMF mission encouraged the authorities to press ahead with current plans with a view to improve tax and customs administration.

The chief of the IMF mission to Belize said: “In the monetary and banking area, the mission welcomed recent reforms to improve the conduct of monetary policy, by relying more on market-based monetary instruments and further reducing non-remunerated reserve requirements. It encouraged the authorities to advance these reforms, which should help reduce intermediation spreads, while maintaining a disciplined monetary stance. The mission also advised the authorities to remain vigilant in their supervision of domestic and offshore banks, ensure that sufficient provisioning is made to cover NPLs, and further strengthen prudential regulations.”

Upon the IMF mission’s return to Washington, DC, a staff report will be prepared by the mission to be discussed by the IMF Executive Board in early September. The staff report is expected to be published shortly thereafter.