International Monetary Fund backs Belize to continue economic growth; Government hails endorsement of “home-grown” economic plan

By Aaron Humes: The annual Article IV staff visit by the International Monetary Fund (IMF) has resulted in mostly positive news for Belize, which according to Reuters is backed for 3 percent economic growth in 2023.

However, the Fund warns that a “sharp slowdown in advanced economies and climate-related disasters” could weaken the recovery of tourism, coming off the back of November’s Hurricane Lisa and ongoing inflation related to the Russian war in Ukraine and global supply chain disruptions. It noted that the risk of an intensification of the COVID-19 pandemic has receded.

It added that further increases in food and fuel prices due to Russia’s invasion of Ukraine could exacerbate imported inflation, widen the current account deficit, and reduce international reserve buffers.

Belize’s primary balance is likely to remain surplus for fiscal year 2022-23 despite cuts in fuel taxes and Lisa’s impact; the task is to maintain and increase that balance to two percent of gross domestic product (GDP) and further reduce public debt to below 50 percent of GDP by fiscal year 2028 (it is presently estimated at 63 percent).

That requires preserving fiscal savings and additional fiscal consolidation including raising certain taxes and increasing expenditure on infrastructure.

CEO in the Ministry of Economic Development Dr Osmond Martinez takes it all as evidence that “Belize’s home-grown economic plan is performing well. Their most impressive point is that our debt to GDP went from a hundred and thirty-three percent in 2020 to sixty-three percent which is over sixty points, which up to now for many economists and people who want to argue is how have we managed to bring down debt to GDP.”

Belize continues to grapple with wage issues, exacerbated by the call from the joint trade unions to restore increments for public officers and teachers. Dr Martinez declined to discuss that issue pending negotiation with those parties.

But is the average Belizean seeing the effects of the economic rebound? High inflation means not particularly, as Dr Martinez cites: “When you look at the economy and it is not only in Belize. It’s a global issue that we are having. In terms of, I always believe that the Briceño administration had to dance with the worst dancers meaning that for example, the Briceño administration took over the government in the middle of the pandemic where some tough decisions had to be taken in order to be where we are today. The second point is that we had a disruption in the global supply chain so a lot of the things that we wanted to do a little bit faster have been so difficult because of the disruption on the global supply chain. And the third one is the invasion of Russia to Ukraine and that immediately spike the increase in fuel cost.”

Because Belize imports much of what it uses, we remain vulnerable to external shocks as mentioned above, but the CEO reiterated that the Government is looking at means of alleviating those issues.

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