Posted: Thursday, May 28, 2020. 3:44 pm CST.
By BBN Staff: The Europe-based credit group Credendo, is predicting that the COVID-19 pandemic will send Belize into the worst economic recession in the country’s history.
Credendo published an article this week entitled “Belize: Tiny Country Likely To Fall In Most Severe Recession In Its History Due To Covid-19 Pandemic,” which detailed a myriad of pre-existing economic problems, that were further compounded by the economic strain bought on by COVID-19.
Apart from issues such as political corruption, high incident rates of violent crime, and the territorial dispute with Guatemala, Credendo points to unsustainable government debt, a major problem for Belize. The credit group also noted that inflows of Foreign Direct Investments (FDI’s) are volatile due to the shutting down of the tourism industry.
“Recent history of serial sovereign debt defaults and COVID-19 put public finances in a difficult spot,” the group said. “Moreover, due to its defaulting history, Belize is very unlikely to obtain accommodative credit terms again from international lenders. Therefore, the sovereign is exposed to significant refinancing risks.”
The group said that Belize’s current position puts a strain on the country’s ability to maintain the peg that Belize’s money has to the US Dollar, and is in danger of peg devaluation which could further bloat the public external debt burden.
The Statistical Institue of Belize says that the internationally recognized definition of economic recession is two consecutive quarters of economic contraction. The SIB noted at its press conference this week, that prior to COVID-19 the country had already experienced three consecutive periods of economic contraction, but that it is not within the purview of the institute to declare that the country is in recession. First-quarter 2020 also saw an economic decline making it the fourth consecutive period of such.
The Government of Belize has implemented cost-saving measures to decrease its operating costs as one of several measures to help stabilize the economy. There is an ongoing discussion in civil society circles on whether or not those measures are enough. The Ministry of Economic Development, Petroleum, Investment, Trade, and Commerce is also reportedly preparing a list of recommendations for economic recovery to submit to Cabinet.
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