Mission Concluding Statement 

Washington, DC: An International Monetary Fund team led by Metodij Hadzi-Vaskov held discussions for the 2025 Article IV consultation with Belize during July 1—11. The team met with Mr. John Briceño, Prime Minister; Mr. Christopher Coye, Minister of State; Mr. Joseph Waight, Financial Secretary; Mr. Kareem Michael, Governor of the Central Bank; and other senior government officials, representatives of the opposition, the private sector, and labor unions.

After a remarkable recovery following the pandemic, preliminary economic data points to subdued growth in the near term while inflation has decelerated, and the public debt-to-GDP ratio has declined sharply. Growth is expected to converge to its potential of about 2 percent over the medium term, reflecting capacity constraints. In an unchanged policies scenario, the public debt-to-GDP ratio is projected to fall more slowly, requiring additional fiscal consolidation and growth-enhancing structural reforms to reduce debt to 50 percent of GDP by 2030. Policy priorities include revenue mobilization and reprioritization of expenditure; greater spending in priority areas; expanded access to finance; accelerating growth-enhancing and structural reforms; and building resilience to natural disasters.

Recent Developments, Outlook, and Risks

1. Belize’s economy has recovered strongly following the pandemic, supporting improvements in social outcomes and financial stability. After expanding by a cumulative 27.6 percent between 2021 and 2023, real GDP grew by 8.1 percent in 2024, driven by tourism, trade, and transport. Consequently, the poverty rate declined substantially to 22 percent in 2024, from 36 percent in 2021, according to the multidimensional poverty index. The strong economic recovery, combined with the prudent management of public sector wages and a sharp rebound in government revenues, improved the primary fiscal balance to 1.7 percent of GDP in FY2024. Consequently, public debt fell sharply to 61.1 percent of GDP by end-2024 from 103.3 percent of GDP in 2020, supported as well by a debt-for-marine protection swap and a negotiated discount on Belize’s Petrocaribe debt. Financial stability risks have declined, following the accumulation of additional tier 1 capital among vulnerable banks and a decline in aggregate nonperforming loans. Staff’s preliminary analysis suggests Belize’s external position in 2024 was stronger than the level implied by fundamentals and desirable policies.
2. Growth is expected to slow considerably in the near term before converging to its potential of about 2 percent over the medium term. Staff projects growth to decelerate to 1.5 percent in 2025 in line with the observed slowdown in stayover visitor arrivals growth and weak agricultural sector performance as a result of unfavorable weather conditions and fungal disease affecting sugarcane. Growth is expected to recover in 2026, before gradually moderating to 2 percent over the medium term, absent increased hotel and flight capacity. Staff expects inflation to decline further to 1.3 percent over the medium term as inflationary pressures from major trading partners and oil prices subside. Public debt is expected to fall more slowly as a percentage of GDP, reflecting slower nominal growth and higher spending on salaries. The current account deficit is expected to moderate to about 1.2 percent of GDP over the medium term, largely on account of lower oil prices. Staff projects a gradual increase in international reserves to about 4 months of imports, albeit not reaching the ARA metric by 2030.
3. Staff assesses risks to the outlook as tilted to the downside. External downside risks stem from higher global policy uncertainty and increased trade barriers—which would weigh on Belize’s growth and current account—and higher-for-longer global interest rates. Domestically, increased or sustained climate-related disasters could cause severe damage to the agriculture, energy, and tourism sectors. A slowdown in the economy could also increase risks to the financial sector. However, the implementation of several large infrastructure projects—particularly in the energy, utilities, and transport sectors—could push growth higher over the medium term.

Policy Priorities

4. The policies implemented by the authorities have been broadly consistent with staff advice and technical assistance recommendations. Legislative amendments to allow for the introduction of electronic tax invoicing, new penalties for tax noncompliance, and a requirement that all taxes are paid before the sale of any entities or businesses have sought to improve tax administration. The central bank has reduced its holdings of government securities and increased the level of international reserves. The passage of the Fiscal Incentives Act—which encourages the formalization of firms—and the establishment of the collateral registry have the potential to increase firms’ access to credit. The central bank also required vulnerable banks to accumulate additional tier 1 capital to reduce financial stability risks. However, reforms to the Pension Plan for Public Officials (PPPO) have been delayed. Going forward, the authorities remain committed to making use of capacity development to further strengthen institutions and the policy framework.
5. Reducing public sector debt to below 50 percent of GDP would help build fiscal buffers against adverse shocks. This would require gradually increasing the primary surplus to 2 percent of GDP by FY2026, supported by:

• Greater revenue mobilization. This could be achieved by broadening the base of the General Sales Tax, raising specific taxes and fees, and improving revenue administration;
• Reprioritization of current expenditure through reforms to the PPPO to reduce the present value of future deficits and lower fiscal risks; and
• Expanding priority spending on targeted social programs, infrastructure, and crime prevention.

This adjustment should be part of a broader medium-term fiscal strategy with clear targets and measures, which—combined with improvements to public financial management—would enhance its credibility and lay the foundation for the development of a well-designed fiscal responsibility law with specific fiscal rules.

6. Accelerating the implementation of growth-enhancing structural reforms would foster job creation and boost potential growth. Belize’s potential growth has significantly declined over the past decade, driven in part by negative growth in total factor productivity in the period since the global financial crisis up to the COVID-19 pandemic. Expanding ongoing efforts to address structural barriers and promote growth remains a key priority. In particular:

• Strong economic activity in the services sector requires more and better skilled labor. The demographic push, which has been a consistent driver of Belize’s growth over the past decades, is expected to diminish over time. The authorities recognize constraints to growth resulting from the tight labor market and are devising various initiatives to address these challenges, including improving intermediation services to help match job seekers to job vacancies, engaging with the private sector to reduce skill mismatches, and introducing legislative amendments regarding seasonal migrant workers. Policies that aim at increasing female labor force participation, including enhancing childcare and education, would support the strong economic activity in the services sector and mitigate the expected impact from decelerating population growth.
• Addressing key bottlenecks in the tourism sector is necessary to accelerate growth in stayover arrivals and support tourism growth over the medium term. Priorities include developing road infrastructure to ease cross-district transportation and expanding flight capacity.
• The degree of resource misallocation among firms in Belize is one of the highest in the Caribbean, leading to lower aggregate productivity. Continued efforts to improve the business climate and address structural barriers, in particular reforms to improve firms’ access to finance, business license and permits processes, tax administration, and workforce education, would help foster productivity growth and job creation.
• Rising sea levels, hurricanes, floods, droughts, and coastal erosion pose significant threats to the economy, particularly to tourism, agriculture, and energy. Given Belize’s vulnerability to natural disasters, continued efforts to enhance resilience to natural disasters remains essential. The authorities have made considerable progress toward building resilience, including plans to invest in a battery energy storage system and renewable energy, and developing a Climate Finance Strategy. In this context, adoption of a Disaster Resilience Strategy to complement the National Preparedness and Response Plan would further help to provide a coherent guide to the authorities’ efforts and could help facilitate coordination of donor support.

7. Strengthening the currency peg requires accumulating additional international reserves. Successfully implementing structural reforms and fiscal consolidation—combined with a gradual reduction in the central bank’s large stock of government securities—is crucial to accelerating official reserve accumulation. Combining this with reforms to develop the domestic capital market, including the introduction of a fully market-based auction for Treasury Notes, would also increase the government’s access to domestic private sector finance and help to reduce excess liquidity in the financial system. Such reforms would also provide opportunities for the Social Security Board to reduce the share of cash instruments in their investment portfolio, improving the General Social Security Scheme’s long-term viability.
8. Improving the private sector’s access to finance and enhancing the financial safety net should be key policy priorities. Accelerating growth in private sector credit could be supported by initiatives to:

• Increase the demand for credit from domestic firms and households. Savings deposits at domestic banks are subject to a regulatory 2½ percent floor on interest earned, while lending spreads are widest among the largest and most liquid banks. Removing this floor and supporting greater competition among domestic banks could reduce private sector borrowing costs, which remain elevated even amid high excess liquidity.
• Removing constraints to expanding the supply of credit. This includes ensuring that domestic banks have sufficient capital above the regulatory requirement, reducing information asymmetries between borrowers and lenders by operationalizing the credit bureau, and expanding access to grants and other non-debt instruments for early-stage firms.

Operationalizing the deposit insurance framework and improving coordination across regulatory agencies would further enhance financial stability.

9. Belize should build on the successful completion of its Anti-Money Laundering/Countering-Terrorism Financing (AML/CFT) assessment with the Caribbean Financial Action Task Force (CFATF). In its report published in January 2025, the CFATF assessed Belize as compliant or largely compliant on all of the FATF’s 40 Recommendations and substantially effective in achieving several immediate outcomes of a sound AML/CFT framework. Going forward, the authorities are encouraged to continue addressing the remaining shortcomings in the AML/CFT framework, including: finalizing and approving the National Risk Assessment; enhancing risk-based supervision; and strengthening the collection of beneficial ownership information of legal entities.

The team would like to thank the authorities and other counterparts for their warm hospitality and constructive policy dialogue.

	Table 1. Belize: Selected Social and Economic Indicators
	I. Population and Social Indicators
Area (sq.km.)		22,860		Human development index (rank), 2022								118
Population (thousands), 2024		410.9		Under-five mortality rate (per thousand), 2021								11.2
GDP per capita, (current US$), 2023		7,587		Unemployment rate (percent), April 2025								2.1
Life expectancy at birth (years), 2021		70.5		Multidimensional poverty (percent of population), 2024								22.1
II. Economic Indicators
						Projections
		2021	2022	2023	2024		2025	2026	2027	2028	2029	2030
National income and prices		(Annual percentage changes, calendar year)
GDP at constant prices		17.7	9.7	1.1	8.1		1.5	2.4	2.2	2.1	2.0	2.0
Consumer prices (end of period)		4.9	6.7	3.7	2.6		1.5	1.3	1.3	1.3	1.3	1.3
Consumer prices (average)		3.2	6.3	4.4	3.3		1.4	1.9	1.3	1.3	1.3	1.3
Central government 1/		(In percent of fiscal year GDP)
Revenue and grants		22.5	22.8	23.2	24.0		24.7	25.0	24.0	24.0	24.0	24.0
Current non-interest expenditure		17.3	16.4	16.3	16.2		16.2	16.6	17.1	16.8	16.8	16.8
Interest payment		1.3	1.7	2.2	2.3		2.3	2.3	2.3	2.3	2.3	2.2
Capital expenditure and net lending		5.2	5.5	7.3	6.1		7.4	7.6	6.4	6.4	6.4	6.4
Capital expenditure		5.1	5.5	7.3	6.0		7.3	7.5	6.3	6.3	6.3	6.3
Net lending		0.1	0.0	0.0	0.1		0.1	0.1	0.1	0.1	0.1	0.1
Primary balance		0.0	0.9	-0.5	1.7		1.1	0.8	0.6	0.8	0.8	0.8
Overall balance		-1.3	-0.8	-2.7	-0.5		-1.2	-1.5	-1.8	-1.5	-1.5	-1.4
Public debt		(In percent of calendar year GDP)
Public debt 2/		82.5	66.8	67.2	61.1		60.4	59.3	59.1	58.7	58.4	58.0
Domestic debt		27.2	23.1	24.6	22.2		21.6	20.5	20.4	20.6	20.9	21.2
External debt		55.3	43.7	42.6	38.9		38.9	38.8	38.7	38.1	37.4	36.8
Principal payment		8.6	5.8	6.7	6.6		7.5	7.9	6.9	6.2	6.1	6.4
Domestic		6.4	4.5	5.1	4.5		5.7	6.2	5.2	4.4	4.4	4.8
External		2.1	1.3	1.6	2.0		1.8	1.7	1.7	1.8	1.7	1.6
		(Annual percentage changes, calendar year)
Money and credit
Private sector credit by commercial banks		2.5	4.4	5.9	4.1		3.2	3.0	3.0	3.0	3.0	3.0
Money and quasi-money (M2)		12.3	4.7	7.0	9.4		2.1	4.4	3.5	3.4	3.3	3.3
External sector		(Annual percentage changes, unless otherwise indicated)
External current account (percent of GDP) 3/		-6.5	-8.3	-0.6	-1.5		-1.5	-1.4	-1.3	-1.2	-1.2	-1.2
Real effective exchange rate (+ = depreciation)		-2.3	2.8	0.2	0.6		…	…	…	…	…	…
Gross international reserves (US$ millions)		420	482	474	498		527	566	599	637	681	721
In months of imports		3.2	3.7	3.3	3.5		3.7	3.7	3.8	3.9	4.0	4.1
Memorandum items
Output gap (percent of potential output)		-5.2	-0.3	-2.4	1.9		0.6	0.4	0.2	0.1	0.0	0.0
Nominal GDP (BZ$ millions)		4,841	5,693	6,134	6,847		7,046	7,356	7,610	7,867	8,125	8,392
Sources: Belize authorities; UNDP Human Development Report; World Development Indicators; and staff estimates and projections.
1/ Fiscal year (April to March).
2/ Public debt includes central government debt as well as external financial and non-financial public sector debt.
3/ Including official grants.