Statement by the IMF Mission at the Conclusion of the 2007 Article IV Discussion with BelizePress Release No. 07/287
December 13, 2007
An International Monetary Fund (IMF) mission headed by Przemek Gajdeczka, Advisor in the IMF's Western Hemisphere Department, issued the following statement on December 13, 2007 at the end of its discussions in Belize City:
"During the past two weeks, as part of its routine annual Article IV consultation with Belize, an IMF team met with government officials and private sector representatives to review recent economic and financial developments and to discuss economic prospects and policies.
"Economic growth was boosted in 2006 by new oil discoveries and strong exports and, following a debt restructuring of early 2007, near-term macroeconomic prospects are broadly favorable. The economy is projected to grow by 2¼ percent in 2007, and inflation is expected at 3 percent. For 2008, real GDP growth is projected at about 3 percent, and inflation is expected to ease to 2½ percent. The successful implementation of the General Sales Tax boosted government revenue, although the fiscal deficit in the fiscal year ending March 2008 is projected to be somewhat larger than originally targeted. International reserves have remained broadly unchanged since last year. On the structural front, the consolidation of the operations of the Development Finance Corporation has advanced, and the newly established Petroleum Revenue Management Fund is expected to enhance transparency and intergenerational equity in the use of natural resources.
"The discussions centered on macroeconomic policies needed to reduce fiscal and external vulnerabilities. It was recognized that, although the debt agreement of early 2007 had provided substantial liquidity relief, Belize's high debt, vulnerable budget position and low reserves could affect financial stability and growth. An ambitious 2008/09 budget would signal commitment to fiscal consolidation. Over the medium term, fiscal policies aimed at substantially lowering debt ratios would ease access to market financing on favorable terms, especially when maturities on the recently restructured debt begin falling due and gross financing requirements will increase substantially. Rapid progress in fiscal structural reforms, including in the areas of revenue administration, multi-year budget planning, and debt management would support this effort.
"The IMF team supported the recent measures by the Central Bank of Belize to control domestic liquidity, and encouraged early introduction of market-based instruments of monetary management. These reforms combined with tight financial policies would support a gradual build-up of international reserves, which remain low by international standards.
"The mission thanks the authorities and private sector representatives for fruitful discussions and for their warm hospitality."
On its return to Washington D.C., the team will prepare a staff report that is tentatively scheduled to be discussed by the IMF's Executive Board in February/March. It is expected that the staff report will soon thereafter be made public on the IMF's website.