As we mentioned regarding the IMF Report for 2016, there are some recommendations that went to the Government of Belize that would prove as stepping stones in rectifying the economic challenges. In the section dubbed, ‘Rebuilding Investor Confidence with Strong Fiscal Policy Action’, the report noted that the Government of Belize had acceded to the problems at hand and that the Barrow administration had noted that increasing the fuel tax in late 2015 was the first step toward fiscal consolidation and they are considering further enhancing collection of revenues, including by moving zero-rated items under the GST either to an exempt status (which would prevent refund of GST paid on inputs) or to the standard GST rate of 12.5 percent. While Dr Carla Barnett would not commit to any particular action that would be undertaken by the Government, she did note that long before the IMF Report came out, there were movements being made to tackle the financial issues.
The IMF Report also noted that the Government of Belize is also considering raising the standard GST rate to the regional average of 15 percent which would result in about one point one percentage points of the GDP; this, however, would be a last resort for the Government to do. Dr Barnett told Love News that there are two things to look at in fixing the economy, namely, the short term issue and the longer term of creating economic policy.
According to the report, the Government of Belize has also acknowledged that the 2013 wage agreement resulted in a sharp increase in the public wage bill and agreed that it should be contained going forward. They noted that a wage freeze will not fundamentally change the fiscal problem but will nonetheless be considered.