Belize’s GDP expands for second year in a row, IMF cites country as poster child for rebound.
Belize’s Gross Domestic Product (GDP) has expanded for the past two consecutive years. This was confirmed by the International Monetary Fund (IMF) in its latest visit to Belize as part of the Article IV Consultation 2023. In its report, the IMF noted that back in 2020 the economy had contracted by thirteen point four percent; in 2021 the economic activity began rebounding with a fifteen point two percent GDP growth in 2021 followed by a twelve point one percent growth in 2022. It is good news for Belize as it was only two years ago that the IMF was pressuring the Briceno administration to subscribe to one of the IMF program. Instead, the government opted to use a home grown method to rebuild the economy. According to the CEO in the Ministry of Economic Development, Dr. Osmond Martinez, the IMF is now looking at Belize as a poster child for a massive rebound.
Dr. Osmond Martinez, CEO, Ministry of Economic Development: “In terms of the IMF I believe that the IMF before and even under the previous administration when we look at their different articles there were strong recommendations of increase in tax, also into buying into their IMF program and during COVID-19 that momentum actually picked up a little bit more and again you know I think that there has to be a lot of kudos that has to be given to the Briceno administration because one the Briceno administration did not buy into the IMF program. Two, it had its ability to produce its own homegrown economic plan which is yielding very good fruits now we can see that there is a positive impact in terms of our macroeconomic indicators and how the economy is growing in our country. And then three now IMF has taken a different approach towards Belize. There is a pre and post approach of the IMF to Belize. Now IMF practically has looked at Belize as a poster child because it believed that what Belize has done in such a short period of time is impressive. The turn around on our economy economy no country in the world has ever done that, going from 133% debt to GDP to 64% not one country in the world has ever done it and IMF is like “wow”.
Reporter: Is that where we are right now? 64%?
Dr. Osmond Martinez, CEO, Ministry of Economic Development: “Yes, our debt to GDP is 64. Our promise or the administration’s promise is that our debt to GDP should be at 75% by 2025 we have surpassed that.”
The IMF report further noted that they are expecting the GDP growth to slow down at a projected growth rate of two point four percent rate. As the economy rebounds, the IMF did observe a drastic increase in inflation with a near zero in 2020 to more than six percent in 2022. They did note that the inflation happened despite the government fixing fuel prices since April 2022. For this year, however, the IMF says they are expecting the inflation rate to fall this year, but Belize should look out for a sharp global slowdown, further increases in commodity prices, and climate-related disasters. As for the fiscal position, the IMF confirmed a decline in public debt, taking the debt to GDP ratio from over one hundred, to sixty four percent, primarily due to the debt for marine protection swap with The Nature Conservancy, coupled with a discount on PetroCaribe payments from Venezuela. Under the column of recommendations, the IMF called for measures that will enhance revenues, and the reprioritizing of expenditures, while increasing priority spending on infrastructure, targeted social programs, and crime prevention. The IMF Directors underscored that efforts to enhance growth should center on structural reforms to ease access to credit for micro, small, and medium sized enterprises, enhance governance, and build resilience to climate change and related disasters. The report went further, stating, quote, “While noting the authorities’ effectiveness in resolving problem loans and strengthening domestic banks’ balance sheets after the pandemic, Directors cautioned that risks remain, requiring continued vigilance. They encouraged the authorities to complete the update of the national assessment of Money Laundering/Terrorism Financing risks and the action plan, ahead of the mutual evaluation by the Caribbean Financial Action Task Force in November 2023.” End of quote.