In tonight’s economic indicators we look at the staggering external debt and what it says about the health of the economy. The government is engaged in the restructuring of the super bond and its inability to meet its debt obligations has brought the International Monetary Fund to Belize. In this analysis, we look at the outstanding external debt which has ballooned to well over a billion dollars. Large fiscal deficits and a growing debt burden are critical problems facing the economy. This happens when a government spends more than it earns resulting in a huge fiscal deficit as data from 2000 to 2011 shows.
Disbursed Outstanding Debt in millions of US dollars has risen steadily over the past twelve years since 2000. There was a sharp increase during the period between 2001 and 2006 when it reached almost nine hundred and eighty-six million U.S. dollars, a value of eighty-seven point one percent of G.D.P. in 2005. Since then, the percent ratio of Outstanding Debt to G.D.P. has hovered between eighty-one and seventy-one percent. The data also shows that the outstanding external debt in 2008 rose considerably from one billion U.S. dollars to one billion twenty-two million dollars.
The staggering debt clearly presents a huge problem. As the amount of monies being paid out by far surpasses the amount of money earned and when money is borrowed to pay for consumption, without a prospect of revenue to service and repay the loan. A low public debt is usually an indication of economic health while a high public debt indicates financial troubles for a country. The challenge facing the government is to reduce budget deficits and manage accumulating debt. The country’s credit history plays a prominent role in determining what levels of debt it can sustain without landing on a sovereign debt crisis.