The Region wants to learn of Belize’s fiscal program facilitating Belize’s Leading Economic Performance

Published by BBNTEAM at April 19, 2023

Posted: Wednesday, April 19, 2023. 8:46 am CST.

Contributed by the Ministry of Economic Development: Honourable Christopher Coye, Minister of State for the Ministry of Finance, Economic Development and Investment, was invited to Washington D.C on Wednesday, April 12, by the Inter-American Development Bank (IDB), to be a panelist at the 57^th Meeting of the Network of Central Banks and Finance Ministries within Latin America and the Caribbean. Panellists, including the Ministers of Finance of the Dominican Republic, Ecuador, Honduras and Belize, were asked to share their country’s current fiscal programs underlying and supporting the country’s economic performance and to address development challenges moving forward.

Noting the deep crisis Belize was in at the end of 2020 while being one of the most climate vulnerable countries in the world, Minister Coye highlighted the importance of being laser focused on the most important goals to be achieved. Quoting the author, Stephen Covey, “to keep the main thing the main thing”, Minister Coye reiterated the Government’s priority of long term sustainable human development for our people. To support that goal, a difficult, but necessary exercise in fiscal discipline and political will in the immediate term was required. This included expenditure containment across the board, both recurrent and capital expenditures, and renegotiating Belize’s then unsustainable debt burden, which were all accomplished. At the same time, the Government chose not to increase taxes, but rather to broaden the tax base and enhance compliance. It also strategically re-opened the country’s key economic sectors being tourism and agriculture, while encouraging economic diversification and investment in the areas of business process outsourcing (BPO) and small business development.

The results of these efforts were sweeping. Belize grew over 15% in 2021 and over 10% in 2022, among of the fastest rates in Latin America and the Caribbean. The economy diversified as the BPO sector, now forms a significant component of our economy in terms of income, foreign exchange and employment generation. Foreign reserves are at all-time highs, while foreign direct investment is at its highest in over a decade. Belize’s debt-to-GDP ratio has fallen in just two years from 133% to 64% as at the end of 2022. Belize’s fiscal position has improved so much so that it was able to quickly recover from the substantial damage and losses caused by Hurricane Lisa in November of 2022, equivalent to almost 5% of GDP with no increase in debt and very little external grant assistance. Most importantly, focusing in on human development, even with a minimum wage increase of 50%, Belize’s unemployment rate is now at an all-time low of 5%, while the multidimensional poverty index indicates that the poverty rate is now under 36%.

However, even with much improvement, many challenges still remain ahead. To address these challenges moving forward, Minister Coye noted that Belize and its public finances are in an improved position to support public investment towards human development, particularly in areas of education, health, citizen security, physical and digital infrastructure, and energy, while fostering and encouraging private investment and public private partnerships in a broadening set of economic sectors. A main challenge however, is building climate resilience which remains a tall order for Belize of which it is not in a position to accomplish by itself. This is where the global financial architecture must step in to provide meaningful, proactive and preventative support by way of grants and highly concessionary financing, even credit enhancements.

Minister Coye ended his remarks stating that as long as the Government of Belize keeps the main thing as the main thing, with the support of its development partners, particularly for climate resiliency building, Belize’s development goals are achievable.

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