I.M.F. report expects Belize’s economy to slow in 2009

There is some grim news to report tonight that spell hard days ahead due to a weakened fiscal position. The Report of the I.M.F. is hot off the press and it essentially confirms what most observers have been anticipating; that the economy is expected to slow down in 2009 due in large part to the global economic downturn. According to the report dated May fourteenth, real G.D.P. growth is expected at one percent in light of a decline in the number of visitors and decreases in remittances to Belize. The I.M.F. also reports that in the 2009-2010 financial year, the overall balance of central government is expected to shift from a surplus to a deficit of close to two percent of G.D.P. due to G.O.B.’s recurrent spending. While the I.M.F. pointed to a favorable economic performance in 2008, it noted that Belize remains vulnerable. The silver lining is that inflation, which stood at ten percent in mid 2008, is expected to ease to two and half percent and the external current deficit could reduce. And to get on track, the I.M.F. urges a number of tough recommendations. Primarily, Belmopan is advised to restrain spending, including the public sector wage bill and to increase its tax revenue. And in respect of public sector programs, it calls on G.O.B. to reform the Social Security Board and the pension plan for public officers; to hold out on the N.H.I.; to give clarity to the D.F.C. mandate and to provide it with resources to cover its operating costs.

Turning to the F.I.U., it recommends an injection of resources for its functioning. The report ends with a call for continued commitment to good governance, the rule of law and contract enforcement. The report was prepared following consultations in Belize by its executive board.