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IMF Paints Dire Economic Future for Belize

The International Monetary Fund has concluded its Article Four Consultation on Belize. The report, which was issued on Monday, noted that the country’s economic recovery is likely going to be a protracted one. In part, the IMF cites the COVID-19 pandemic as one of the factors that accounts for its most recent assessment, despite efforts to control the situation. Belize’s biggest money-earner, tourism, saw a drop of seventy-two percent in tourist arrivals. Couple that with the drastic decline in activity amongst contact-sensitive sectors and Belize has recorded a contraction of fourteen-point one percent in GDP last year. Going forward, the IMF expects that tourist arrivals will remain subdued but will pick up late in the year when it is believed that COVID-19 vaccines will be widely available in developed countries. Given this, the IMF also predicts that real GDP will grow at one point five percent in 2021- and six-point two percent next year, reaching its pre-pandemic levels by 2025. Public debt, which is also a major concern for the fund, will remain high peaking at one hundred thirty-two percent this year and gradually declining to one hundred eleven percent in ten years. The IMF is also worried about the sustainability of the currency peg because external financing is projected to decline over time. This means that the exchange rate to US dollars, for example, may be a bit more expensive if this situation is not adequately addressed. Despite these risks, Belize continues to hold fast to its home-grown plan as opposed to joining an IMF Economic Recovery Program. Our newsroom spoke with Economist and CEO in the Ministry of Economic Development, Dr Osmond Martinez. According to Martinez, the home-grown plan could work and Belize could be seeing its benefits in about two years.

Osmond Martinez, Ministry of Public Service: “I am very confident that the home grown plan will be one that well help us to bounce back. I am 100% sure that within two years we will start to see this economy coming back to where it was in 2019. But we have an excellent home grown plan. There is an economic development strategy that will be published pretty soon, we are working on it. One that is very careful at this same time it’s robust and one that we will execute well and I am sure that the recovery is coming. One of the things that we will be focusing on is in the reduction of poverty, social protection, to introduce science and technology to enhance exports, reduce imports and generate jobs. To enable a friendly environment for investors, to be energy self sustainable so these are the points that we have to look at in order to move forward and have a healthy economy. So I am fully in support of the home grown economic recovery plan.”

Among other recommendations by the IMF is for Belize to restore debt sustainability while providing support to the most vulnerable and implement reforms to boost inclusive growth and enhance resilience. Belize is also being urged to strengthen its resilience to climate chance and natural disasters by developing a Disaster Resilience Strategy. In terms of taxes, they recommend broadening the tax base, strengthen revenue administration and reprioritizing expenditures. Belize has also been urged to enact reforms to reduce public debt, take steps to improve access to credit, enhance infrastructure, and strengthen law enforcement and social programs to reduce crime./