World Bank Joins IMF in Concerns Over Belize’s Public Sector Wage Bill

World Bank Joins IMF in Concerns Over Belize’s Public Sector Wage Bill

Interestingly, the IMF is not the only one that has expressed concerns over the public sector wages.  While the National Trade Union Congress had boycotted a meeting with the IMF over the singling out of the public sector workers, the World Bank is echoing the IMF’s concern, saying that the public wage bill continues to be an issue when it comes to the country’s expenditure.  According to the report, if Belize wants to remain on the road to sustainability and growth, it will need to make some changes.  It spoke particularly of a high public sector wage bill that continues to limit the space for fiscal growth.  It also spoke on some gaps in policy, including the gaps between what they are approved to spend, and what they actually spend.  For the very first time, this report from the World Bank was officially presented via a conference at the San Ignacio Hotel.  According to the Minister of State for Finance, Christopher Coye, it is a first for Belize as no previous administration has had such a collaboration with the World Bank.

Carlos Felipe Jaramillo, Regional VP (World Bank): “The public expenditure review is just another example of the trusted partnership between the World Bank and the Government of Belize in the development of the country. It exemplifies the work that we’re doing together to further the best interests of the people of Belize. We are currently in the process of preparing a new framework for engagement between the Belize and the World Bank, so that would be a five-year plan about where we will work together in furthering the development of the country. Currently we have projects in agriculture, energy resilience and health and we are in the process of preparing a couple projects. One we call the Blue Cities which is focused on blue economy and water and sanitation and we’re also preparing a renewable energy project that actually will be approved pretty soon I think in the next couple months. We are also in discussions with the government on disaster risk preparedness. As you know, Belize is one of the most climate vulnerable countries in the world so we think that’s  a very important aspect of the development. And we are also talking about engaging in a project of climate resilient housing. The advantages of the World Bank is that we’re a global organization, so we bring knowledge not just from the region, not just from the Caribbean, not just from Central America, Latin America we also bring knowledge from every aspect of the world, from East Asia Pacific, South Asia, Africa a lot of lessons learned that we’ve applied in every single engagement that we’ve done here. I think one project that stands out that I think is particularly innovative, particularly in the Caribbean, is the renewable energy project. It’s focused on solar and battery storage and right now, as you may know, Belize gets about 50% of its energy from Mexico and that’s fossil fuel based. And so changing the entire framework of the energy structure of Belize to make Belize energy independent, lowers  costs for consumers, we think is absolutely crucial.”

Anton Dobronogov is a Senior Economist attached to Belize for the World Bank was at this morning’s presentation.  In an interview with the media, Dobronogov spoke on what areas the report focuses on, as well as the country’s vulnerabilities, and the budgets for various sectors.  

Anton Dobronogov, Senior Economist, World Bank: “The report looks at the key macro fiscal issues which the country is facing, delves more deeply into issues related to public investment management, public sector wage bill and expenditures on the sectors like health, education, and expenditures related to climate change the report finds that budget credibility remains an issue in the country despite the progress made. There is a need for additional measures. There is a need to make public investment management more efficient to address the challenges related to public sector wage bill which remains fairly high. In the education sector we found that while the expenditures have been increasing the outcomes have stagnated and therefore there is a need to increase efficiency of these expenditures and in the health sector the situation is somewhat better but there is still need to undertake reforms of health sector governance, financing and also develop the strategies which would allow the country to retain health sector workers in the country.”

Reporter:  So you went back give a time of 15 years. I’d like to go back a little less than that. Let’s go to COVID. How much did COVID play a role in Belize’s monetary problems that they faced? 

Anton Dobronogov, Senior Economist, World Bank: “Of course COVID was a major shock and it delayed the fiscal consolidation which was already much needed before the pandemic. However the government handled the shock fairly well and managed to resume fiscal consolidation and to promote higher growth once the pandemic was over.”

Dobronogov said that aside from the identification of gaps and weaknesses, the World Bank also provided suggested remedies that could bring more stability.

Anton Dobronogov, Senior Economist, World Bank: “The report provides detailed recommendations on all areas which we identified as challenging. For example it suggests that Belize should move to a more rules-based fiscal policy. At the same time, the government should get more flexibility and more tools to manage external shocks. The government needs a reserve fund for these purposes. We also recommend that the government improves efficiency in public investments which is critical and also the report goes into detail on recommending various measures for improving the efficiency of health and education expenditures and for reprioritization of climate change expenditures to meet the country’s main needs. It’s always a challenge in a small country to get the data because small countries typically have issues of limited government capacity. However, I would like to acknowledge excellent collaboration we received from the government. We did have challenges related to the data, but the government was very cooperative in helping us to address them.”

As it relates further to the country’s Wage Bill, the World Bank Report indicated that for 2022, the wage bill took forty-one percent of the government’s total spending.  The wage bill also represents fifty percent of the country’s total revenue.  In the health sector, the bank notes that Belize is facing an increasing burden of non-communicable diseases, communicable diseases, and climate-sensitive vector-borne diseases, as well as high mortality rates among male adults due to homicides and road accidents. It further states, quote, “Despite progress in maternal and child health, disparities in access, services, and outcomes persist. Belize’s health system ranks low globally, scoring 52 out of 100 in the Effective Coverage Index.”  End of quote.  

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