IMF sees better days for Belize
A ten day visit by the International Monetary Fund ended on Thursday and a statement has been released by the Mission Chief for Belize, Gerardo Peraza. It starts with the news that in comparison to other Caribbean countries, Belize has weathered well the global economic crisis. The IMF reports an increase in the country’s output for 2010, which is attributed to electricity, wholesale and retail trade. It also notes that inflation for 2010 was at zero and has since risen slightly to point nine percent. There is also potential for growth in 2011 with the expansion of the manufacturing and agriculture sectors as well as improved terms of trade to stabilize foreign reserves. Belize, however, continues to face financial difficulties caused by nonperforming loans, high public debt and growing concerns in the business community. According to the release, the discussions were focused on three critical policy challenges; the first was achieving fiscal consolidation and gradual debt reduction.
The IMF mission says that GOB needs a stronger fiscal stance to reduce its dependence on grants and oil revenues. It also emphasizes the need to the protect public sector balance in light of recent nationalizations and to develop a plan of action to mitigate contingent fiscal liabilities. The second policy challenge is safeguarding financial and monetary stability. On the subject of growth and poverty, the report says that government is making strides by working with the private sector to identify specific measures to improve the business environment, which is critical to support long-term investment and poverty reduction, but there is still a lot to be done. The government says that the IMF report is favorable.
IMF to Belize: reduce dependence on grant and oil revenues
Gerardo Peraza, the International Monetary Fund (IMF) Mission Chief for Belize, released a statement this evening, on conclusion of his team’s 2-week visit to Belize.
The statement said, “...the government needs to adopt a stronger fiscal stance to reduce its dependence on grant and oil revenues, and rebuild macroeconomic buffers to deal with future shocks.”
The statement also said that the IMF mission “...underscored the need to protect the public sector balance from the recently nationalized entities.”
It also spoke of the need to further develop a clear plan of action to ease contingent fiscal liabilities, such as those associated with government-guaranteed debt for public utilities.
The IMF team again addressed the lingering problem of non-performing loans, which continue to put a strain on the banking sector, but which are reflective of continued challenges facing the Belizean economy.
Peraza’s statement said, “...Belize continues to face challenges due to a high the level of nonperforming loans (NPLs)—which require close and continuing monitoring by the Central Bank—high public debt, and concerns about the business environment.”
It said that discussions with officials in Belize were focused on three critical policy challenges facing Belize: achieving fiscal consolidation and gradual debt reduction; safeguarding financial and monetary stability; and strategies for boosting growth and reducing poverty.
The IMF mission in Belize began on August 15 and concluded today, August 25.
It notes that, “Upon its return to Washington, the mission will prepare a staff report that is scheduled to be discussed by the IMF Executive Board in late October.”