The executive board of the International Monetary Fund concluded the Article IV consultation with Belize. In their assessment, the executive directors congratulated the authorities on the strong economic performance during the last year and the successful completion of the external debt exchange. They also noted, however, that the economy of Belize still faces substantial challenges, and encouraged the authorities of the country to pursue active debt management, accelerate financial sector reform, and strengthen economy’s resilience to external influences.
The directors spoke about the need of fiscal consolidation while protecting such priority areas as infrastructure, internal security, and social programs. Given uncertainties about the potential liabilities associated with the nationalization of public companies, they encouraged the authorities to take additional measures as necessary, with a view to ensuring fiscal sustainability.
Also, the executive board welcomed plans of Belize authorities to improve the debt management framework, and the progress on financial sector, but also spoke about the need to further strengthen the Anti Money Laundering/Combating the Financing of Terrorism framework.
Directors called on the authorities to advance structural reforms, focusing on removing impediments to private investment, boosting competitiveness and jobs, and promoting inclusiveness and the diversification of exports and energy sources.
In 2012, inflation in Belize was 1.4%, the external current account deficit increased to 1.7% of GDP. However, partially due to strong foreign direct investment inflows in the sugar sector, international reserve coverage is estimated at 3.4 months of imports up from 3 months in 2011. Unemployment rate is at 16%. After two years of decline, credit to the private sector recovered in 2012.
The Belize government’s completion of the exchange of its “super-bond” for new US dollar denominated bonds due to expire in 2038 brought substantial cash-flow relief – about US$130 million over the next 5 years.