IMF warns of devaluation

The Island Newspaper, Ambergris Caye, Belize            Vol. 15, No. 19            May 12, 2005

Features: Search Issues | Read Back Issues | Subscriptions | Merchandise Ordering Information

A few weeks ago, representatives from the Inter Monetary Fund (IMF) visited Belize for follow-up meetings after its Article IV consultation last February. Channel 7 News reported that they obtained a copy of an internal government report that summarizes the IMF's concerns with the Belize economy. According to Channel 7, the document stated, a primary finding of the consultation.was that GOB's (Government of Belize) current fiscal stance is unsustainable and would result in a collapse of the fixed exchange rate regime during 2006.

    The IMF analysis states that the present tax system is not keeping pace with growth. If GOB does not take corrective measures, the Belizean dollar could face devaluation as early as next year, 2006.

    What is the solution? According to IMF, GOB needs to take significant corrective and sharp cost cutting measures as soon as July 1st; measures that go way beyond the tax hike imposed by GOB on March 1st. IMF suggested that GOB increase the average sales tax by 40%, and increase excise rates by 50%. Another recommendation that would help GOB to maintain buoyancy is to adjust tax rates.

    How about expenditure? IMF suggested that GOB cut their present wage bill of $228 million to $225 million and cut back on goods and services by $5 million while cutting back on Capital II spending by $25 million. By putting these recommendations into effect, GOB could save approximately $44 million and by making proper revenue adjustments GOB should net an estimated $44 million in additional earnings. The Belize deficit could go be reduced to $50 million from $140 million.

    These were among the recommendations made by the IMF. Now it is up to the GOB to consider and implement these valuable recommendations
Search go!
| | Island Info | Community | History | Visitor Center |
Belize News | | Messages |

Copyright © San Pedro Sun. Design by Casado Internet Group

San Pedro Town, Ambergris Caye, Belize News