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New World Bank Study Identifies Reforms to Improve Public Spending in Belize

Posted: Thursday, February 29, 2024. 6:56 pm CST.

Press Release

Belize could reduce government debt to below 50 percent of Gross Domestic Product (GDP) by undertaking reforms in targeted areas, according to the World Bank’s Public Expenditure Review, launched today.  The report shows that for Belize to maintain the current positive trend in the quality of its fiscal policies, the country needs to increase its ability to respond to external shocks, improve value for money in key social and investment programs, manage growth in public sector wages, and optimize spending related to climate change.

While Belize has made important progress in reducing public debt and strengthening fiscal management, constraints remain.  The report found that budget credibility and fiscal discipline remain a challenge. Inconsistencies in budget reporting and strategic planning make it difficult to use resources more efficiently and a high public sector wage bill continues to limit fiscal space. As of 2022, the wage bill accounted for 41 percent of total public spending.

“The compounding challenges of high debt, global financial conditions, and low growth rates intensify the strain on public budgets. This review takes a close look at the core of Belize’s fiscal challenges and identifies steps toward establishing a sustainable fiscal framework for public expenditure in Belize and maximizing value for money in important sectors such as health and education,” said Lilia Burunciuc, World Bank Country Director for the Caribbean.

To address these challenges, the report recommends a range of policy measures.  Specific recommendations include the adoption of a Fiscal Responsibility Law which will feature explicit rules to guide transparent and predictable debt reduction. The report also emphasized the need to establish an Independent Fiscal Council, which will produce unbiased projections and evaluate compliance with fiscal rules.

Belize’s climate change mitigation and adaptation spending – which poses significant risks to its economy – was also found to be limited and in need of reprioritization. The Public Expenditure Review further recommends creating a Natural Disaster Reserve Fund, a fund of approximately one percent of GDP, replenished annually, to help expedite the financing of immediate recovery and response expenses arising from floods and hurricanes.

The study identified opportunities to improve education and health services, which could convert spending into better results. It recommends health and education financing reforms, stronger accountability mechanisms, and other effective policy strategies to improve the productivity of schools and health facilities.

The report’s publication is the culmination of 4 rounds of consultations between the World Bank and the Ministry of Education, Culture, Science and Technology, the Ministry of Health and Wellness and the Ministry of Finance, Economic Development and Investment.

The report can be accessed here.


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