IMF releases statement on consultation to Belize

On April 8-18, an International Monetary Fund (IMF) Mission visited Belize with the purpose to yearly review the economy of the country in the context of the IMF consultation. At the conclusion of the visit, the head of the mission Gerardo Peraza released the statement with the estimations of Belize economy:

“In 2012, economic activity accelerated thanks to a strong rebound in agriculture and services, despite a sharp decline in crude oil production. Output growth is estimated at 5.3 percent of Gross Domestic Product (GDP), led by a recovery from the 2011 effects of weather-related damages to commodity exports. Inflation averaged 1.4 percent in 2012, as commodity price pressures abated. The external current account deficit widened to about 1.7 percent of GDP, up from 1.1 percent of GDP in 2011, due to a steep drop in crude oil exports and higher imports of fuel and electricity. The fiscal primary surplus for FY2012/13 is expected to decline to 1.3 percent of GDP from 2.3 percent of GDP in FY2011/12. After two years of decline, credit to the private sector recovered in 2012. For 2013, output growth is expected to moderate to about 2.5 percent as the main export crops stabilize and crude oil production continues to contract.”

Mr Gerardo Peraza noted that the mission welcomes the collaboration and dialogue between the government of Belize and the Creditors Committee to achieve a consensual debt restructuring. The mission recommended the country to adopt a fully articulated macroeconomic framework, which should include robust fiscal consolidation, active debt management, steady financial sector reform and measures to buttress external sector resilience, as well as to implement structural reforms which would enhance competitiveness and growth prospects. Given the anticipated increase in gross financing needs, an active debt management framework and a robust medium-term debt management strategy should be developed.

It is said in the IMF statement that “the authorities need to strengthen Belize’s external position in light of the projected widening current account deficit, and access to external financing. In addition to a more ambitious fiscal consolidation, the mission recommends tackling major impediments to doing business in order to better attract investment, expand exports, and bolster external sustainability.”

The mission will prepare staff report which is to be discussed by the IMF Executive Board in June 2013.

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