Tonight in Economic Indicators, we focus on the Inter-American Development Bank. This week, Prime Minister Dean Barrow announced that the US Treasury blocked the Inter-American Development Bank from disbursing a loan request to Belize. The Bank plays a crucial role in opening up economies to foreign direct investment and in strengthening property rights to allow private sectors to flourish.
The IDB, like any other multilateral agency such as the International Monetary Fund, also expects from its members fiscal discipline, expenditure management and public debt sustainability. Its objectives are geared to boost macroeconomic stability through fiscal measures to grow revenues and curtail spending. How does Belize fare with these measures? It is safe to say that because of the high debt burden there is not in place an appropriate or concrete framework that is consistent with fiscal sustainability.
There are also insufficient fiscal measures to boost revenue or fiscal discipline to ensure that fiscal targets are met. Public debt sustainability and inability to meet debt obligations have led the country into technical default. As a result, the country’s capacity to maintain or gain flow of financing from its multilateral partners is weak. Of its forty-eight members, there are twenty-six borrowing members, all of them in Latin America and the Caribbean. The remaining twenty-two are non borrowing, meaning that they provide capital and have voting representation in the Bank’s Board of Governors.
The IDB’s non-borrowing members include the United States, Canada, Japan, Israel, the Republic of Korea, the People’s Republic of China, and sixteen European countries: Austria, Belgium, Croatia, Denmark, Finland, France, Germany, Italy, The Netherlands, Norway, Portugal, Slovenia, Spain, Sweden, Switzerland and the United Kingdom.Channel 5