IMF Executive Board Concludes 2024 Article IV Consultation with Belize
IMF News, May 15, 2024
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Bibliographic details
- Published: May 15, 2024
Macroeconomic developments (2022–2023)
- Real GDP growth:
- 2022: 8.7 percent
- 2023: 4.7 percent
- 2023 growth led by tourism, construction, retail and wholesale trade, transport, and business process outsourcing.
- Inflation:
- 2022: 6.3 percent
- 2023: 4.4 percent
- Decline driven by lower prices of transport and utilities, partly offset by higher food inflation.
- Fiscal and debt dynamics:
- Overall fiscal deficit widened in 2023 due to a narrowing of the primary surplus and higher interest payments on the blue loan and other external debt.
- Public debt declined slightly from 67 percent of GDP 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 risks
- Growth and inflation projections:
- Growth projected at 3.4 percent in 2024 and 2.5 percent from 2025 onwards as the output gap closes.
- Inflation projected to fall to 1.3 percent over the medium term in line with expected decline in commodity prices and global inflation.
- Fiscal projections and debt path:
- Primary balance projected to remain at 1.2 percent of GDP from FY2024 onwards under current policies.
- Public debt projected to decline slowly and remain above 50 percent of GDP through 2034 due to slower nominal GDP growth and high global interest rates.
- Key risks to the outlook:
- Higher global food and fuel prices.
- Higher-for-longer global interest rates.
- Climate related disasters.
Executive Board assessment and policy priorities
- Fiscal consolidation 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 this requires implementing 0.8 percent of GDP of fiscal consolidation to raise the primary balance to 2 percent of GDP from FY2025 onwards.
- Anchoring the plan in a well-defined medium-term fiscal strategy and preparing for a Fiscal Responsibility Law with well-designed fiscal rules to enhance credibility.
- Revenue and expenditure measures:
- Potential revenue measures that can raise revenue by 2.2 percent of GDP: broadening the GST base, raising excise taxes, rebalancing manufacturing taxes, and strengthening revenue administration.
- Potential expenditure savings: reforming the PPPO could lower government spending by 0.1 percent of GDP.
- Using these savings to:
- Increase the primary surplus by 0.8 percent of GDP.
- Expand priority spending by 1.5 percent of GDP on infrastructure, targeted social programs, and crime prevention.
- Priority spending areas to boost inclusive and resilient growth:
- 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 increase medium-term growth and resilience:
- Improve business climate: ease access to affordable credit for SMEs (including by establishing a credit bureau and a collateral registry), advance digitalization of land and business registries, and improve firms and government services.
- Develop a disaster resilience strategy (DRS) focusing on strengthening structural, financial, and post-disaster resilience based on a consistent macroeconomic framework to unlock funding for climate mitigation and adaptation and reduce output volatility.
- External position and reserves:
- Belize’s external position assessed as stronger than implied by medium-term fundamentals and desirable policies.
- International reserves projected to remain below the ARA metric.
- Increasing international reserves through fiscal consolidation and structural reforms would strengthen the currency peg, especially given projected rise in external financing needs when repayment of the blue loan starts in 2032.
- Financial sector and AML/CFT:
- Limit central bank financing of the government to reduce excess liquidity and help develop the local capital market.
- Central bank to remain vigilant to financial stability risks, keep vulnerable institutions under enhanced supervision and request recapitalization when needed.
- Continue strengthening the AML/CFT framework and its enforcement, especially in the IFS.
Selected findings and projections (key statistics preserved)
- Population and social indicators:
- Area (sq.km.): 22,860
- Human development index (rank), 2022: 118
- Population (thousands), 2022: 444.8
- Under-five mortality rate (per thousand), 2021: 11.2
- GDP per capita, (current US$), 2023: 6,855
- Unemployment rate (percent), October 2023: 3.4
- Life expectancy at birth (years), 2021: 70.5
- Poverty (percent of total population), 2023: 26.4
- National income and prices (annual percentage changes, calendar year):
- GDP at constant prices: 17.9 (2021); 8.7 (2022); 4.7 (2023); 2.5 (2024)
- Consumer prices (end of period): 4.9 (2021); 6.7 (2022); 3.7 (2023); 2.6 (2024); 1.3 (2025)
- Consumer prices (average): 3.2 (2021); 6.3 (2022); 4.4 (2023); 3.1 (2024); 2.3 (2025)
- Central government (in percent of fiscal year GDP):
- Revenue and grants: 22.5 (2021); 22.8 (2022); 22.9 (2023); 23.2 (2024)
- Current non-interest expenditure: 17.3 (2021); 16.0 (2022); 15.7 (2023)
- Interest payment: 1.7 (2021); 2.2 (2022); 2.1 (2023)
- Capital expenditure and net lending: 5.2 (2021); 5.1 (2022); 6.0 (2023)
- Primary balance: 1.6 (2021); 1.2 (2022)
- Overall balance: -1.3 (2021); -0.1 (2022); -1.0 (2023); -0.9 (2024); -1.1 (2025)
- Public debt (percent of calendar year GDP):
- Public debt 2/: 82.3 (2021); 67.1 (2022); 66.2 (2023); 62.9 (2024); 61.1 (2025); 60.0 (2026); 58.9 (2027); 57.8 (2028); 56.7 (2029)
- Domestic debt: 27.1 (2021); 24.4 (2022); 22.6 (2023); 22.0 (2024); 21.6 (2025); 21.3 (2026); 21.5 (2027); 21.9 (2028)
- External debt: 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)
- Principal payment: 8.6 (2021); 5.8 (2022); 6.6 (2023); 6.5 (2024); 7.2 (2025); 7.1 (2026); 5.7 (2027); 5.6 (2028)
- Domestic principal payment: 6.4 (2021); 4.6 (2022); 5.0 (2023); 3.9 (2024)
- External principal payment: 1.8 (2021); 2.0 (2022); 1.9 (2023)
- Money and credit:
- Private sector credit by commercial banks: 5.9 (2021); 4.2 (2022); 3.0 (2023)
- Money and quasi-money (M2): 12.3 (2021); 4.1 (2022); 3.8 (2023)
- External sector:
- External current account (percent of GDP) 3/: -6.5 (2021); -8.3 (2022); -2.9 (2023); -2.5 (2024); -2.4 (2025); -2.4 (2026)
- Real effective exchange rate (+ = depreciation): -3.3 (2021); 0.8 (2022)
- Gross international reserves (US$ millions): 420 (2021); 482 (2022); 474 (2023); 515 (2024); 539 (2025); 550 (2026); 567 (2027); 585 (2028); 601 (2029)
- In months of imports: 3.5
- Memorandum items:
- Output gap (percent of potential output): -7.3 (2021); -1.9 (2022); -0.2 (2023)
- Nominal GDP (BZ$ millions): 4,849 (2021); 5,661 (2022); 6,187 (2023); 6,592 (2024); 6,913 (2025); 7,177 (2026); 7,453 (2027); 7,738 (2028); 8,035 (2029)
IMF Executive Board Concludes 2024 Article IV Consultation with Belize; May 15, 2024.