Consultation of Belize jurisdiction concluded by IMF team leader

May 12th, 2014

On April 28 – May 9 the team of International Monetary Fund (IMF) visited Belize jurisdiction, with the purpose to hold discussions in the context of Belize’s 2014 Article IV Consultation mission. The IMF team, led by Jacques Bouhga-Hagbe, met with Belizean Prime Minister Dean Barrow, Financial Secretary Joseph Waight, Central Bank Governor Glenford Ysaguirre, and other government and central bank officials, representatives of the private sector, opposition members and labour unions.

The leader of the IMF mission concluded the visit with the statement, including information on the growth of the Belizean economy by only 0.7% in 2013, because of continued decline in oil production and weak agricultural output. Also, according to his statement, inflation in the country decreased to 0.5%, from 1.3% in 2013. While declining, Non-Performing Loans (NPLs) remained high at 17.6 percent of total loans at end 2013. The banking system’s capital buffers improved and weaknesses in the system were addressed. International reserves improved to 4.3 months of imports (up from 3.3 months at end-2012), mainly due to PetroCaribe financing and private capital inflows. The primary fiscal surplus for FY2013/14 is estimated to have fallen to 1 percent of GDP, from 1.4 percent of GDP in FY2012/13.

Mr. Bouhga-Hagbe stated: “Risks continue to be tilted to the downside as additional external vulnerabilities could arise from a protracted period of weak growth in advanced economies or complications with PetroCaribe financing. New oil discoveries and growth-enhancing projects that are currently being implemented or envisaged could mitigate these risks… In this context, the mission pointed to the benefits of a more ambitious fiscal stance to create credible policy buffers that would help address downside risks. This could be achieved by a combination of revenue, expenditure, public financial management, and debt management measures. The mission also expressed the view that current efforts to further strengthen the banking system should continue.”

Belize Bank Ltd filed petition against the Government of Belize

April 26th, 2014

The Belize Bank Limited has filed a petition at federal court in Washington, D.C., seeking to enforce US$18 million arbitration award against Belize Government. Belize Bank claims that the Belize Government “did not respond” to a demand to satisfy a “final award” issued by the London Court of International Arbitration on January 15, 2013. The award comprised BZ$36.9 million, plus annual compounded interest of 17% from September 8, 2012 until the date of the payment, regarding unpaid loans, plus £536,818 in legal costs.

It is stated in the petition that the loans were advanced to Universal Health Service Company Limited, a provider of healthcare services in Belize, and guaranteed by the Government of Belize in December 2004.

Belize Bank Ltd is controlled by British businessman and political activist Michael Ashcroft who has dual nationality of UK and Belize, and is a belonger of the Turks and Caicos Islands.

Belize listed in United States INCSR report

March 21st, 2014

In the recently released 2014 International Narcotics Control Strategy (INCSR) Report, – an annual evaluation compiled by the U.S. Department of State in cooperation with other investigative authorities of the U.S. Government – it was confirmed already for the fourth time that the level of corruption remains very strong in Belize. The country is listed in the last category, named “Jurisdictions of Primary Concern”, with the countries which have the most inadequate and/or insufficient regulation of their financial systems.

It was specifically stated in the 2014 INCSR report about the suspicions that money laundering activity takes place in the Benque Viejo Free Zone and the Corozal Commercial Free Zone, which is believed to be “heavily involved in trade-based money laundering and the illicit importation of duty free products.”

The report notes that “Belize faces a challenging struggle against the threats of illegal drugs. Drug trafficking and drug use appear to be rising, and will continue if left unaddressed.” It also stressed that the investigative authority, the Financial Intelligence Unit, has poor resources and only limited assistance from other law enforcement agencies and government departments.

The INCSR pointed out that last year the Caribbean Financial Action Task Force (CFATF) issued statement on Belize where addressed the jurisdiction, which is part of this organization, with critics and certain pressure for “not complying with its AML/CFT action plan”, to fight the deficiencies.

Prime Minister of Belize presented Budget for 2014/2015

March 15th, 2014

Belize Prime Minister Dean Barrow has presented the 2014-2015 Budget; in his speech, he was talking about the expected economic environment in 2014, stating that the oil prices will stay down, and so will be the cost of living. The PM turned to the budget priorities – education, healthcare and infrastructure, and emphasized the ability of the government to raise salaries this year.

Speaking about the draft estimates for fiscal year 2014-2015, the Prime Minister said: “The proposed budget targets a preliminary primary surplus of 1.0 percent of GDP and an overall deficit of 1.7 percent of GDP. Total expenditure is estimated at $1.0 billion while total revenue and grants are projected at $956 million. When taken together, this results in the projected overall deficit of $57 million, the equivalent of 1.7 percent of GDP. To this figure we must add a further $70 million for loan amortization requirements, and so arrive at the Total Financing Needs of $127 million.”

To cover these financing needs, the Government of Belize plans to use the following sources: a $48 million loan to fund its Capital Three Expenditure Program, $20 million in budget support financing from the Taiwan International Cooperation and Development Fund and $59 million from Venezuela’s PetroCaribe initiative.

The forecasted revenue is $956 million, an overall shortfall of $57 million dollars, or 1.7% of GDP. Where revenue is concerned, Belize Government has identified five primary sources, the main of which will be a boost in collection of taxes on goods and services – total amount of $315 million. Other named sources were income tax, international trade and transactions and non-tax revenue.

Debates of the proposed Budget for the new financial year are to begin this week, when the Opposition will have a go at the numbers.