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#468331 - 07/17/13 10:43 AM IMF pleased with economic performance of Belize
Marty Offline
The International Monetary Fund (IMF) says the completion of the exchange of the “super bond” for new United States denominated bonds has brought “substantial cash-flow relief” to Belize. The IMF, which recently concluded a review of the country’s economy, said that the new bonds, which will expire in 2038, has resulted in a cash flow of US$130 million over the next five years.

Last December, the Dean Barrow government said it had reached an agreement with its creditors on restructuring the country's US$544 million foreign debt, also known as the super bond. Prime Minister Barrow described the agreement as “comprehensive” adding “it is sustainable, and it will provide well in excess of US$150 million in relief to Belize”.

Last year, bondholders had rejected an offer from the Caribbean Community (CARICOM) country on restructuring the debt and said they had hired lawyers after the expiry of a reprieve on legal action. Belize, which said it could not afford to meet rising interest payments on the bond, shocked investors with an earlier suggestion that they take a haircut of up to 45 per cent.

The IMF said that the debt restructuring took place against prolonged legal disputes over the nationalization of two utility companies, Belize Telemedia Limited (BTL) and Belize Electricity Limited (BEL), and that no agreement has been reached yet over compensation payments. It said that the legal dispute may take a few years in court. The IMF said that the output growth for Belize is estimated at 5.3 per cent in 2012, led by a recovery from the 2011 effects of weather-related damages in commodity exports.

Inflation averaged 1.4 per cent, as commodity price pressures abated, but the IMF said the external current account deficit widened to about 1.7 per cent of Gross Domestic Product (GDP) due to a steep drop in oil exports and higher imports of fuel and electricity. “Notwithstanding this deterioration, international reserve coverage is estimated at 3.4 months of imports up from three months in 2011, thanks in part to strong foreign direct investment inflows in the sugar sector. Unemployment remains high at 16 per cent.”

The Washington-based financial institution said that the fiscal primary surplus for the fiscal year 2012/13 is expected to deteriorate to 1.3 per cent of GDP compared to 2.3 per cent of GDP in 2011. “This deterioration largely reflects the continued decline in oil-related revenues and an increase in the wage bill, despite robust growth in General Sales Tax (GST) revenue.”

But it said after two years of decline, credit to the private sector recovered modestly in 2012 and that high non-performing loans (NPLs) in the banking system - 20 per cent of total loans at end-2012 - and loan write-offs continue to hold back private sector credit growth, estimated at 1.1 per cent, and are eroding banks’ net earnings. The IMF said that despite the acceleration in economic activity in 2012, output growth is expected to moderate to about 2.5 per cent in the medium term.

It said that the primary surplus is projected at one per cent of GDP in the next fiscal year with public debt expected to decline to about 75 per cent of GDP at end-2013, reflecting, in part, the net face value haircut of three per cent from the recent debt exchange.

“The government may face large financing needs over the medium term largely associated with compensation to the former shareholders of nationalized companies, pending legal rulings. The external current account deficit is projected to widen to about 1.9 per cent of GDP owing to the continued deterioration in crude oil exports and rising imports. The reserve coverage would remain at around 3 months of imports by end-2013,” the IMF said.

The IMF said it was pleased nonetheless with the economic performance of the Caribbean Community (CARICOM) country based also on the successful completion of the external debt exchange.


“These positive developments notwithstanding,” the IMF noted that Belize’s economy still faces substantial challenges and vulnerabilities” and has encouraged the authorities to take advantage of the existing breathing space to rebuild policy buffers, pursue active debt management, accelerate financial sector reform, and buttress the economy’s resilience to external shocks.

The IMF welcomed the authorities’ plans to revamp the debt management framework and encouraged continued efforts to develop a more robust debt management, strengthen the institutional framework, and build capacity to implement a medium term debt management strategy. “Options to develop the domestic debt market should also be explored to mobilize domestic financing,” the IMF said.

Guardian Media

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#468332 - 07/17/13 10:49 AM Re: IMF pleased with economic performance of Belize [Re: Marty]
Marty Offline

IMF - International Monetary Fund : Press Release: IMF Executive Board Concludes 2013 Article IV Consultation with Belize

On June 21, 2013, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Belize.

The Belize government's completion of the exchange of its "super-bond" for new U.S. dollar denominated bonds due to expire in 2038 brought substantial cash-flow relief (about US$130 million over the next 5 years). The debt restructuring took place against prolonged legal disputes over the nationalization of two utility companies, Belize Telemedia Limited (BTL) and Belize Electricity Limited (BEL). No agreement has been reached yet over compensation payments; and the legal dispute may take a few years in court.

Output growth is estimated at 5.3 percent in 2012, led by a recovery from the 2011 effects of weather-related damages in commodity exports. Inflation averaged 1.4 percent, as commodity price pressures abated. The external current account deficit widened to about 1.7 percent of Gross Domestic Product (GDP) due to a steep drop in oil exports and higher imports of fuel and electricity. Notwithstanding this deterioration, international reserve coverage is estimated at 3.4 months of imports up from 3 months in 2011, thanks in part to strong foreign direct investment inflows in the sugar sector. Unemployment remains high at 16 percent.

The fiscal primary surplus for FY2012/13 (March 31- April 1) is expected to deteriorate to 1.3 percent of GDP compared to 2.3 percent of GDP in 2011. This deterioration largely reflects the continued decline in oil-related revenues and an increase in the wage bill, despite robust growth in General Sales Tax (GST) revenue.

After two years of decline, credit to the private sector recovered modestly in 2012. High non-performing loans (NPLs) in the banking system-20 percent of total loans at end-2012-and loan write-offs continue to hold back private sector credit growth, estimated at 1.1 percent, and are eroding banks' net earnings. Broad money grew by 5 percent, mostly driven by expansion in net foreign assets. New provisioning and loan classification standards implemented by the central bank at end-2011 have resulted in declining NPLs in the banking system and improving provisioning.

Despite the acceleration in economic activity in 2012, output growth is expected to moderate to about 2.5 percent in the medium term. The primary surplus is projected at 1 percent of GDP in FY13/14, with public debt expected to decline to about 75 percent of GDP at end-2013, reflecting, in part, the net face value haircut of 3 percent from the recent debt exchange. The government may face large financing needs over the medium term largely associated with compensation to the former shareholders of nationalized companies, pending legal rulings. The external current account deficit is projected to widen to about 1.9 percent of GDP owing to the continued deterioration in crude oil exports and rising imports. The reserve coverage would remain at around 3 months of imports by end-2013.

Executive Board Assessment

Executive Directors congratulated the authorities on the strong economic performance last year and the successful completion of the external debt exchange. These positive developments notwithstanding, Directors noted that Belize's economy still faces substantial challenges and vulnerabilities. They encouraged the authorities to take advantage of the existing breathing space to rebuild policy buffers, pursue active debt management, accelerate financial sector reform, and buttress the economy's resilience to external shocks.

Directors underscored the need to sustain the momentum of fiscal consolidation while protecting spending in such priority areas as infrastructure, internal security, and social programs. They stressed that raising the primary surplus to levels consistent with debt sustainability would require strong adjustment efforts, including moderating wage increases and broadening the base for the general sales tax. Over the medium term, it will be important to strengthen public financial management and implement a tax reform that promotes growth and fairness. Directors recommended that the authorities avoid the earmarking of funds, and put in place appropriate safeguards for public resources should they be used for the creation of a specialized mortgage bank. Given uncertainties surrounding the potential liabilities associated with the nationalization of public companies and other contingent liabilities, Directors encouraged the authorities to take additional measures as necessary, with a view to ensuring fiscal sustainability.

Directors welcomed the authorities' plans to revamp the debt management framework. They encouraged continued efforts to develop a more robust debt management, strengthen the institutional framework, and build capacity to implement a medium-term debt management strategy. Options to develop the domestic debt market should also be explored to mobilize domestic financing.

Executive Directors welcomed progress on financial sector reforms. However, given the remaining vulnerabilities, including the still high nonperforming loans, they called for continued vigilance, close monitoring of individual institutions, and intensified efforts to implement the remaining recommendations of the 2011 Financial Sector Assessment Program (FSAP). It will also be important to update the crisis management plan and the bank restructuring and resolution framework, making use of technical assistance from the Fund. Directors also saw a need to further strengthen the Anti Money Laundering/Combating the Financing of Terrorism framework.

Directors concurred that, while the fixed exchange rate has provided an important anchor for macroeconomic policies, efforts are needed to tackle Belize's widening current account deficits and relatively low international reserves. They called on the authorities to advance structural reforms, focusing on removing impediments to private investment, boosting competitiveness and jobs, and promoting inclusiveness and the diversification of exports and energy sources.

Source


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#468625 - 07/20/13 10:38 AM Re: IMF pleased with economic performance of Belize [Re: Marty]
Marty Offline

IMF TELLS GOB TO MODERATE WAGE INCREASES AND BROADEN GENERAL SALES TAX BASE

It recommends “protecting spending” on infrastructure, internal security, and social programs

Amid calls from the trade unions for wage adjustments for public officers, the International Monetary Fund has issued a statement following the conclusion of its annual Article IV Consultation with Belize on June 21, 2013, in which it calls on the Government of Belize to moderate wage increases and broaden the general sales tax base.

Furthermore, it recommends “protecting spending in such priority areas as infrastructure, internal security, and social programs.”

“[IMF Directors] stressed that raising the primary surplus to levels consistent with debt sustainability would require strong adjustment efforts, including moderating wage increases and broadening the base for the general sales tax. Over the medium term, it will be important to strengthen public financial management and implement a tax reform that promotes growth and fairness,” the report said.

The IMF executive directors, said the report, congratulated Belize authorities on the strong economic performance last year, as well as the successful completion of the external debt exchange.

“The Belize government’s completion of the exchange of its ‘super-bond’ for new US dollar denominated bonds due to expire in 2038 brought substantial cash-flow relief (about US$130 million over the next 5 years),” said the IMF statement.

According to the report, “…public debt [is] expected to decline to about 75 percent of GDP at end-2013, reflecting, in part, the net face value haircut of 3 percent from the recent debt exchange.”

It added that the restructuring took place against the backdrop of prolonged legal disputes over the nationalization of two utility companies: Belize Telemedia Limited (BTL) and Belize Electricity Limited (BEL)—for which, it noted, no agreement has been yet reached over compensation payments.

“The government may face large financing needs over the medium-term, largely associated with compensation to the former shareholders of nationalized companies, pending legal rulings,” the IMF statement said. It projected that “the legal dispute may take a few years in court.”

Notwithstanding the success with the debt exchange, the Directors said that Belize’s economy still faces substantial challenges and vulnerabilities.

“They encouraged the authorities to take advantage of the existing breathing space to rebuild policy buffers, pursue active debt management, accelerate financial sector reform, and buttress the economy’s resilience to external shocks,” the report said.

The report also highlights plans by the Barrow administration to set up a national bank and says that, “Directors recommended that the authorities avoid the earmarking of funds, and put in place appropriate safeguards for public resources, should they be used for the creation of a specialized mortgage bank.”

It also pointed to the overall economic picture, saying that output growth is estimated at 5.3% in 2012, led by a recovery from the 2011 effects of weather-related damages in commodity exports.

“Despite the acceleration in economic activity in 2012, output growth is expected to moderate to about 2.5 percent in the medium term,” it said.

GDP growth is expected to slow to 2.5% in 2013, with the nominal GDP reaching US$1.6 billion, and unemployment remains high at 16 percent, said the IMF report.

The high rate of non-performing loans was also highlighted in the report:

“High non-performing loans (NPLs) in the banking system—20 percent of total loans at end-2012—and loan write-offs continue to hold back private sector credit growth, estimated at 1.1 percent, and are eroding banks’ net earnings,” the IMF report said, noting, though, that new provisioning and loan classification standards implemented by the Central Bank at end-2011 have eased the levels of NPLs.

Amandala


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#468867 - 07/24/13 10:56 AM Re: IMF pleased with economic performance of Belize [Re: Marty]
Marty Offline
IMF's Belize Staff Report for the 2013 Article IV Consultation
[Jul-23-13 - pdf - 67 Pages]

The staff report for the 2013 Article IV Consultation prepared by a staff team of the
IMF, following discussions that ended on April 18, 2013, with the officials of Belize
on economic developments and policies. Based on information available at the time
of these discussions, the staff report was completed on June 5, 2013. The views
expressed in the staff report are those of the staff team and do not necessarily
reflect the views of the Executive Board of the IMF.

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