## 1blzea2024001

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### Recent macroeconomic developments
- Real GDP growth: 4.7 percent in 2023 (slowed due to contractions in the primary and secondary sectors and a slowdown in the tertiary sector as tourist arrivals neared pre-pandemic levels).
- Inflation: declined to 4.4 percent in 2023, led by lower prices of transport and utilities, partly offset by higher food inflation.
- Food inflation: rose from 7.8 percent in 2022 to 12.4 percent in 2023 driven by higher prices of imported food items from Guatemala and Mexico, higher costs of production (labor and fertilizers), and dry weather conditions.
- Unemployment rate: 3.4 percent in 2023; economy assessed to be at full employment.
- Primary fiscal balance: declined to 1.2 percent in FY2023 due to lower non-tax revenues and grants, and higher capital expenditure and spending on goods and services (partly due to higher prices of healthcare inputs).
- Public debt: declined slightly from 67 percent in 2022 to 66 percent of GDP in 2023 after the acquisition of the Port of Belize and settlement of outstanding litigations with a foreign investor.

### Outlook and projections (calendar year / fiscal year indicators preserved)
- Growth projections:
  - 2024: 3.4 percent
  - 2025 onwards: 2.5 percent (projected to remain at 2.5 percent through 2029 in the baseline table)
- Inflation projections:
  - Consumer prices (end of period): 2024: 2.6 percent; 2025: 1.3 percent; 2026–2029: 1.3 percent
  - Consumer prices (average): 2024: 3.1 percent; 2025: 2.3 percent; 2026–2029: 1.3 percent
- Primary balance (staff projection under current policies): remain at 1.2 percent of GDP from FY2024 onwards.
- Public debt trajectory (calendar year percent of GDP, baseline):
  - 2023: 66.2; 2024: 62.9; 2025: 61.1; 2026: 60.0; 2027: 58.9; 2028: 57.8; 2029: 56.7
- International reserves (gross, US$ millions projected): 2024: 515; 2025: 539; 2026: 550; 2027: 567; 2028: 585; 2029: 601.
- External current account (percent of GDP projected): 2024: -2.5; 2025–2029: -2.5 to -2.4 (table shows -2.5 in 2024 and -2.5/-2.4 thereafter).

### Fiscal and debt dynamics (exact figures from central government and public debt tables)
- Central government fiscal indicators (percent of fiscal year GDP):
  - Revenue and grants: 2023: 22.9; 2024: 23.2; 2025–2029: 23.2
  - Current non-interest expenditure: 2023: 15.7; 2024–2029: 15.7
  - Interest payment: 2023: 2.2; 2024: 2.1; 2025: 2.3; 2026: 2.3; 2027: 2.3; 2028: 2.2; 2029: 2.2
  - Capital expenditure and net lending: 2023: 6.0; 2024: 6.3; 2025–2029: 6.3
  - Primary balance: FY2021: 0.0; FY2022: 1.6; FY2023: 1.2; FY2024–2029: 1.2
  - Overall balance: FY2021: -1.3; FY2022: -0.1; FY2023: -1.0; FY2024: -0.9; FY2025–2028: -1.1; FY2029: -1.0
- Public debt composition and service (percent of calendar year GDP):
  - Public debt: 2021: 82.3; 2022: 67.1; 2023: 66.2; 2024: 62.9; 2025: 61.1; 2026: 60.0; 2027: 58.9; 2028: 57.8; 2029: 56.7
  - Domestic debt (percent of GDP): 2023: 24.4; 2024: 22.6; 2025: 22.0; 2026: 21.6; 2027: 21.3; 2028: 21.5; 2029: 21.9
  - External debt (percent of GDP): 2023: 41.8; 2024: 40.3; 2025: 39.2; 2026: 38.4; 2027: 37.5; 2028: 36.3; 2029: 34.8
  - Principal payment (percent of GDP): 2023: 6.6; 2024: 6.5; 2025: 7.2; 2026: 7.1; 2027: 6.5; 2028: 5.7; 2029: 5.6
    - Domestic principal: 2023: 5.0; 2024: 4.7; 2025: 5.2; 2026: 5.2; 2027: 4.7; 2028: 3.9; 2029: 3.9
    - External principal: 2023: 1.6; 2024: 1.8; 2025: 2.0; 2026: 1.9; 2027: 1.8; 2028: 1.8; 2029: 1.7

### Financial sector soundness and credit (selected exact indicators)
- Domestic banks’ regulatory capital: increased from 15.1 percent of risk weighted assets (Dec-2022) to 16.1 percent (Dec-2023).
- Nonperforming loans: fell from 6.9 percent of total loans (Dec-2022) to 5.2 percent (Dec-2023).
- Returns on assets: rose from 0.3 percent (Dec-2022) to 1.5 percent (Dec-2023).
- Banking sector constraints: still high nonperforming loans compared with pre-pandemic levels, low capital buffers, and tight liquidity in some banks constraining private sector credit growth.

### Risks to the outlook
- Key risks highlighted:
  - Higher global food and fuel prices.
  - Higher-for-longer global interest rates (higher real interest rate – growth differential complicating debt dynamics).
  - Climate-related disasters.
  - International reserves projected to remain below the ARA metric; external financing needs projected to rise when repayment of the blue loan starts in 2032.

### Policy recommendations and priorities (preserve measures and quantified targets)
- Fiscal consolidation and debt target:
  - Reduce public debt to 50 percent of GDP by FY2030 by raising the primary fiscal balance to 2.0 percent of GDP from FY2025 onwards.
  - Implement 0.8 percent of GDP of fiscal consolidation over two years to raise the primary balance to 2 percent of GDP from FY2025 onwards.
  - Anchor the plan in a well-defined medium-term fiscal strategy and prepare for adoption of a Fiscal Responsibility Law with well-designed fiscal rules.
- Revenue and expenditure measures (quantified yields):
  - Broadening the GST base, raising excise taxes, rebalancing manufacturing taxes, and strengthening revenue administration can raise revenue by 2.2 percent of GDP.
  - Reforming the PPPO could lower government spending by 0.1 percent of GDP.
  - Use savings to increase the primary surplus (0.8 percent of GDP) and expand priority spending (1.5 percent of GDP).
- Recommended revenue and consolidation scenario (Text Table 1 yields preserved):
  - Expenditure measures: annual yields -0.7 (FY2024), -0.7 (FY2025); cumulative -0.7 (FY2024), -1.4 (FY2025).
  - Revenue measures: 1.1 (annual) / 2.2 (cumulative) with GST (gross sales tax) contributing 0.8 (annual) / 1.6 (cumulative).
  - Total Fiscal Consolidation: 0.4 (annual) / 0.8 (cumulative).
  - Memorandum: Primary balance (baseline) 1.2; Primary balance (active scenario) 1.6 (FY2024) and 2.0 (FY2025).
- Priority spending to be expanded (1.5 percent of GDP):
  - Enhancing roads, water, and sewer systems.
  - Expanding renewable energy generation and storage.
  - Subsidizing childcare and training for vulnerable women to enhance female labor force participation.
  - Expanding targeted transfers to protect against food insecurity.
  - Investing in climate-resilient infrastructure.
- Pension Plan for Public Officials (PPPO) reform recommendations:
  - Gradually introduce a contribution rate of 10 percent.
  - Increase retirement age from 55 to 65.
  - Reduce the replacement rate from 67.5 percent to 50 percent.
- Structural and financial sector reforms:
  - Increase female labor force participation.
  - Ease access to affordable credit for SMEs (including establishing a credit bureau and a collateral registry).
  - Advance digitalization of land and business registries and improve firm and government services.
  - Develop a Disaster Resilience Strategy (DRS) based on a consistent macroeconomic framework to unlock climate finance.
  - Gradually reduce central bank financing of the government to reduce excess liquidity and help develop the local capital market.
  - Preserve financial stability via enhanced supervision and recapitalization where needed.
  - Continue strengthening the AML/CFT framework and enforcement, especially in the international financial services sector.

### Illustrative reform scenario (Text Table 2 assumptions and outcomes)
- Scenario assumptions:
  - Increase primary balance to 2 percent of GDP from FY2025 (achieved via 0.8 percent of GDP consolidation over two years).
  - Rise in priority spending as described above.
  - Structural reforms raise real GDP growth by 0.25 percent in 2026-27 and 0.5 percent from 2028 onwards.
  - Fiscal multiplier of -0.5 in the year of consolidation.
- Projected outcomes (selected exact comparisons, baseline vs illustrative reform):
  - Public debt in 2030: baseline 55.5 percent of GDP; illustrative reform scenario 49.4 percent of GDP.
  - Growth (percent): baseline 2024: 3.4; 2025: 2.5; illustrative reform 2024: 3.2; 2025: 2.3; 2028–2032: baseline 3.0 (illustrative gives 3.0 from 2028 onward).
  - International reserves (months of imports): baseline 2024: 3.5; illustrative reform 2024: 3.7; 2025: baseline 3.5 vs illustrative 3.8.

### External position, reserves, and balance of payments (selected figures)
- Current account balance (percent of GDP): 2022: -8.3; 2023: -2.9; projected medium-term near -2.5 percent of GDP.
- Gross international reserves (US$ millions): 2020: 348; 2021: 420; 2022: 482; 2023: 474; 2024: 515; 2025: 539; 2026: 550; 2027: 567; 2028: 585; 2029: 601.
- Reserves in months of imports series (selected): 2022: 3.7; 2023: 3.4; 2024: 3.5; 2025: 3.5; 2026: 3.5.
- NIIP and external position (2023): NIIP: -111 (percent of GDP); Gross liabilities: 139 (percent of GDP); External debt: 41 (percent of GDP); FDI: 85 (percent of GDP); Gross assets: 28 (percent of GDP).

### Social indicators and inclusion priorities
- Selected social snapshot:
  - Area (sq.km.): 22,860
  - Population (thousands), 2022: 444.8
  - GDP per capita (current US$), 2023: 6,865
  - Life expectancy at birth (years), 2021: 70.5
  - Human development index (rank), 2022: 118
  - Under-five mortality rate (per thousand), 2021: 11.2
  - Unemployment rate (percent), 2023: 3.4
  - Poverty (percent of total population), 2023: 26.4
- Food insecurity and food inflation (Annex III):
  - Food weight in consumption basket: 25.8 percent (fourth largest in the Caribbean).
  - Food and non-alcoholic beverage prices increased by 25 percent between December 2019 and June 2023.
  - Over 40 percent of the Belizean population experienced food insecurity in 2021; share with severe food insecurity in 2021: 6 percent; share with moderate food insecurity in 2021: 40 percent.
  - World Food Program survey: 18 percent of respondents in Belize experiencing severe food insecurity in 2023.
  - Cost to fully compensate vulnerable households in 2022: between 0.1 and 0.8 percent of GDP depending on the group targeted.

### Structural reform priorities to boost medium-term growth and resilience
- Labor market and human capital:
  - Increase female labor force participation (female labor force participation: 45.2 percent in 2023 vs 71.5 percent for males).
  - Pilot and scale subsidized daycare, after-school programs, and training for vulnerable women.
  - Education priorities: expand conditional cash transfers, improve curricula, expand technical and “soft skill” vocational training.
- Business climate and SME finance:
  - Ease access to affordable credit for SMEs: set up a credit bureau and a collateral registry; help SMEs prepare business plans.
  - Advance digitalization of land and business registries and the single investment window.
  - Reduce ministerial discretion and strengthen rule-based processes; enhance judiciary technical capacity.
- Climate and disaster resilience:
  - Develop and implement a Disaster Resilience Strategy (DRS) that integrates a multi-year macro-fiscal framework to unlock climate finance.
  - Invest in climate-resilient infrastructure and protective ecosystems (forests, mangroves, coral reefs).
- Crime reduction:
  - Increase spending on crime prevention (recommended 0.1 percent of GDP starting FY2025).
  - Homicide rates: fell from 37.2 per 100,000 (2016–19) to 31.2 in 2021 and 21.2 in 2023.
  - Reducing crime to the Caribbean average could increase annual real GDP growth between 0.04 and 0.3 percent.

### Debt sustainability and risk assessment (Annex IV and related DSA material)
- Overall assessment: risk of sovereign stress assessed as moderate.
- Public debt path (baseline calendar year percent of GDP): 2020: 103.0; 2021: 82.3; 2022: 67.1; 2023: 66.2; projected to fall to 57.0 percent of GDP in 2029 (text states 57 percent; tables show 56.7 for 2029).
- Debt Fanchart and GFN indicators:
  - Debt Fanchart score: 1.7 (above low-risk threshold of 1.1, below high-risk threshold of 2.1).
  - GFN financeability tool score: 8.3 (just above low-risk threshold of 7.6, below high-risk threshold of 17.9).
  - Average baseline GFN: 7.5 percent of GDP over the medium-term.
- Blue loan and long-term pressures:
  - Principal repayments on the blue loan start in FY2032, increasing GFNs from 2032 onward.
  - Stress test (hurricane causing 6 percent of GDP damages): raises debt to 62 percent of GDP in the medium-term; GFNs rise but remain below 15 percent of GDP.
- External debt sustainability:
  - External public debt: 2020: 71.0; 2021: 55.2; 2022: 43.8; 2023: 41.8; projected 2029: 34.8.
  - Gross external financing needs: projected to remain low, falling to 3.8 percent of GDP by 2031, rising thereafter as blue loan repayments start.

### Data, statistics, and capacity development priorities (Annex II and annexes)
- Data and institutional priorities:
  - Improve compilation of consolidated public sector operations, domestic debt and debt service (including SOE debt), and capital expenditure recording.
  - Strengthen public financial management: multi-year budget preparation, fiscal risk assessment, public investment management, accounting and fiscal reporting, and internal audit.
  - Expand trade data to cover services to better capture tourism receipts.
  - Improve timeliness of balance of payments and international investment position data.
- Capacity development delivered and recommended:
  - CARTAC, FAD, MCM, LEG and STA technical assistance on tax policy and administration, public investment management, bank resolution and NPL management, FX reserve management, and FSIs.
  - Recommendation to update tax policy assessment and continue TA to implement reforms (e.g., unified tax department, customs law, accrual accounting transition).

### Risk Assessment Matrix (selected risks and policy responses)
- Abrupt global slowdown: Relative likelihood Medium; Impact High; Policy response: reprioritize spending, implement structural reforms, monitor banking sector.
- Intensification of regional conflicts: Relative likelihood High; Impact High; Policy response: targeted support to vulnerable, avoid broad-based subsidies, invest in domestic food and renewable energy.
- Commodity price volatility: Relative likelihood High; Impact Medium; Policy response: reprioritize spending, avoid broad subsidies, invest in renewables and domestic food production.
- Higher frequency/severity of natural disasters: Relative likelihood Medium; Impact High; Policy response: invest in resilience, strengthen ex-ante preparedness and financial resilience.
- Further pressure on Correspondent Banking Relationships (CBRs): Relative likelihood Medium; Impact High; Policy response: strengthen AML/CFT framework and engagement with global banks.
- Social discontent and political instability: Relative likelihood Medium; Impact Medium; Policy response: targeted measures to support vulnerable households and businesses.

*Source: IMF staff report for the 2024 Article IV Consultation (Belize) — excerpt (1blzea2024001).*

### 4.4 percent in 2023, driven by lower prices of transport and utilities, partly offset by higher food

### 4.4 percent in 2023, driven by lower prices of transport and utilities, partly offset by higher food

### Recent developments
- Real GDP growth slowed to 4.7 percent in 2023 due to contractions in the primary and secondary sectors and a slowdown in the tertiary sector as tourist arrivals neared pre-pandemic levels.
- Inflation declined to 4.4 percent in 2023, led by lower prices of transport and utilities, partly offset by higher food inflation.
- Food inflation rose from 7.8 percent in 2022 to 12.4 percent in 2023 driven by higher prices of imported food items from Guatemala and Mexico, higher costs of production (labor and fertilizers), and dry weather conditions.
- The unemployment rate declined to 3.4 percent in 2023 and is expected to remain at that level as the economy is assessed to be at full employment.
- The primary fiscal balance declined to 1.2 percent in FY2023 due to lower non-tax revenues and grants, and higher capital expenditure and spending on goods and services (partly due to higher prices of healthcare inputs).
- After the acquisition of the Port of Belize and settlement of outstanding litigations with a foreign investor, public debt declined slightly from 67 percent in 2022 to 66 percent of GDP in 2023.

### Outlook and projections
- Growth projections:
  - 2024: 3.4 percent
  - 2025 onwards: 2.5 percent (projected to remain at 2.5 percent through 2029 in the baseline table)
- Inflation projections:
  - Consumer prices (end of period): 2024: 2.6 percent; 2025: 1.3 percent; 2026–2029: 1.3 percent
  - Consumer prices (average): 2024: 3.1 percent; 2025: 2.3 percent; 2026–2029: 1.3 percent
- The primary balance is projected to remain at 1.2 percent of GDP from FY2024 onwards under current policies.
- Public debt is projected to decline slowly and remain above 50 percent of GDP through 2034 due to slower nominal GDP growth and high global interest rates.
- International reserves (gross, US$ millions) projected: 2024: 515; 2025: 539; 2026: 550; 2027: 567; 2028: 585; 2029: 601.
- External current account (percent of GDP) projected: 2024: -2.5; 2025–2029: -2.5 to -2.4 (table shows -2.5 in 2024 and -2.5/-2.4 thereafter).

### Fiscal and debt dynamics
- Central government fiscal indicators (percent of fiscal year GDP):
  - Revenue and grants: 2023: 22.9; 2024: 23.2; 2025–2029: 23.2
  - Current non-interest expenditure: 2023: 15.7; 2024–2029: 15.7
  - Interest payment: 2023: 2.2; 2024: 2.1; 2025: 2.3; 2026: 2.3; 2027: 2.3; 2028: 2.2; 2029: 2.2
  - Capital expenditure and net lending: 2023: 6.0; 2024: 6.3; 2025–2029: 6.3
  - Primary balance: FY2021: 0.0; FY2022: 1.6; FY2023: 1.2; FY2024–2029: 1.2
  - Overall balance: FY2021: -1.3; FY2022: -0.1; FY2023: -1.0; FY2024: -0.9; FY2025–2028: -1.1; FY2029: -1.0
- Public debt (percent of calendar year GDP) from table:
  - 2021: 82.3; 2022: 67.1; 2023: 66.2; 2024: 62.9; 2025: 61.1; 2026: 60.0; 2027: 58.9; 2028: 57.8; 2029: 56.7
  - Domestic debt: 2023: 24.4; 2024: 22.6; 2025: 22.0; 2026: 21.6; 2027: 21.3; 2028: 21.5; 2029: 21.9
  - External debt: 2023: 41.8; 2024: 40.3; 2025: 39.2; 2026: 38.4; 2027: 37.5; 2028: 36.3; 2029: 34.8
  - Principal payment (percent of GDP): 2023: 6.6; 2024: 6.5; 2025: 7.2; 2026: 7.1; 2027: 6.5; 2028: 5.7; 2029: 5.6
    - Domestic principal: 2023: 5.0; 2024: 4.7; 2025: 5.2; 2026: 5.2; 2027: 4.7; 2028: 3.9; 2029: 3.9
    - External principal: 2023: 1.6; 2024: 1.8; 2025: 2.0; 2026: 1.9; 2027: 1.8; 2028: 1.8; 2029: 1.7

### Key policy recommendations and priorities
- Fiscal consolidation and debt target:
  - Reduce public debt to 50 percent of GDP by FY2030 by raising the primary fiscal balance to 2.0 percent of GDP from FY2025 onwards.
  - Achieving the 50 percent of GDP debt target requires implementing 0.8 percent of GDP of fiscal consolidation to raise the primary balance to 2 percent of GDP from FY2025 onwards.
  - Anchor the plan in a well-defined medium-term fiscal strategy and prepare for adoption of a Fiscal Responsibility Law with well-designed fiscal rules.
- Revenue and expenditure measures:
  - Broadening the GST base, raising excise taxes, rebalancing manufacturing taxes, and strengthening revenue administration can raise revenue by 2.2 percent of GDP.
  - Reforming the PPPO could lower government spending by 0.1 percent of GDP.
  - Use these savings to increase the primary surplus (0.8 percent of GDP) and expand priority spending (1.5 percent of GDP).
- Priority spending areas to be expanded using savings (1.5 percent of GDP):
  - Enhancing roads, water, and sewer systems.
  - Expanding renewable energy generation and storage.
  - Subsidizing childcare and training for vulnerable women to enhance female labor force participation.
  - Expanding targeted transfers to protect against food insecurity.
  - Investing in climate-resilient infrastructure.
- Structural reforms to boost medium-term growth and resilience:
  - Increase female labor force participation.
  - Ease access to affordable credit for SMEs (including establishing a credit bureau and a collateral registry).
  - Advance digitalization of land and business registries and improve firm and government services.
  - Develop a Disaster Resilience Strategy (DRS) focusing on structural, financial, and post-disaster resilience based on a consistent macroeconomic framework to unlock funding for climate mitigation and adaptation and reduce output volatility.
- Monetary and financial sector priorities:
  - Increase international reserves by implementing fiscal consolidation and structural reforms to strengthen the currency peg.
  - Gradually reduce central bank financing of the government to reduce excess liquidity and help develop the local capital market.
  - Preserve financial stability by keeping vulnerable institutions under enhanced supervision and requesting recapitalization when needed.
  - Continue strengthening the AML/CFT framework and enforcement, especially in the international financial services sector.

### Risks highlighted
- Important risks to the outlook include higher global food and fuel prices, higher-for-longer global interest rates, and climate-related disasters.
- The higher real interest rate – growth differential has made debt dynamics more difficult.
- International reserves are projected to remain below the ARA metric; external financing needs are projected to rise when repayment of the blue loan starts in 2032.

*Source: IMF staff report for the 2024 Article IV Consultation (Belize).*

### 66.2 percent of GDP as the impact of the primary surplus and still high nominal GDP growth was

### 1blzea2024001 - 66.2 percent of GDP as the impact of the primary surplus and still high nominal GDP growth was

### Fiscal outlook, public debt, and settlements
- Public debt declined but is projected to continue to fall slowly and remain above 50 percent of GDP over the next decade.
- A US$98.7 million (3.2 percent of GDP) payment for a settlement with a foreign investor partly offset the impact of the primary surplus and still high nominal GDP growth.
- The settlement comprises US$83.4 million to purchase the Commercial Port in Belize City and US$15.3 million to resolve long-outstanding judgment awards and the withdrawal of all existing claims and cases against Belize.
- Authorities target reducing public debt to 50 percent of GDP by FY2030.
- Achieving the debt target requires implementing 0.8 percent of GDP of fiscal consolidation over two years to increase the primary balance to 2 percent of GDP from FY2025 onwards.

### Key fiscal balances and recommendations
- FY2024 budget targets a primary surplus of 0.5 percent of GDP (authorities’ plan).
- Recommended fiscal consolidation measures (deviations from the Unchanged Policies Scenario) and yields:
  - Expenditure measures: annual yields -0.7 (FY2024), -0.7 (FY2025); cumulative yields -0.7 (FY2024), -1.4 (FY2025).
    - Public pensions: 0.1 (annual) / 0.1 (cumulative).
    - Infrastructure investment: -0.4 (annual) / -0.8 (cumulative).
    - Social expenditure: -0.3 (annual) / -0.6 (cumulative).
    - Crime prevention: -0.1 (annual) / -0.1 (cumulative).
  - Revenue measures: 1.1 (annual) / 2.2 (cumulative).
    - Personal income taxes (PIT): 0.1 (annual) / 0.2 (cumulative).
    - Taxes on goods and services: 0.9 (annual) / 1.8 (cumulative).
      - Gross sales tax (GST): 0.8 (annual) / 1.6 (cumulative).
    - Excises and fees: 0.1 (annual) / 0.2 (cumulative).
    - Revenue administration: 0.1 (annual) / 0.2 (cumulative).
  - Total Fiscal Consolidation: 0.4 (annual) / 0.8 (cumulative).
  - Memorandum items: Primary balance (baseline scenario) 1.2; Primary balance (active scenario) 1.6 (FY2024) and 2.0 (FY2025) as indicated in Text Table 1.
- Contingency measures if public debt does not decline as expected: taxing more zero-rated items at the 12.5 percent GST rate, raising the GST rate, and reducing nonpriority expenditure.

### Revenue mobilization and expenditure reprioritization (recommended measures)
- Tax measures could raise 2 percent of GDP in revenue by FY2025 through:
  - Taxing some non-first necessity zero-rated items at the 12.5 percent GST rate could raise 1.6 percent of GDP.
  - Standardizing personal income tax exemption thresholds could raise 0.2 percent of GDP.
  - Raising excises on fuel and fees on vehicle registrations and driver licenses could raise 0.2 percent of GDP.
- Strengthening revenue administration could raise 0.2 percent of GDP via:
  - Creating a unified tax department and incorporating stamp duties and land taxes within the Belize Tax Service Department (BTSD).
  - Increasing tax arrears collection through improved tax account accuracy and enhanced SOPs for arrears collection.
  - Granting greater autonomy on human resources for the BTSD.
  - Implementing a risk-based approach for audit case selection.
  - Enacting the draft customs law.
- Reforming the Pension Plan for Public Officials (PPPO) could reduce government spending by 0.1 percent of GDP over two years and cut the PPPO’s long-run deficit by two-thirds. Recommended PPPO reforms:
  - Gradually introduce a contribution rate of 10 percent.
  - Increase retirement age from 55 to 65.
  - Reduce the replacement rate from 67.5 percent to 50 percent.
- Continue efforts to secure concessional external financing for infrastructure to keep the interest bill manageable.

### Public investment, social spending, and targeted measures
- Increase infrastructure spending in logistics, utilities, and energy by 0.8 percent of GDP from FY2025 onwards to:
  - Enhance road connectivity, improve water and sewer systems, expand renewable energy generation and storage, build social housing, and increase climate resilience of infrastructure.
  - Strengthen public investment management, appraisal and selection processes, oversight of major risks, coordination across public entities, and follow-up and recording of liabilities and guarantees.
  - Leverage well-designed Public Private Partnerships to expand and maintain infrastructure.
- Expand targeted transfers by 0.3 percent of GDP from FY2025 onwards:
  - 0.1 percent of GDP to protect vulnerable households facing severe food insecurity.
  - 0.2 percent of GDP to support those with moderate food insecurity but at highest risk of severe food insecurity.
  - These transfers should be temporary, require beneficiaries to take training and seek employment, and be accompanied by an awareness campaign on food prices across retailers.
- Introduce 0.3 percent of GDP in subsidies for childcare, after-school programs, and training for vulnerable women from FY2025 onwards to raise female labor force participation.
  - Female labor force participation stood at 45.2 percent in 2023, compared with 71.5 percent for males.
- Raise spending to prevent and address crime by 0.1 percent of GDP starting in FY2025.

### Current account, external position, and reserves
- The current account deficit fell from 8.3 percent of GDP in 2022 to 2.9 percent in 2023.
- Drivers: rise in the services balance due to lower shipping costs and higher tourism receipts, and a fall in the primary income deficit.
- The current account deficit is projected to stabilize at near 2.5 percent of GDP over the medium term.
- International reserves projected to stay above 3 months of imports and external financing needs.

### Financial sector soundness and credit
- Between December 2022 and December 2023:
  - Domestic banks’ regulatory capital increased from 15.1 percent of risk weighted assets to 16.1 percent.
  - Nonperforming loans fell from 6.9 percent of total loans to 5.2 percent.
  - Returns on assets rose from 0.3 percent to 1.5 percent.
- Banking sector constraints: still high nonperforming loans, low capital buffers, and tight liquidity in some banks compared to the pre-pandemic period are constraining real private sector credit growth and may limit private sector investment and real GDP growth.
- Recommendation: remain vigilant to financial stability risks.

### Macroeconomic outlook and risks
- Real GDP growth:
  - Strong outturn in 2023; authorities expect growth to gradually slow to 2 percent over the medium term.
  - Staff projects growth averaged 2.1 percent in 2010-19 (below population growth of 2.6 percent) and projects 2.5 percent over the medium term (population growth 2 percent).
- Inflation: authorities expect inflation to continue to decline, converging to 2 percent over the medium term.
- Important risks:
  - Higher global food and fuel prices due to armed conflicts, which could increase inflation, food insecurity, and the current account deficit.
  - Global interest rates could stay high for longer, complicating debt dynamics.
  - Vulnerability to climate change and related disasters causing severe damages to agriculture, energy, and tourism.
  - A sharp economic slowdown could exacerbate banking sector vulnerabilities.
- Authorities expect the current account deficit to narrow to less than 1 percent of GDP over the medium term due to slower import growth and higher tourism receipts (authorities’ view).

### Structural reforms, human capital, female labor force participation, and crime reduction
- Raising female labor force participation and improving education quality are key to boosting employment and potential output.
  - Raising female labor force participation from 45.2 percent in 2023 to 71.5 percent could increase real GDP by over 20 percent in the long run.
  - Authorities are piloting a subsidized daycare and training program for women in the Cayo district.
  - Further expanding subsidized childcare, after-school programs, and training for vulnerable women recommended.
- Education: priorities include expanding conditional cash transfers to promote school attendance, improving school curriculums, and expanding technical and “soft skill” vocational training programs.
- Crime:
  - Homicide rates fell from 37.2 per 100,000 people in 2016-19 to 31.2 in 2021 and 21.2 in 2023.
  - Reducing crime to the Caribbean average could increase annual real GDP growth between 0.04 and 0.3 percent.
  - Policy priorities: enhance police capacity, use advanced technology to prevent and address crime, and expand social programs supporting youth at risk.

*Source: IMF staff estimates and reports contained in the Belize country document.*

### 18.      Easing access to affordable credit for small and medium size enterprises (SMEs) would

### 18.      Easing access to affordable credit for small and medium size enterprises (SMEs) would

### SME access to affordable credit and investment
- Lending rates have declined in the last 20 years but remain high; key causes include lack of competition and high operational costs in the banking system due to low population density and borrower riskiness, many of which are SMEs.
- Authorities are incentivizing formalization of SMEs with tax incentives, which should also help their access to credit.
- Additional priorities to enhance SME access to affordable credit:
  - Help SMEs prepare business plans.
  - Set up a credit bureau.
  - Establish a collateral registry.

### Improving the business climate and rule of law
- Continued efforts: digitalize land and business registries, the single investment window, and firms and government services.
- Further priorities:
  - Advance digitalization projects and ease registration of new businesses to enhance the business environment.
  - Replace ministerial discretion in business-related processes with a more predictable, rules-based system.
  - Enhance technical capacity of the judiciary.
  - Promote greater access to legislation and judicial decisions to reduce business uncertainty.

### Strengthening resilience to climate change and disasters
- Belize is highly vulnerable to sea level rise, hurricanes, floods, droughts, and coastal erosion, with adverse effects especially in agriculture, energy, and tourism.
- Authorities’ current actions:
  - Investing in climate resilient infrastructure and crops.
  - Protecting forests, mangroves, and coral reefs that shield against storm surges and coastal erosion.
  - Protecting the marine environment as carbon sinks in line with commitments under the blue loan.
  - Investing in renewable energy generation and electrifying public transportation.
- Priority going forward:
  - Implement a Disaster Resilience Strategy (DRS) focused on improving structural, financial, and post-disaster resilience and based on a multi-year macro-fiscal framework that incorporates climate change and related disasters.
  - A DRS would improve access to climate finance.
- Constraint: Significant financing gaps for mitigation initiatives remain.

### Authorities’ views on growth and social measures
- Authorities target a growth rate of 5 percent over the medium term and have established a committee to identify necessary reforms to achieve it.
- Pilot programs and reforms:
  - Piloting a subsidized daycare and training program in the Cayo district to raise female labor force participation, with plans to expand if successful.
  - Increased mandatory school age from 14 to 16.
  - Eliminated copayments for vulnerable households to improve high school attendance.
  - Retraining teachers and improving education quality with support of the Millennium Challenge Corporation.
  - Increased number of policemen in 2023, now training them and buying advanced equipment.
  - Extended deadline for SMEs to formalize and benefit from fiscal incentives.
  - Pipeline of infrastructure projects (water, sewer, roads, and renewable energy); seeking affordable external financing and plan to use Public Private Partnerships where feasible.

### Monetary and financial policies — external position and reserves
- External position in 2023: current account norm estimated at –5  .6 percent of GDP in 2023 while the cyclically adjusted current account balance reached –3  .0 percent, implying a gap of 2.5 percent of GDP (Annex IX).
- International reserves:
  - Projected to remain below the ARA metric, although above three months of imports and short-term external debt.
  - Increasing international reserves would strengthen the currency peg, especially given projected increase in external financing needs when repayment of the blue loan starts in 2032.
- Requirements to increase reserves: implement fiscal consolidation and growth-enhancing structural reforms, and gradually reduce government financing by the Central Bank.

### Central Bank financing, liquidity, and local capital market
- At end-2023 the Central Bank held more than half of the government’s domestic public debt.
- Policy recommendations:
  - Gradually reduce Central Bank holdings of government domestic debt to give more investment opportunities to banks and the social security fund and reduce excess liquidity.
  - Introduce a market-based auction for Treasury Notes, accompanied by outreach to domestic investors to explain fiscal plans and the low risk of government securities, to provide price signals across maturities and develop a market-based government securities yield curve.
  - Recognize potential side-effects: this may raise domestic interest rates and lower incentives for capital outflows, allowing for gradual removal of capital controls; fiscal consolidation would mitigate adverse impact on public finances.
- Developing the domestic capital market requires a careful roadmap of structural reforms.

### Financial stability and AML/CFT
- Central Bank vigilance:
  - Keep vulnerable institutions under enhanced supervision.
  - Request preemptive recapitalizations above the 9 percent minimum regulatory requirement depending on balance sheet conditions.
  - Tools available: provision of liquidity, imposition of limits on dividend distributions, and an adequate bank resolution framework.
- AML/CFT measures:
  - Companies Act amended in 2023 to require registered agents and corporations to file beneficial ownership (BO) information with the Belize Companies and Corporate Registry.
  - Financial Services Commission (FSC) reviews indicate registered agents met physical presence requirements under the Economic Substance Law, including BO records.
  - FSC stepped-up AML/CFT supervision of registered agents with additional staff and is developing a risk-based supervisory framework.
  - Central Bank issued a penalty to a bank for breaches of AML/CFT requirements and should continue to strengthen proportionate and dissuasive sanctions.
  - A comprehensive assessment of Belize’s AML/CFT framework by the Caribbean Financial Action Task Force is ongoing; its findings should guide next steps.
- Authorities’ views: broadly agree with staff; conducting bank stress tests and improving capital buffers; open to reducing Central Bank financing but note domestic investors misprice government securities risk; plan outreach to investors; optimistic about Mutual Evaluation outcome and preparing for final plenary discussion scheduled for November 2024.

### Illustrative reform scenario and fiscal outlook
- Scenario assumptions (Text Table 2 summary):
  - Increase in the primary balance to 2 percent of GDP from FY2025 onwards (achieved via 0.8 percent of GDP in fiscal consolidation over two years).
  - Rise in spending on infrastructure, targeted social programs, and crime prevention as in Text Table 1.
  - Implementation of structural reforms discussed in Section B, raising real GDP growth by 0.25 percent in 2026-27 and 0.5 percent from 2028 onwards.
  - Fiscal multiplier of -0.5 in the year of consolidation as in Chapter 4 of the April 2018 Regional Economic Outlook: Western Hemisphere.
- Projected outcomes under the illustrative reform scenario:
  - Public debt in 2030 declines from 55.5 percent in the baseline scenario to 49.4 percent in the illustrative reform scenario.
  - The increase in growth is conservative, representing one-fourth of estimated gains in Chapter 2 of Unleashing Growth and Strengthening Resilience in the Caribbean, 2017.

### Key projections and fiscal numbers (selected exact figures from Text Table 2 and staff appraisal)
- Baseline Scenario: Current Policies (selected years and indicators)
  - Growth (percent): 2022: 8.7; 2023: 4.7; 2024: 3.4; 2025–2032: 2.5 (each year listed as 2.5).
  - Primary fiscal balance (percent of GDP): 2022: 1.6; 2023: 1.2; 2024–2032: 1.2 (each year listed as 1.2).
  - Public debt (percent of GDP): 2022: 67.1; 2023: 66.2; 2024: 62.9; 2025: 61.1; 2026: 60.0; 2027: 58.9; 2028: 57.8; 2029: 56.7; 2030: 55.5; 2031: 54.4; 2032: 53.3.
  - International reserves (months of imports): 2022: 3.7; 2023: 3.4; 2024: 3.5; 2025: 3.5; 2026: 3.5; 2027: 3.5; 2028: 3.4; 2029: 3.4; 2030: 3.4; 2031: 3.3; 2032: 3.3.
- Illustrative Reform Scenario (selected years and indicators)
  - Growth (percent): 2022: 8.7; 2023: 4.7; 2024: 3.2; 2025: 2.3; 2026: 2.8; 2027: 2.8; 2028–2032: 3.0 (each year listed as 3.0).
  - Primary fiscal balance (percent of GDP): 2022: 1.6; 2023: 1.2; 2024: 1.6; 2025 onward: 2.0 (each year listed as 2.0).
  - Public debt (percent of GDP): 2022: 67.1; 2023: 66.2; 2024: 62.6; 2025: 60.1; 2026: 58.0; 2027: 55.9; 2028: 53.7; 2029: 51.6; 2030: 49.4; 2031: 47.2; 2032: 45.0.
  - International reserves (months of imports): 2022: 3.7; 2023: 3.4; 2024: 3.7; 2025: 3.8; 2026: 3.9; 2027: 3.9; 2028: 4.0; 2029: 3.9; 2030: 3.9; 2031: 3.8; 2032: 3.8.
- Staff appraisal highlights:
  - 2023 outcomes: Real GDP grew by 4.7 percent; unemployment rate reached 3.4 percent; inflation declined to 4.4 percent; primary fiscal balance remained in surplus at 1.2 percent of GDP in FY2023; public debt fell from 67 percent of GDP in 2022 to 66 percent in 2023.
  - Projections: Real GDP growth projected at 3.4 percent in 2024 and 2.5 percent over the medium term; inflation projected at 3.1 percent in 2024 and 1.3 percent over the medium term.
  - Risk assessment: Staff assesses the risk of sovereign stress as moderate (Annex IV).
  - Recommendation: Reducing public debt to 50 percent of GDP by 2030 requires implementing 0.8 percent of GDP of fiscal consolidation to raise the primary balance to 2 percent of GDP from FY2025 onwards and anchoring the plan in a well-defined medium-term fiscal strategy and preparing for a Fiscal Responsibility Law with well-designed fiscal rules.
  - Revenue and expenditure measures: Broadening the GST base, raising excise taxes, rebalancing manufacturing taxes, and strengthening revenue administration can raise revenue by 2.2 percent of GDP; reforming the PPPO could lower government spending by 0.1 percent of GDP. Using savings to increase the primary surplus (0.8 percent of GDP) and expand priority spending (1.5 percent of GDP).
  - Priority spending areas: roads, water, and sewer systems; expanding renewable energy generation and storage; subsidizing childcare and training for vulnerable women; expanding targeted transfers to protect against food insecurity; investing in climate-resilient infrastructure.
  - Other priorities reiterated: ease SME access to affordable credit (credit bureau and collateral registry), advance digitalization of land and business registries, and develop a Disaster Resilience Strategy (DRS).

*Source: IMF staff report excerpt (1blzea2024001).*

### 35.      It is recommended that the next Article IV consultation take place on the standard 12-

### 1blzea2024001 - 35.      It is recommended that the next Article IV consultation take place on the standard 12-

### Real sector indicators
- Real GDP Growth (quarterly, year on year): time series shown across Mar-10 to Sep-23 (chart present).
- Real GDP Growth and Output Gap (annual percent): time series 2010–2029 (chart present).
- Tourist arrivals:
  - Stay over visitor arrivals series 2010–2023 (thousands).
  - Composition of Stay Over Visitor Arrivals by Origin, 2023: USA 68%, Canada 6%, Europe 12%, Other 12%, Mexico 1%, South America 1%.
  - Cruise ship disembarkations series (right axis) 2010–2023.
- Consumer Price Inflation (year on year, monthly series): Feb-12 to Feb-24 (chart present).
- Private Sector Credit Growth (nominal and real, year on year monthly series): Jan-12 to Jan-24 (chart present).

### Public sector indicators and fiscal stance
- Government Balance (percent of GDP): annual series 2010–2023 (chart shows Belize vs other Caribbean median and interquartile range).
- Public Sector Debt (percent of GDP): annual series 2010–2023 (chart shows Belize vs other Caribbean median and interquartile range).
- Government Tax Revenue (percent of GDP): annual series 2010–2023 (chart present).
- Government Current Expenditure (percent of GDP): annual series 2010–2023 (chart present).
- Government Nontax Revenue plus Grants (percent of GDP): annual series 2010–2023 (chart present).
- Government Capital Expenditure (percent of GDP): annual series 2010–2023 (chart present).

### Selected social and economic indicators (snapshot)
- Area (sq.km.): 22,860
- Population (thousands), 2022: 444.8
- GDP per capita, (current US$), 2023: 6,865
- Life expectancy at birth (years), 2021: 70.5
- Human development index (rank), 2022: 118
- Under-five mortality rate (per thousand), 2021: 11.2
- Unemployment rate (percent), 2023: 3.4
- Poverty (percent of total population), 2023: 26.4

### Key macro projections and indicators (calendar year unless indicated)
- GDP at constant prices (annual percent change): 
  - 2020: -13.7
  - 2021: 17.9
  - 2022: 8.7
  - 2023: 4.7
  - 2024–2029: 3.4, 2.5, 2.5, 2.5, 2.5, 2.5 (each year)
- Consumer prices (end of period):
  - 2020: 0.3
  - 2021: 4.9
  - 2022: 6.7
  - 2023: 3.7
  - 2024–2029: 2.6, 1.3, 1.3, 1.3, 1.3, 1.3
- Output gap (percent of potential output):
  - 2020: -19.3
  - 2021: -7.3
  - 2022: -1.9
  - 2023: -0.2
  - 2024–2029: 0.0 (flat series)
- Real effective exchange rate (+ = depreciation): series includes -0.3, -3.3, 2.1, 0.8, ... (chart/data present)
- Gross international reserves (US$ millions): series includes 348, 420, 482, 474, 515, 539, 550, 567, 585, 601 (annual entries)
- Reserves in months of imports: series shows 3.3, 3.2, 3.7, 3.4, 3.5, 3.5, 3.5, 3.5, 3.4, 3.4

### Central government fiscal numbers (percent of GDP and BZ$ levels)
- Fiscal year basis note: Fiscal year (April to March).
- Revenue and grants (percent of GDP): 22.2 (2022), 22.5 (2023), projected 22.8, 22.9, 23.2, 23.2, 23.2, 23.2, 23.2, 23.2
- Current non-interest expenditure (percent of GDP): series includes 20.4 (2020), 17.3 (2021), 16.0 (2022), 15.7 (2023), then 15.7 repeated through projections.
- Interest payment (percent of GDP): 1.5 (2020), 1.3 (2021), 1.7 (2022), 2.2 (2023), 2.1 (2024), 2.3 (2025–2026), then 2.2/2.3 range in projections.
- Capital expenditure (percent of GDP): 10.1 (2020), 5.2 (2021), 5.1 (2022), 6.0 (2023), 6.3 (2024–2029 projected)
- Primary balance (percent of GDP): -8.3 (2020), 0.0 (2021), 1.6 (2022), 1.2 (2023–2029 projected)
- Overall balance (percent of GDP): -9.9 (2020), -1.3 (2021), -0.1 (2022), -1.0 (2023), projections around -0.9 to -1.1 across 2024–2029
- Public debt (percent of GDP, calendar year basis):
  - 2020: 103.0
  - 2021: 82.3
  - 2022: 67.1
  - 2023: 66.2
  - 2024: 62.9
  - 2025: 61.1
  - 2026: 60.0
  - 2027: 58.9
  - 2028: 57.8
  - 2029: 56.7
- Public debt composition (percent of GDP):
  - Domestic debt: 32.1 (2020), 27.1 (2021), 23.2 (2022), 24.4 (2023), 22.6 (2024), 22.0 (2025), 21.6 (2026), 21.3 (2027), 21.5 (2028), 21.9 (2029)
  - External debt: 71.0 (2020), 55.2 (2021), 43.8 (2022), 41.8 (2023), 40.3 (2024), 39.2 (2025), 38.4 (2026), 37.5 (2027), 36.3 (2028), 34.8 (2029)
- Central government operations (BZ$ millions, fiscal years):
  - Revenue and grants: 953 (2022/23), 1,136 (2023/24), projected 1,319 (2024/25), 1,439 (2025/26), 1,547 (2026/27), 1,618 (2027/28), 1,680 (2028/29), 1,745 (2029/30), 1,812 (2030/31), 1,881 (2031/32)
  - Total expenditure: 1,375 (2022/23), 1,201 (2023/24), projected 1,323 (2024/25), 1,500 (2025/26), 1,608 (2026/27), 1,697 (2027/28), 1,762 (2028/29), 1,827 (2029/30), 1,895 (2030/31), 1,963 (2031/32)
  - Primary balance (BZ$): -356 (2022/23), -195 (2023/24), 75 (2024/25), 79 (2025/26), 82 (2026/27), 85 (2027/28), 89 (2028/29), 29 (2029/30) [table entries]
  - Overall balance (BZ$): -422 (2022/23), -66 (2023/24), -5 (2024/25), -61 (2025/26), -61 (2026/27), -79 (2027/28), -82 (2028/29), -82 (2029/30), -83 (2030/31), -82 (2031/32)

### Balance of payments and external sector
- Current account balance (US$ millions, 2020–2029): -128, -158, -236, -91, -81, -86, -87, -91, -94, -98
- Trade balance (US$ millions): -443 (2020), -534 (2021), -706 (2022), -777 (2023), -827 (2024), -867 (2025), -899 (2026), -933 (2027), -969 (2028), -1,006 (2029)
- Total exports, f.o.b. (US$ millions): 289 (2020), 422 (2021), 518 (2022), 488 (2023), 520 (2024), 544 (2025), 565 (2026), 587 (2027), 610 (2028), 633 (2029)
  - Of which: Oil entries include 242, 100, 0, 0 (table shows oil line with values)
- Total imports, f.o.b. (US$ millions): 731 (2020), 956 (2021), 1,224 (2022), 1,265 (2023), 1,346 (2024), 1,412 (2025), 1,464 (2026), 1,520 (2027), 1,579 (2028), 1,639 (2029)
  - Of which: Fuel and lubricants series includes 80, 134, 211, 198, 211, 221, 231, 240, 249 (table entries)
- Services (US$ millions): 255 (2020), 328 (2021), 501 (2022), 669 (2023), 712 (2024), 747 (2025), 776 (2026), 805 (2027), 836 (2028), 868 (2029)
- Income (US$ millions): -59 (2020), -78 (2021), -134 (2022), -111 (2023), -118 (2024), -124 (2025), -129 (2026), -134 (2027), -139 (2028), -144 (2029)
  - Public sector interest payments (component): -26 (2020), -20 (2021), -8 (2022), -7 (2023), -8 (2024–2029 series)
- Current transfers (US$ millions): 118 (2020), 127 (2021), 103 (2022), 129 (2023), 151 (2024), 159 (2025), 165 (2026), 171 (2027), 178 (2028), 184 (2029)
  - Private (net) transfers series: 112, 126, 133, 142, 151, 159, 165, 171, 178, 184
- Capital and financial account balance (US$ millions): 183 (2020), 192 (2021), 217 (2022), 84 (2023), 122 (2024), 109 (2025), 81 (2026), 81 (2027), 112 (2028), 113 (2029)
- Gross international reserves (US$ millions): 348 (2020), 420 (2021), 482 (2022), 474 (2023), 515 (2024), 539 (2025), 550 (2026), 567 (2027), 585 (2028), 601 (2029)
  - In months of next year's imports: 3.3, 3.2, 3.7, 3.4, 3.5, 3.5, 3.5, 3.5, 3.4, 3.4 (2020–2029)

### Banking system and monetary aggregates
- Central Bank of Belize:
  - Base money (BZ$ millions): 1,052 (2020), 1,159 (2021), 1,331 (2022), 1,434 (2023), 1,544 (2024), 1,608 (2025), 1,670 (2026), 1,734 (2027), 1,800 (2028), 1,869 (2029)
  - Net international reserves (BZ$ millions): series includes 699, 848, 967, 949, 1,031, 1,079, 1,101, 1,136, 1,171, 1,203
- Commercial banks:
  - Credit to the private sector (BZ$ millions): 2,254 (2020), 2,312 (2021), 2,413 (2022), 2,556 (2023), 2,663 (2024), 2,749 (2025), 2,831 (2026), 2,916 (2027), 3,003 (2028), 3,093 (2029)
  - Money and quasi-money (M2, BZ$ millions): 3,534 (2020), 3,969 (2021), 4,155 (2022), 4,448 (2023), 4,679 (2024), 4,873 (2025), 5,060 (2026), 5,254 (2027), 5,455 (2028), 5,664 (2029)
- Monetary and liquidity ratios:
  - Required cash reserve ratio (percent): 6.5 (2020), 6.5 (2021–2028 series), 6.5 (2029)
  - Loan-deposit ratio (percent): 70.1 (2020), 62.9 (2021), 63.8 (2022), 63.5 (2023), 63.1 (2024), 62.7 (2025), 62.3 (2026), 62.0 (2027), 61.6 (2028), 61.3 (2029)
  - Net international reserves to M2 (percent): 19.8 (2020), 21.4 (2021), 23.3 (2022), 21.3 (2023), 22.0 (2024), 22.1 (2025), 21.8 (2026), 21.6 (2027), 21.5 (2028), 21.2 (2029)

### Baseline medium-term outlook (selected series to 2033)
- GDP at constant prices (annual percent change): repeated 2.5 for 2024–2033 with earlier years as above.
- GDP at current market prices (annual percent change): series includes -14.2 (2020), 18.4 (2021), 16.7 (2022), 9.3 (2023), 6.5 (2024), 4.9 (2025), 3.8 (2026–2033 repeated)
- Prices (GDP deflator, annual percent change): series includes -0.6 (2020), 0.5 (2021), 6.3 (2022), 4.4 (2023), 3.1 (2024), then 1.3 annually from 2025–2033
- Gross national savings (percent of GDP): 19.2 (2020), 17.1 (2021), 14.9 (2022), 18.6 (2023), series 18.8–19.9 across projections
- External sector:
  - Current account balance (percent of GDP): -6.2 (2020), -6.5 (2021), -8.3 (2022), -2.9 (2023), then -2.5 or -2.4 across 2024–2033
  - Exports of goods and services (percent of GDP): 34.9 (2020), 43.0 (2021), 48.4 (2022), 47.3 (2023), 47.2 (2024–2033)
  - Imports of goods and services (percent of GDP): -44.0 (2020), -51.5 (2021), -55.6 (2022), -50.8 (2023), -50.7 (2024–2033)
- Public debt (percent of GDP) long-run path:
  - 2020: 103.0
  - 2021: 82.3
  - 2022: 67.1
  - 2023: 66.2
  - 2024: 62.9
  - 2025: 61.1
  - 2026: 60.0
  - 2027: 58.9
  - 2028: 57.8
  - 2029: 56.7
  - 2030: 55.5
  - 2031: 54.4
  - 2032: 53.3
  - 2033: 52.1

### Financial soundness indicators (domestic banks)
- Capital adequacy (percent):
  - Regulatory Capital to Risk Weighted Assets: 24.6 (2018), 22.8 (2019), 19.8 (2020), 19.8 (2021), 15.1 (2022), 16.1 (2023)
  - Primary Capital to Risk-Weighted Assets: 23.6, 21.7, 18.6, 18.2, 12.4, 14.2 (2018–2023)
- Asset quality (percent):
  - Non-Performing Loans to Total Gross Loans: 6.2 (2018), 5.1 (2019), 7.7 (2020), 5.3 (2021), 6.9 (2022), 5.2 (2023)
  - Loan Loss Coverage: 72.3 (2018), 71.9 (2019), 57.3 (2020), 66.0 (2021), 67.1 (2022), 75.8 (2023)
- Profitability/efficiency (percent):
  - Return On Equity (Net Income to Average Capital): 19.8 (2018), 13.3 (2019), 3.2 (2020), 5.7 (2021), 2.9 (2022), 14.0 (2023)
  - Return On Assets (Net Income to Average Assets): 3.1 (2018), 2.0 (2019), 0.4 (2020), 0.6 (2021), 0.3 (2022), 1.5 (2023)
- Liquidity (percent):
  - Liquid Assets to Total Assets: 25.8 (2018), 24.3 (2019), 28.1 (2020), 33.8 (2021), 34.3 (2022), 32.9 (2023)
  - Customer Deposits to total (Non-Interbank) Loans: 127.8 (2018), 128.4 (2019), 138.1 (2020), 155.1 (2021), 152.1 (2022), 152.3 (2023)

*Source: IMF staff compilation from the provided Belize country chapter tables and figures.*

### Annex I. Implementation of 2023 Article IV Consultation

### Annex I. Implementation of 2023 Article IV Consultation

### Recommendations — Fiscal Consolidation and Debt Reduction
- Raise the primary balance to 2.0 percent of GDP by FY2025 and keep it unchanged thereafter to reduce public debt to 50 percent of GDP by 2028.
- Anchor this plan on a medium-term fiscal strategy with clear targets and specific measures to make it more credible.
- Reform the Pension Plan for Public Officials (PPPO) and increase priority spending on infrastructure, targeted social programs, and crime prevention.
- Broaden the GST base, standardize PIT exemption thresholds, raise excise taxes, and strengthen revenue administration.

### Implementation status — Fiscal Consolidation and Debt Reduction
- Some Progress
- The fiscal position remained robust in FY2023, but the primary surplus declined to 1.2 percent of GDP and public debt declined more slowly to 66 percent of GDP.
- There has been slow progress implementing the recommended revenue measures and reforms to the PPPO, because of political economy considerations.
- The authorities are strengthening revenue administration in line with technical assistance from CARTAC and FAD and remain committed to maintaining primary surpluses.
- The authorities expect to agree with the labor unions on necessary reforms to the PPPO in FY2024.

### Recommendations — Growth Enhancing Structural Reforms
- Ensure more predictable access to FX to boost FDI.
- Improve access to credit for MSMEs.
- Strengthen the technical capacity of the judiciary.
- Replace ministerial discretion in business-related processes with a more predictable rules-based system.
- Elaborate a comprehensive Disaster Resilience Strategy (DRS) that focuses on strengthening structural, financial, and post-disaster resilience and is based on a consistent multi-year macro-fiscal framework.

### Implementation status — Growth Enhancing Structural Reforms
- Some Progress
- Strong uptake of the government’s initiative to formalize MSMEs through fiscal incentives, which is expected to enhance access to credit for these firms.
- Two domestic banks have expanded credit to MSMEs with the support of the IDB.
- The credit bureau and collateral registry have been approved by cabinet but are not yet operational.
- The authorities have continued investing in disaster-resilient infrastructure and crops, but have not yet developed a DRS that focuses on strengthening structural, financial, and post-disaster resilience.

### Recommendations — Financial Sector Reform
- Reduce NPLs and oversee bank recapitalization to preserve financial stability.
- Remain vigilant about risks in the financial sector.

### Implementation status — Financial Sector Reform
- Progress
- Financial soundness indicators improved in 2023 but are weaker than before the pandemic.
- Vulnerable institutions requiring recapitalization injected capital in 2023 to ensure that regulatory capital adequacy ratios were in line with those mandated by the Central Bank.

### Recommendations — AML/CFT Reforms
- Test and update the guidelines for imposing penalties for non-compliance with AML/CFT requirements.
- Enhance the transparency of beneficial ownership (BO) of legal entities and trusts, including by ensuring that all registered agents have a physical presence and keep the BO records in Belize and are subject to adequate AML/CFT supervision.
- Require BO information to be filed with the registry by agents or corporations to facilitate access by competent authorities.

### Implementation status — AML/CFT Reforms
- Progress
- The authorities have submitted the required AML/CFT laws and regulations for the Mutual Evaluation by the Caribbean Financial Action Task Force.
- The Companies’ Act was amended in 2023 to require registered agents and corporations to file information on beneficial ownership of companies with the Belize Companies and Corporate Registry to facilitate access to such information by competent authorities.

*Source: Annex I. Implementation of 2023 Article IV Consultation*

### Annex II. Integrating Surveillance and Capacity Development

### Tax Policy and Administration
- Recommendation: Increase revenue collection through tax policy measures and improved administration to increase the primary balance and expand priority expenditure by taxing some zero-rated items at the 12.5 percent GST rate, increasing excise taxes and fees, standardizing the personal income tax exemption thresholds, and strengthening revenue and customs administration.
- Capacity Development and Recent Actions/Plans:
  - Belize received technical assistance (TA) on tax policy from FAD in 2013, and would benefit from an updated assessment.
  - In 2020, FAD advised on tax reform options and LEG on income taxation.
  - More recently, FAD and CARTAC have provided TA on revenue and customs administration, including on creating a unified, autonomous tax department to enhance efficiency, implementing a tax compliance plan to improve filing and payment, enhancing audit capacity, increasing tax arrears collection, and building capacity.
  - LEG and CARTAC also provided TA on a Property Transactions Tax.

### Expenditure Policy
- Recommendation: Increase spending on infrastructure, targeted social programs, and crime prevention to boost growth and make it more inclusive and resilient to climate change and related disasters. Reform the pension plan for public officials to cut its long-run deficit and make it sustainable.
- Capacity Development and Recent Actions/Plans:
  - The World Bank conducted a Public Expenditure Review in 2023 and provided recommendations in line with staff’s advice.
  - The authorities would benefit from a more detailed review of the public wage bill, including a review of the salary scale, a needs assessment to determine which areas of government are under or over staffed, and a strategic review of public employment policies.

### Public Financial Management
- Recommendation: Strengthen multi-year budget preparations, fiscal risk assessment, public investment management, coverage of government accounts, accounting and fiscal reporting, and internal audit. Publish procurement contracts and beneficial ownership information of awardees to ensure transparency and accountability.
- Capacity Development and Recent Actions/Plans:
  - A 2020 public investment management assessment noted some good practices and made recommendations to improve public investment management further.
  - CARTAC and FAD provided TA on the transition to accrual accounting and improving financial reporting and accountability in 2023.

### Structural Reforms
- Recommendation: Increase female labor force participation and the quality of education; enhance access to affordable credit for MSMEs; strengthen resilience to climate change and related disasters; reduce crime; and improve the rule of law and business climate.
- Capacity Development and Recent Actions/Plans:
  - A Climate Change Policy Assessment was completed in 2018, which recommended implementing a Disaster Resilience Strategy that focuses on improving structural, financial, and post-disaster resilience and is based on a consistent multi-year macro-fiscal framework.

### Financial Sector
- Recommendation: Continue to strengthen financial sector regulation and supervision. Remain vigilant to financial stability risks, including keeping vulnerable institutions under enhanced supervision. Reduce central bank financing of the government.
- Capacity Development and Recent Actions/Plans:
  - CARTAC delivered TA on implementing Basel II-III and strengthening risk-based supervision. It also helped develop stress testing tools and helped to support the FSC with TA for the new Securities Act and Insurance Legislation and Regulation.
  - MCM provided TA on bank resolution and NPL management in 2021 and on the FX Regulatory Framework and FX reserve management, most recently in 2023.
  - The authorities could benefit from TA to update the bank resolution framework.

### AML/CFT
- Recommendation: Continue strengthening the AML/CFT framework and implementation, including efforts to ensure registered agents’ compliance with AML/CFT requirements and to strengthen the regime for ensuring proportionate and dissuasive sanctions for violations of AML/CFT requirements.
- Capacity Development and Recent Actions/Plans:
  - MCM delivered TA on cybersecurity regulation and supervision in 2019.

### Statistics
- Recommendation: Improve the accuracy and timeliness of statistics.
- Capacity Development and Recent Actions/Plans:
  - CARTAC provided TA on rebasing the national accounts and back casting GDP by expenditure in 2020.
  - STA provided TA on producing new Financial Soundness Indicators in line with the FSIs Guide in 2022, and on improving the compilation of the BOP and IIP in 2023.

*Source: Annex II. Integrating Surveillance and Capacity Development*

### Annex III. Food Inflation and Food Insecurity in Belize

### Key observations on global and domestic drivers
- Global food prices started rising in early 2021 due to pandemic related disruptions; low harvests in Europe, South America, and the United States; and strong demand.
- Russia’s invasion of Ukraine in 2022 further fueled food price rises as both countries are large producers of wheat, maize, and fertilizers.
- Upside risks to food prices include climate change and related disasters, and the possible spreading of the armed conflicts in Ukraine and the Middle East.
- Food accounts for:
  - 45.5 percent of the consumption basket in low-income countries,
  - 27.9 percent in emerging market economies,
  - 16.1 percent in advanced economies.
- Belize has a food weight in the consumption basket of 25.8 percent, the fourth largest in the Caribbean, making it particularly vulnerable to increases in international food prices.

### Recent food inflation and its contribution to headline inflation
- Food and non-alcoholic beverage prices increased by 25 percent in Belize between December 2019 and June 2023.
- Food inflation accounted for over half of headline inflation in Belize, compared with a 27 percent contribution for the average Caribbean economy.

### Food insecurity metrics
- Over 40 percent of the Belizean population experienced food insecurity in 2021.
- Share with severe food insecurity in Belize in 2021: 6 percent.
- Share with moderate food insecurity in Belize in 2021: 40 percent (the largest in the region).
- World Food Program’s Caribbean Food Security & Livelihood Survey suggests 18 percent of respondents in Belize were experiencing severe food insecurity in 2023, following two years of high food inflation.

### Policy responses in the region and Belize
- DEFPA shows the average Caribbean country announced five measures with a cost of 0.7 percent of GDP; the average country in Latin America announced 6 measures with a cost of 0.9 percent of GDP.
- Around 53 percent of measures in the Caribbean tackled energy prices, 23 percent food prices, 12 percent both sectors, and 9 percent did not specify the sector.
- Over 90 percent of these measures were temporary; most-used instruments were consumption taxes, price subsidies, and in-kind transfers.
- Over 60 percent of measures were targeted to specific segments of the economy, with a large share directed to households.

### Belize-specific measures (2022–2023)
- April 2022: Temporarily reduced excise taxes on diesel and regular gasoline prices to fix prices at the pump, and introduced temporary subsidies for bus operators to limit increases in bus fares.
  - Estimated cost: 0.6 percent of GDP between April 2022 and March 2023.
- August 2023: Imposed temporary limits on the markup for 32 basic consumption goods, including foodstuff, for wholesalers (15 percent) and retailers (25 percent). Effectiveness not yet assessed.

### Policy options and cost estimates
- Targeted support is more cost-effective than broad-based subsidies; options include emergency food relief, food stamps, or cash transfers leveraging existing programs like BOOST.
- If expanding social safety nets is not possible, consider demographic or geographic targeting, self-selection targeting, or community targeting; use latest Census data to identify areas most in need.
- Targeted transfers should be temporary and require beneficiaries to take training and seek employment; accompany with an awareness campaign on food prices.
- If targeting is not possible short-term, consider temporary tax or tariff reductions for staple foods with clear sunset clauses.

### Cost to fully compensate vulnerable households in 2022
- Fully compensating vulnerable households against food inflation in 2022 would have cost the government between 0.1 and 0.8 percent of GDP depending on the group targeted.
  - Cost to protect the population that had severe food insecurity in 2021: 0.1 percent of GDP.
  - Cost to protect those that had any form of food insecurity in 2021: 0.8 percent of GDP.
- Estimation assumptions: government can perfectly target vulnerable households and provide a one-time transfer equal to the increase in the cost of food between 2021 and 2022; level of consumption of vulnerable households in 2021 equals average Belizean; share of food in consumption basket of most vulnerable equals that of the average Belizean.

*Source: Annex III. Food Inflation and Food Insecurity in Belize*

### Annex IV. Debt Sustainability Analysis

### Overall assessment
- Belize’s risk of sovereign stress is assessed as moderate.
- Public debt remained broadly stable at 66 percent of GDP in 2023.
- Public debt is projected to fall to 57 percent of GDP in 2029.
- Medium- and long-term risks are contained, with debt firmly on a downward path and manageable gross financing needs.
- Assessment robust to adverse shocks to growth and the fiscal position, including those emanating from natural disasters.

### Recent developments and outlook
- Public debt declined slightly in 2023 after falling sharply in 2021-22.
- Public debt peaked at 103 percent of GDP in 2020 before falling to 67 percent of GDP in 2022, driven by:
  - strong rebound in real GDP and inflation,
  - a debt for marine protection swap with The Nature Conservancy that reduced public debt by 9 percentage points of GDP,
  - a 4.9 percent of GDP discount in Belize’s Petrocaribe debt with Venezuela,
  - a recovery in the primary balance from –8.3 percent of GDP in FY2020 to 1.6 percent in FY2022 due to sizable fiscal consolidation and a rebound in revenue.
- Despite a primary surplus and still strong growth, public debt fell only to 66 percent of GDP in 2023 reflecting higher interest expense on external debt, the acquisition of the Port of Belize, and the settlement of outstanding litigations with a foreign investor.

*Source: Annex IV. Debt Sustainability Analysis*

### 2. The structure of public debt reflects past reliance on official financing and the results

### 2. The structure of public debt reflects past reliance on official financing and the results of debt operations and court settlements

### Structure of public debt (end-2023)
- By end-2023, 63 percent of public debt was owed to external creditors:
  - 29 percent to multilateral institutions
  - 16 percent to bilateral creditors
  - 18 percent to private creditors (blue loan)
- The remaining 37 percent was denominated in local currency and owed to domestic creditors:
  - 19 percent to the Central Bank
  - 11 percent to domestic banks
  - 7 percent to other domestic creditors
- The debt-for-marine protection swap and the discount on the Petrocaribe debt reduced external commercial and external bilateral public debt.
- Domestic debt rose by 1.1 percent of GDP in 2023 as the authorities acquired the Port of Belize and settled outstanding claims with a foreign investor.

### Projections and fiscal outlook (medium-term and to FY2033)
- Public debt is projected to fall from 66 percent of GDP in 2023 to 52 percent in 2033.
- Real GDP growth projections:
  - 4.7 percent in 2023
  - 3.4 percent in 2024
  - 2.5 percent over the medium-term
- Inflation is expected to moderate to 1.3 percent from 2026 onwards.
- Staff expects the primary balance to stabilize at 1.2 percent of GDP over the medium-term.
- Fiscal deficit projection: narrow to 0.8 percent of GDP by FY2033 from 1.0 percent in FY2023.
- Gross financing needs (GFNs) trajectory:
  - Expected to decline from 10.8 percent of GDP in 2023 to 6.1 percent of GDP in 2031
  - Rise to 7.1 percent of GDP in 2032 when principal repayments on the blue loan commence
- With external borrowing costs higher, staff expects external debt to fall faster than domestic debt over the medium-term as authorities rely more on cheaper domestic financing and less on external sources.

### Assessment of sovereign stress (summary and drivers)
- Overall risk of sovereign stress: assessed as moderate.
- Key factors informing this assessment:
  - Public debt remains high in percent of GDP and revenue, and a large share is denominated in foreign currency.
  - Debt-to-GDP ratio is on a downward path and gross financing needs are manageable.
  - Long-term risks driven by:
    - Higher amortization payments starting in 2032 when the blue loan’s principal repayments commence
    - Costs of investing in climate adaptation
  - Risks that could raise sovereign stress:
    - Economy slowing faster than expected
    - Shocks to food and fuel prices requiring additional fiscal support
    - A worsening banking sector creating contingent liabilities to the central government
  - Mitigating factors: structural reforms that boost growth and enhance resilience to climate change and related disasters could reduce public debt faster than expected.

### Medium-term risk assessment and diagnostics
- Medium-term risks: assessed as moderate, consistent with mechanical tools.
- Debt Fanchart tool:
  - Produces a score of 1.7
  - Above the low-risk threshold of 1.1, below the high-risk threshold of 2.1
  - Public debt expected to stabilize at a relatively moderate level by 2029 with high probability
- GFN financeability tool:
  - Produces a score of 8.3
  - Just above the low-risk threshold of 7.6, below the high-risk threshold of 17.9
  - GFNs expected to average 7.5 percent of GDP over the medium-term due to small fiscal deficits, a favorable repayment profile for the blue loan, and modest short-term debt to be rolled over by domestic creditors
  - Rollover risks on external debt are contained because a large share of public debt is owed to official creditors, which carries less rollover risk
- Stress test (natural disaster scenario):
  - A hurricane causing 6 percent of GDP in economic damages increases debt to 62 percent of GDP in the medium-term
  - Gross financing needs rise but remain below 15 percent of GDP over the horizon
  - Scenario assumptions: hurricane causes 6 percent of GDP in damages in 2025; real GDP growth falls by 3 percent in 2025 and 1 percent in 2026 but increases by 0.5 percent in 2027 and 2028 due to reconstruction; government spending on reconstruction increases by 2 percent of GDP in 2025 and 1 percent of GDP in 2026 and 2027

### Long-term risk assessment and scenarios
- Long-term risks: assessed as moderate.
- Principal payments on the blue loan will start in FY2032 and continue until FY2040, increasing long-term GFNs.
- Stabilization under historical-average scenario:
  - If nominal GDP growth and the primary balance revert to their 10-year historical averages (4.7 percent and –1.0 percent of GDP), public debt and GFNs would stabilize through 2053.
- Realistic baseline:
  - If real GDP growth falls to 2 percent and the primary balance declines to 0.6 percent of GDP over the long-term, public debt would continue to fall and GFNs would remain below 10 percent of GDP.
- Fiscal policy trade-off for climate adaptation:
  - Public debt and GFNs would stabilize over the long-term even after reducing the primary balance by an additional 1 percent of GDP per year relative to the baseline to finance investments in climate adaptation.

### External debt sustainability
- External public debt developments:
  - External debt declined to 42 percent of GDP in 2023 from 44 percent in 2022, driven largely by strong real GDP growth and high inflation.
  - Projected to fall further to 29 percent of GDP by 2033, reflecting greater reliance on domestic debt to meet GFNs.
- Gross external financing needs:
  - Projected to remain low, falling to 3.8 percent of GDP by 2031, but expected to rise thereafter as principal payments on the blue loan start
- Sensitivity to shocks (external debt projections for 2033 under shocks):
  - Widening of the noninterest current account deficit by 0.8 percent of GDP in 2025 increases external debt to 36 percent of GDP in 2033
  - A 30 percent currency depreciation in the same year increases external debt to 43 percent of GDP in 2033
  - Half standard deviation shock to real GDP growth increases external debt to 39 percent of GDP in 2033
  - Half standard deviation shock to interest rates increases external debt to 30 percent of GDP in 2033
  - If real GDP growth, the noninterest current account deficit, nominal interest rates, inflation, and nondebt net capital flows all revert to their 10-year historical averages, external debt could rise to 46 percent of GDP in 2033
- Coverage note: Given lack of data on private external debt, the external DSA covers only external public debt.

*Source: IMF staff analysis (chapter 2 of the PDF).*

### 5. Debt consolidation across sectors:

### 5. Debt consolidation across sectors:

### Coverage and reporting notes
- The SRDSA uses public sector debt, including central government debt and external financial and non-financial public sector debt.
- The Social Security Board is not treated as part of the general government; the Central Bank (CBB) classifies it as other non-financial public corporation.
- Despite wide coverage of external public sector debt, data on domestic debt and debt service (including SOE debt) needs to be improved.
- Stock of arrears could be used as a proxy in the absence of accrual data on other accounts payable.
- IPSGSs: Insurance, Pension, and Standardized Guarantee Schemes, typically including government employee pension liabilities.
- Basis of recording notes: Includes accrual recording, commitment basis, due for payment, etc.
- Valuation definitions preserved:
  - Nominal value: amount the debtor owes to the creditor; reflects value at creation and subsequent economic flows.
  - Face value: undiscounted amount of principal to be paid at (or before) maturity.
  - Market value: value as if acquired in market transactions on the balance sheet reporting date; only traded debt securities have observed market values.

### Public debt structure indicators (selected observations)
- Perimeter shown is consolidated public sector for all charts.
- After the debt-for-marine protection swap in 2021, the government has relied increasingly on official sector debt to meet gross financing needs and has recourse to domestic debt; this is likely to continue in the medium-term.
- Residual maturity: 7.9 years (reported under projections).

### Baseline scenario: key projections and contributions (Percent of GDP unless indicated)
- Public debt path:
  - Actual 2023: 66.2
  - 2024: 62.9
  - 2025: 61.1
  - 2026: 60.0
  - 2027: 58.9
  - 2028: 57.8
  - 2029: 56.7
  - 2030: 55.5
  - 2031: 54.4
  - 2032: 53.3
  - 2033: 52.1
- Change in public debt:
  - 2023: -0.9
  - 2024: -3.2
  - 2025: -1.8
  - 2026: -1.1
  - 2027: -1.1
  - 2028: -1.1
  - 2029: -1.1
  - 2030: -1.1
  - 2031: -1.1
  - 2032: -1.2
  - 2033: -1.2
- Contribution of identified flows:
  - 2023: -2.4
  - 2024: -2.9
  - 2025: -1.7
  - 2026: -1.4
  - 2027: -1.3
  - 2028: -1.3
  - 2029: -1.3
  - 2030: -1.3
  - 2031: -1.3
  - 2032: -1.3
  - 2033: -1.4
- Primary deficit:
  - 2023: -1.3
  - 2024: -1.2
  - 2025–2033: -1.2 (stabilizes at 1.2 percent of GDP from 2024 onwards; staff projects primary balance to stabilize at 1.2 percent of GDP from 2024 onwards)
- Noninterest revenues:
  - 2023: 22.8
  - 2024: 23.1
  - 2025–2033: 23.2 (repeated)
- Noninterest expenditures:
  - 2023: 21.5
  - 2024: 21.9
  - 2025–2033: 22.0 (repeated)
- Automatic debt dynamics:
  - 2023: -3.5
  - 2024: -1.7
  - 2025: -0.5
  - 2026: -0.2
  - 2027: -0.2
  - 2028: -0.1
  - 2029: -0.1
  - 2030: -0.2
  - 2031: -0.1
  - 2032: -0.2
  - 2033: -0.2
- Real interest rate and relative inflation (selected):
  - 2023: -0.2  (reported as "-0.20.4..." in source; preserved as presented)
  - Real interest rate entries include values such as -0.5, 0.1, 0.9, 1.6, 1.5, 1.5, 1.5, 1.4, 1.4, 1.4, 1.3 (as reported in the matrix)
  - Relative inflation entries include 0.3, 0.3, 0.1, -0.3, -0.2, -0.2, -0.2, -0.2, -0.2, -0.2 (as reported)
- Real growth rate:
  - 2023: -3.0 (presented in a fragmented format; includes values -2.2, -1.6, -1.5, -1.5, -1.5, -1.4, -1.4, -1.4, -1.3 across horizons in source)
- Other identified flows:
  - 2023: 2.4
  - 2024–2033: 0.0
- Contingent liabilities:
  - 2023: 3.2
  - 2024–2033: 0.0
- Contribution of residual:
  - 2023: 1.5
  - 2024: -0.3
  - 2025: -0.1
  - 2026–2033: 0.3, 0.2, 0.2, 0.2, 0.2, 0.2, 0.2 (as reported)
- Gross financing needs:
  - 2023: 10.8
  - 2024: 7.4
  - 2025: 8.3
  - 2026: 8.3
  - 2027: 7.6
  - 2028: 6.8
  - 2029: 6.6
  - 2030: 6.8
  - 2031: 6.1
  - 2032: 7.1
  - 2033: 7.0
- Debt service (component of GFN):
  - 2023: 8.9
  - 2024: 8.5
  - 2025: 9.5
  - 2026: 9.4
  - 2027: 8.8
  - 2028: 8.0
  - 2029: 7.8
  - 2030: 8.0
  - 2031: 7.3
  - 2032: 8.2
  - 2033: 8.2
- Local versus foreign currency GFN composition (examples):
  - Local currency:
    - 2023: 5.7
    - 2024: 5.4
    - 2025: 5.9
    - 2026: 5.9
    - 2027: 5.4
    - 2028: 4.6
    - 2029: 4.6
    - 2030: 5.1
    - 2031: 4.6
    - 2032: 4.7
    - 2033: 4.8
  - Foreign currency:
    - 2023: 3.2
    - 2024: 3.1
    - 2025: 3.6
    - 2026: 3.6
    - 2027: 3.4
    - 2028: 3.3
    - 2029: 3.2
    - 2030: 2.9
    - 2031: 2.7
    - 2032: 3.5
    - 2033: 3.4
- Memo macro variables:
  - Real GDP growth (percent): 2023: 4.7; 2024: 3.4; 2025–2033: 2.5 (consistent medium-term projection)
  - Inflation (GDP deflator; percent): 2023: 4.4; 2024: 3.1; 2025–2033: 3.1 then 1.3 repeated (as reported)
  - Nominal GDP growth (percent): 2023: 9.3; 2024: 6.5; 2025–2033: 4.9, 3.8 repeated, 3.8 etc. (as reported)
  - Effective interest rate (percent): 2023: 3.6; 2024: 3.2; 2025: 3.8; 2026: 3.9; 2027: 3.9; 2028: 4.0; 2029: 4.0; 2030: 3.9; 2031: 3.9; 2032: 3.9; 2033: 3.8

- Staff projection summary: Real GDP expanded by 4.7 percent in 2023 and is projected to gradually slow to 2.5 percent over the medium-term from 2025. Together with a stable primary balance of 1.2 percent of GDP from 2024 onwards, public debt is projected to decline from 66 percent of GDP in 2023 to 57 percent by 2029.

### Realism of baseline assumptions and historical context
- The sharp COVID-related contraction and subsequent recovery complicate realism tools.
- The rise in debt between 2017 and 2021 was due primarily to the economic contraction, deterioration in fiscal balances, and low inflation.
- Nominal GDP growth has been strong since then and is expected to persist in 2024.
- Realism diagnostics shown: Forecast track record, percentile ranks for output gap revisions, bond issuance and average marginal interest rates, 3-year debt reduction and 3-year adjustment in cyclically-adjusted primary balance, fiscal adjustment and possible growth paths (multipliers).

### Medium-term risk analysis (summary metrics and signals)
- Debt fanchart module:
  - Fanchart width: 44.6 (percent of GDP)
  - Probability of debt non-stabilization: 18.5 (percent)
  - Terminal debt-to-GDP x4: 0.5 (interpreted as 0.5 in source) and 0.9 (other entry)
  - Debt fanchart index (DFI): 1.7
  - Risk signal for DFI: Moderate (per thresholds in source)
- Gross Financing Needs (GFN) module:
  - Average baseline GFN: 7.5 (percent of GDP)
  - Initial Banks' claims on the general government: 7.2 (pct bank assets)
  - Change in banks' claims in stress: 10.0 (pct bank assets)
  - GFN financeability index (GFI): 8.3
  - Risk signal for GFI: Moderate (per thresholds in source)
- Medium-term index: Risk signal: 5/ (reported as “5/” in source)
- Final assessment: 
  - Prob. of missed crisis, 2024-2029, if stress not predicted: 18.2 pct.
  - Prob. of false alarms, 2024-2029, if stress predicted: 38.6 pct.
- Overall medium-term risk: assessed as moderate. Triggered stress tests suggest shocks from natural disasters would not increase risks sufficiently to change the overall assessment.

### Long-term risk analysis and scenario results
- Long-term projections consider slower growth, smaller primary balance, and commencement of principal payments on the blue loan (which end in 2040).
- Even under slower long-term growth and smaller primary balance, GFNs are expected to remain manageable.
- Debt-to-GDP ratio is expected to fall more slowly in the long-run compared to scenarios where growth and the primary balance remain at their 2025–2029 average.
- Climate change adaptation scenarios:
  - Both GFNs and public debt are vulnerable to higher investment costs associated with climate adaptation but stabilize over the long-run.
  - Graphical scenarios include Baseline: Custom; With climate adaptation (standardized scenario); With climate adaptation (customized scenario).

### External Debt Sustainability Framework (2020–2029) — selected table highlights (In percent of GDP unless indicated)
- Baseline external debt:
  - 2020: 71.0
  - 2021: 55.2
  - 2022: 43.8
  - 2023: 41.8
  - 2024: 40.3
  - 2025: 39.2
  - 2026: 38.4
  - 2027: 37.5
  - 2028: 36.3
  - 2029: 34.8
  - Debt-stabilizing non-interest current account: -1.9 (reported in table)
- Change in external debt:
  - 2020: 15.6
  - 2021: -15.8
  - 2022: -11.4
  - 2023: -2.0
  - 2024: -1.5
  - 2025: -1.1
  - 2026: -0.7
  - 2027: -0.9
  - 2028: -1.2
  - 2029: -1.6
- Identified external debt-creating flows (4+8+9):
  - 2020: 11.9
  - 2021: -9.6
  - 2022: -4.5
  - 2023: -2.3
  - 2024: -1.4
  - 2025: -0.9
  - 2026: -0.8
  - 2027: -0.7
  - 2028: -0.6
  - 2029: -0.6
- Current account deficit, excluding interest payments:
  - 2020: 4.6
  - 2021: 5.8
  - 2022: 7.2
  - 2023: 1.3
  - 2024: 1.0
  - 2025: 0.8
  - 2026: 0.7
  - 2027: 0.7
  - 2028: 0.8
  - 2029: 0.9
- Automatic debt dynamics 1/:
  - 2020: 10.8
  - 2021: -10.3
  - 2022: -6.8
  - 2023: -2.1
  - 2024: 0.1
  - 2025: 0.8
  - 2026: 0.8
  - 2027: 0.7
  - 2028: 0.7
  - 2029: 0.7
- Residual, incl. change in gross foreign assets (2-3):
  - 2020: 3.7
  - 2021: -6.1
  - 2022: -6.9
  - 2023: 0.3
  - 2024: -0.1
  - 2025: -0.2
  - 2026: 0.1
  - 2027: -0.2
  - 2028: -0.6
  - 2029: -1.0
- External debt-to-exports ratio:
  - 2020: 203.4
  - 2021: 128.3
  - 2022: 90.6
  - 2023: 88.4
  - 2024: 85.3
  - 2025: 82.9
  - 2026: 81.3
  - 2027: 79.5
  - 2028: 76.9
  - 2029: 73.6
- Gross external financing need (in billions of US dollars):
  - 2020: 0.2
  - 2021: 0.2
  - 2022: 0.3
  - 2023: 0.1
  - 2024: 0.1
  - 2025: 0.2
  - 2026: 0.2
  - 2027: 0.2
  - 2028: 0.2
  - 2029: 0.2
- Key macro assumptions (selected):
  - Real GDP growth (percent): 2020: -13.7; 2021: 17.9; 2022: 8.7; 2023: 4.7; 2024: 2.8; 2025: 8.0; 2026: 3.4; 2027–2029: 2.5 (repeated)
  - GDP deflator in US dollars (change in percent): 2020: -0.6; 2021: 0.5; 2022: 7.4; 2023: 4.4; 2024: 1.8; 2025: 2.5; 2026: 3.1; 2027–2029: 2.3, 1.3, 1.3, 1.3 respectively
  - Nominal external interest rate (percent): 2020: 2.5; 2021: 1.2; 2022: 2.3; 2023: 4.1; 2024: 3.1; 2025: 0.9; 2026: 3.6; 2027: 4.5; 2028: 4.7; 2029: 4.6; other years show 4.5 entries
  - Growth of exports and imports (US dollar terms) and current account balances are reported in table (preserved as presented).

### Boundary and sensitivity tests (external debt)
- Figure notes: Individual shocks are permanent one-half standard deviation shocks; combined shocks and historical scenarios are analyzed (e.g., interest rate shock, current account shock, growth shock, 30 percent one-time real depreciation in 2025).
- Representative historical and scenario averages quoted in boxes in the figures (exact numeric box averages shown in figures).

### Risk Assessment Matrix (Annex V): potential deviations, likelihood, impact, and policy response
- Abrupt global slowdown:
  - Direction: Downside
  - Relative likelihood: Medium
  - Impact: High
  - Policy response: Reprioritize government spending to support the most vulnerable; implement structural reforms to reinvigorate growth; monitor closely the banks’ balance sheets for potential vulnerabilities.
- Intensification of regional conflicts (e.g., Gaza/Israel, Russia/Ukraine):
  - Direction: Downside
  - Relative likelihood: High
  - Impact: High
  - Policy response: Increase targeted support to the most vulnerable and avoid broad-based food and fuel subsidies; reduce reliance on imported food and fuel over the medium term by investing in renewable energy generation and domestic food production.
- Commodity price volatility:
  - Direction: Downside
  - Relative likelihood: High
  - Impact: Medium
  - Policy response: Reprioritize government spending to support the most vulnerable; avoid broad-based subsidies; invest in renewable energy generation and domestic food production; monitor closely the banks’ balance sheets.
- Higher frequency and severity of natural disasters related to climate change:
  - Direction: Downside
  - Relative likelihood: Medium
  - Impact: High
  - Policy response: Enhance ex-ante preparedness and risk reduction strategies; invest in resilient infrastructure; strengthen financial and post-disaster resilience.
- Further pressure on Correspondent Banking Relationships (CBRs):
  - Direction: Downside
  - Relative likelihood: Medium
  - Impact: High
  - Policy response: Strengthen the AML/CFT framework; monitor CBRs and communicate with global banks and standard setters.
- Social discontent and political instability:
  - Direction: Downside
  - Relative likelihood: Medium
  - Impact: Medium
  - Policy response: Implement targeted measures to support vulnerable households and businesses.

*Source: 1blzea2024001 - 5. Debt consolidation across sectors.*

### Annex VI. Estimating an Appropriate Fiscal Rule for Belize

### Annex VI. Estimating an Appropriate Fiscal Rule for Belize

### Background and recent debt dynamics
- Public debt increased from 30 percent of GDP in 1995 to 78 percent in 2019, driven by persistent fiscal deficits and low nominal GDP growth.  
- Public debt peaked at 103 percent of GDP in 2020 following the pandemic-induced contraction and large fiscal deficit.  
- Reforms and recovery reduced public debt to 67 percent of GDP in 2022.  
- Public debt remained broadly unchanged at 66 percent of GDP in 2023 due to higher interest rates on existing and new external debt, slower nominal GDP growth, and the settlement of outstanding claims and the acquisition of the Port of Belize.  
- With a higher real interest rate – growth differential, public debt is projected to decline more slowly and is expected to remain above 50 percent of GDP until 2034 under current policies.  
- Simulations indicate public debt could breach the authorities’ 70 percent of GDP debt target (presented in the 2021 Medium-term Recovery Plan) with more than 5 percent probability under potential shocks.

### Recommended fiscal rule design and operationalization
- Policy objective:
  - Target a public debt-to-GDP ratio of 50 percent by 2030.  
- Operational mechanism:
  - Operationalize the debt anchor via a primary balance target.  
  - Raise the primary balance from 1.2 percent of GDP in FY2023 to around 2 percent of GDP starting in FY2025.  
- Rationale:
  - A 50 percent public debt-to-GDP target is aligned with the average for emerging market economies with investment grade sovereign credit ratings.  
  - Given the historical distribution of shocks, this target would keep public debt below 70 percent of GDP with 95 percent probability over the medium term if implemented.  
- Tradeoffs and priorities:
  - The rule should prioritize sustainability and simplicity over short-term stabilization.  
  - Choice of medium-term and operational targets should reflect tradeoffs among simplicity, sustainability, budget guidance, macroeconomic volatility, and enforceability.

### Flexibility, shock response, and enforcement
- Escape clause:
  - Include a well-defined escape clause to allow temporary deviations in exceptional circumstances (for example, large climate-related disasters) while preventing abuse.  
  - Activation should be limited to exceptional cases and require a clear, time-bound plan to return public debt to its medium-term target once shock effects dissipate.  
- Automatic adjustment mechanism:
  - Include an automatic adjustment mechanism that prescribes required fiscal adjustments based on accumulated deviations from the primary balance target (example cited: Jamaica).  
  - The mechanism would reduce uncertainty about the future fiscal path and ensure public debt returns to the 50 percent target by 2030, allowing for short-run deviations followed by stronger primary balances.

### Climate risks, contingency funding, and resilient investment
- Natural disaster response and buffers:
  - Providing relief and reconstruction after large climate-related disasters will typically require a temporary rise in expenditure and a reduction in revenue, lowering the primary balance and raising public debt.  
  - Establishing a contingency fund of 1 percent of GDP to respond to high-frequency low-severity climate-related disasters would allow immediate financing of recovery without issuing new debt.  
  - A 1 percent of GDP contingency fund could justify a 1 percent of GDP higher long-term debt target, since part of disaster response would be financed from the fund rather than by issuing debt.  
- Infrastructure resilience:
  - Investing more in resilient infrastructure would mitigate future damages and lower required fiscal buffers over the long term.  
  - The mapping from resilient infrastructure investment to reduced fiscal buffers depends on the type and location of investment and requires careful assessment of expected disaster impacts.  
- Staff sensitivity:
  - Staff estimates that more frequent and severe climate-related disasters could justify targeting a reduction of public debt to 45 percent of GDP over the medium term.

### Implementation and institutional considerations
- Rule design principles:
  - The fiscal rule should be simple, ensure long-term debt sustainability, provide clear budget guidance, avoid exacerbating economic volatility, be difficult to abandon after shocks, and be easy to monitor and enforce.  
- Legal and institutional support:
  - Successful implementation requires a strong legal and institutional framework and buy-in from politicians and the public.  
- Monitoring:
  - The rule should be transparent and accompanied by monitoring and enforcement mechanisms to maintain credibility.

*Source: Annex VI. Estimating an Appropriate Fiscal Rule for Belize (IMF staff analysis).*

### 5. To tap into this source of growth, the Belizean authorities should implement measures

### 1blzea2024001 - 5. To tap into this source of growth, the Belizean authorities should implement measures

### Policies to increase female labor force participation and reduce labor-market gender biases
- Recommended policy measures:
  - Enhance access to education and health for women.
  - Subsidize childcare services.
  - Improve parental leave policies (both maternal and paternal).
  - Analyze whether tax policies distort incentives for secondary income earners, which in many cases are women.
  - Consider improving service and administrative procedures for MSMEs, which are also predominantly owned by women.
- Implementation approach:
  - Given fiscal costs and uncertain impact, start with pilot programs that could be expanded if successful.

### Estimated gains and important caveats on timing and assumptions
- The estimates of output gains in this annex should be considered as upper bounds of long-run gains from reducing gender gaps rather than immediate gains.
- Timing and transmission:
  - Labor market policies that incentivize female labor force participation and enhance female human capital would take time to implement and even longer to yield significant dividends.
  - Policies may not fully eliminate the gender gaps in the labor market.
- Labor market absorption and capital:
  - The estimated output gains assume the domestic labor market can absorb the increase in the labor force without a rise in unemployment or a fall in the cost of labor relative to capital, which is likely possible in the long run.
  - In the near to medium term, a large increase in the labor force is likely to lead to temporarily higher unemployment and lower wages.
  - The analysis assumes that the capital stock will increase in line with employment, which may require significantly higher investment over a prolonged period.

### Quantified approach-2 gains in GDP from closing gender gaps (In percent)
- Approach 2: Gains in GDP from Closing Gender Gaps (In percent)
  - Labor force participation: 22.3
  - Unemployment rate: 23.6
  - Hours worked: 1.1
  - Total: 0.3

### External sector assessment—key findings and policy implications
- Overall assessment:
  - Belize’s external position in 2023 was stronger than the level implied by fundamentals and desirable policies.
  - The estimated current account gap in 2023 is 2.5 percent of GDP, larger than the gap of –1.1 percent of GDP estimated in 2022, reflecting a sharp improvement in the current account balance in 2023 led by lower shipping costs and higher tourism receipts.
  - International reserves are projected to remain above 3 months of imports and short-term external debt, but below the ARA metric.
  - The risk of capital outflows remains modest as most external debt is with official creditors.
- Potential policy responses to strengthen the currency peg and external position:
  - Increase the level of international reserves closer to the ARA metric via fiscal consolidation and structural reforms that increase competitiveness and exports and attract FDI.
  - Invest in infrastructure to improve road connectivity, water and sewage systems, and build resilience to climate change and related disasters to help agriculture and tourism grow and become more interconnected.
- Foreign assets and liabilities (2023):
  - NIIP: -111 (percent of GDP)
  - Gross Assets: 28 (percent of GDP)
  - Debt Assets: 9 (percent of GDP)
  - Gross Liab.: 139 (percent of GDP)
  - Debt Liab.: 41 (percent of GDP)
  - Gross liabilities amounted to 139 percent of GDP in 2023, with external debt amounting to 41 percent of GDP and FDI to 85 percent of GDP.
  - Gross assets totaled 28 percent of GDP, with reserve assets amounting to 15 percent of GDP and other investment to 9 percent of GDP.
  - Belize’s NIIP improved from –167 percent of GDP in 2020 to –111 percent of GDP in 2023.
- Current account:
  - The current account balance rose from –8.3 percent of GDP in 2022 to –2.9 percent in 2023 led by an increase of 3.9 percent of GDP in the services balance and a rise of 1.1 percent of GDP in the primary income balance.
  - Going forward, the CAB is projected to stabilize at around –2.4 percent of GDP.
  - The CA model estimates a current account norm of –5.6 percent of GDP, while the cyclically-adjusted CAB is –3.0 percent of GDP, implying a current account gap of 2.5 percent of GDP and a real effective exchange rate undervaluation of 7.3 percent.
  - The current account gap places Belize in the range of [2, 4] percent of GDP.
- Real exchange rate:
  - Belize’s REER appreciated by 0.8 percent in 2023 as a 2.0 percent nominal effective exchange rate appreciation was partly offset by a lower inflation rate in Belize than in its trading partners.
  - The REER model estimates an undervaluation of 0.9 percent; staff gives more weight to the CA model because it imposes multilateral consistency.
- Capital and financial accounts:
  - The capital and financial accounts balance declined from 7.4 percent of GDP in 2022 to 2.7 percent in 2023, reflecting declines of 3.4 percent of GDP in FDI flows and 1.3 percent of GDP in other investment flows.
  - Projected international reserves are expected to increase in nominal terms and remain broadly stable at 3.5 months of imports.
  - There are no major risks of capital outflows from nonresidents as Belize is de facto excluded from the international capital market and the government relies on multilateral and bilateral loans; risk of outflows from residents is limited because of existing capital controls.
  - FDI inflows could be lower than in the baseline scenario if adverse shocks hurt the tourism sector or if external financing for FDI projects increases further or remain high for longer than currently expected.
- FX intervention and reserves level:
  - Gross international reserves stood at US$474 million or 3.4 months of imports at end-2023, US$196 million above the level in 2019.
  - The increase in reserves since 2019 reflects large official loans to the government, robust FDI inflows, and the IMF SDR allocation in 2021.
  - No intervention data is published by the Central Bank, but the authorities maintain a fixed exchange rate against the US dollar.
  - Raising the level of international reserves closer to the ARA metric would strengthen the currency peg; doing so requires fiscal consolidation, structural reforms, and infrastructure investment.
  - Note: The ARA metric overestimates the risk of capital outflows from nonresidents and residents in Belize because most external debt is with multilateral and bilateral creditors and resident outflows are mitigated by existing capital controls and central bank tools.

_Prepared by Western Hemisphere Department; Staff Report for the 2024 Article IV Consultation—Informational Annex (April 24, 2024)._

### Annex I for more details). While the new series is an improvement over the previous sources and

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_Source: https://www.imf.org/-/media/files/publications/cr/2024/english/1blzea2024001.pdf_