IMF Preliminary Report on Belize Doesn’t Inspire Economic Confidence

The International Monetary Fund (I.M.F.) has issued a report at the end of its most recent visit to Belize which concluded this Wednesday. The team was led by Jacques Bouhga-Hagbe and its preliminary report does not inspire economic confidence.  The IMF says that the economy is slowing while fiscal and external vulnerabilities are rising. G.D.P. growth has been reduced to one percent due to falling oil production and multiple shocks in the primary sector. The decline in prices of energy and other commodities led to deflation in 2015, despite a fuel tax imposed by government.  The current account deficit widened to nine point eight percent of G.D.P. and exports fell by nine percent.  Following partial compensation payments for the two nationalized companies, international reserves fell to four point six months of imports in March 2016. The fiscal deficit widened to eight percent of G.D.P. to a settlement of a loan of B.T.L. as well as an increase in public sector wages and transfers, and a large overrun in capital expenditure. Public debt shot up to eighty-two percent of G.D.P.   The IMF also states that the economic outlook has worsened further and has the potential to further deteriorate.  Growth is projected to decline further to zero point five percent in 2016.  In the absence of fiscal measures, rigid current spending would fuel high fiscal deficits and add to the already high public debt burden. The current account deficit is forecasted to remain high, putting pressure on international reserves. The bad news continues with the analysis that these vulnerabilities could worsen due to domestic and external risks, such as the end of PetroCaribe financing, protracted period of weak growth in trading partners, and challenges posed by withdrawal of correspondent banking.