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Jun 16, 2017

I.M.F. Says More Must Be Done for Belize’s Economy

The International Monetary Fund has concluded its annual Article Four consultative visit to Belize, held from June sixth to fifteenth. It has issued its preliminary findings, which speak of a weak economy. The summary of their conclusions is as follows: “The economy is expected to return to positive growth in 2017, but the medium term outlook remains weak. Public debt remains elevated, despite the cash flow relief and NPV gain from the recent debt restructuring agreement with private external bondholders; and the current account deficit is sizable. While the tightening of the fiscal stance in the context of the 2017-18 budget is welcome, in the view of the team, further fiscal consolidation is necessary to mitigate risks and put public debt on a clear downward path, and to facilitate external adjustment. Withdrawal of Correspondent Banking Relationships and low capital buffers in a major bank remain key risks to financial stability.”  The I.M.F. team says Belize needs to supplement its fiscal adjustment with other measures, including streamlining the wage bill, broadening the base of the General Sales Tax, implementing a fiscal rule to lower public debt to GDP ratio to sixty percent like in other Caribbean countries, and introducing more technological platforms to make Government service more effective. It notes that unemployment has gone up from eight to eleven percent of the available labour force and that Belize is slipping in the rankings of the ease of doing business.

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