WASHINGTON, CMC – After a outstanding restoration following the COVID-19 pandemic, an Worldwide Financial Fund (IMF) group has predicted “subdued development” within the close to time period for Belize.
The IMF group, which concluded the 2025 Article IV session with Belizean authorities from July 1 to 11, said on Friday that preliminary financial information additionally point out a deceleration of inflation and a pointy decline within the public debt-to-GDP (gross home product) ratio.
“Development is anticipated to converge to its potential of about 2 % over the medium time period, reflecting capability constraints,” the mission stated.
“In an unchanged insurance policies situation, the general public debt-to-GDP ratio is projected to fall extra slowly, requiring further fiscal consolidation and growth-enhancing structural reforms to scale back debt to 50 % of GDP by 2030,” it added.
The mission’s coverage priorities embody income mobilization, expenditure reprioritization, elevated spending in precedence areas, expanded entry to finance, accelerated growth-enhancing and structural reforms, and constructing resilience to pure disasters.
The IMF mission stated Belize’s financial system has recovered strongly following the pandemic, supporting enhancements in social outcomes and monetary stability.
After increasing by a cumulative 27.6 % between 2021 and 2023, the mission reported that actual GDP grew by 8.1 % in 2024, pushed by development in tourism, commerce, and transport.
Consequently, it stated the poverty charge declined considerably to 22 % in 2024, from 36 % in 2021, in accordance with the multidimensional poverty index.
The IMF mission famous {that a} robust financial restoration, mixed with prudent administration of public sector wages and a pointy rebound in authorities revenues, improved the first fiscal steadiness to 1.7 % of GDP in Fiscal 12 months 2024.
Consequently, the group said that public debt fell sharply to 61.1 % of GDP by the top of 2024, from 103.3 % of GDP in 2020, supported as nicely by a “debt-for-marine safety swap and a negotiated low cost on Belize’s Petrocaribe debt.”
The IMF mission said that monetary stability dangers have declined, following the buildup of further tier 1 capital by weak banks and a decline in mixture nonperforming loans.
The IMF employees’s preliminary evaluation suggests Belize’s exterior place in 2024 was “stronger than the extent implied by fundamentals and fascinating insurance policies.
“Development is anticipated to gradual significantly within the close to time period earlier than converging to its potential of about 2 % over the medium time period,” the evaluation says.
“Workers initiatives development to decelerate to 1.5 % in 2025 in step with the noticed slowdown in stayover customer arrivals development and weak agricultural sector efficiency because of unfavorable climate situations and fungal illness affecting sugarcane,” it provides.
The group expects development to get better in 2026, earlier than steadily moderating to 2 % over the medium time period, supplied there isn’t a improve in resort and flight capability.
The IMF employees stated it anticipated inflation to say no additional to 1.3 % over the medium time period, as inflationary pressures from main buying and selling companions and oil costs subside.
It said that public debt is anticipated to say no extra slowly as a proportion of GDP, reflecting slower nominal development and better spending on salaries.
The IMF mission said that the present account deficit is anticipated to reasonable to roughly 1.2 % of GDP over the medium time period, primarily as a consequence of decrease oil costs.
It projected a gradual improve in worldwide reserves to about 4 months of imports, albeit not reaching the ARA metric by 2030.
The IMF employees said that exterior draw back dangers stem from greater world coverage uncertainty and elevated commerce limitations, which might weigh on Belize’s development and present account, in addition to greater rates of interest which are anticipated to persist for an prolonged interval.
“Domestically, elevated or sustained climate-related disasters may trigger extreme injury to the agriculture, vitality, and tourism sectors,” the mission stated.
It stated a slowdown within the financial system may additionally improve dangers to the monetary sector.
Nevertheless, the mission said that the implementation of a number of giant infrastructure initiatives—notably within the vitality, utilities, and transportation sectors—may push development greater over the medium time period.
It said that the insurance policies applied by Belizean authorities have been broadly in keeping with the employees’s recommendation and technical help suggestions.
“Legislative amendments to permit for the introduction of digital tax invoicing, new penalties for tax noncompliance, and a requirement that each one taxes are paid earlier than the sale of any entities or companies have sought to enhance tax administration,” the IMF mission stated.
It famous that the central financial institution has diminished its holdings of presidency securities and elevated the extent of worldwide reserves.
The group said that the passage of the Fiscal Incentives Act—which inspires the formalization of companies—and the institution of a collateral registry have the potential to extend companies’ entry to credit score.
The central financial institution additionally required weak banks to build up further Tier 1 capital to mitigate monetary stability dangers, the mission said.
Nevertheless, it stated reforms to the Pension Plan for Public Officers (PPPO) have been delayed.
Sooner or later, the mission said that Belizean authorities “stay dedicated” to using capability growth to strengthen establishments and the coverage framework additional.
“Decreasing public sector debt to beneath 50 % of GDP would assist construct fiscal buffers towards hostile shocks,” it stated, including that this could require steadily growing the first surplus to 2 % of GDP by Fiscal 12 months 2026, supported by, amongst different issues, larger income mobilization; reprioritization of present expenditure; increasing precedence spending on focused social packages, infrastructure, and crime prevention; and accelerating the implementation of growth-enhancing structural reforms that will foster job creation and increase potential development.
The IMF mission stated, “Addressing key bottlenecks within the tourism sector is important to speed up development in stayover arrivals and help tourism development over the medium time period.”
It stated priorities embody creating street infrastructure to ease cross-district transportation and increasing flight capability.
The group famous that the diploma of useful resource misallocation amongst companies in Belize is among the highest within the Caribbean, “resulting in decrease mixture productiveness.
“Continued efforts to enhance the enterprise local weather and handle structural limitations, particularly reforms to enhance companies’ entry to finance, enterprise license and permits processes, tax administration, and workforce training, would assist foster productiveness development and job creation,” the mission stated.
It stated rising sea ranges, hurricanes, floods, droughts, and coastal erosion pose “important threats to the financial system,” notably to tourism, agriculture, and vitality.
Given Belize’s vulnerability to pure disasters, the mission said that continued efforts to boost resilience to those disasters “stay important.”
It, nonetheless, famous that Belizean authorities have made appreciable progress towards constructing resilience, together with plans to put money into a battery vitality storage system and renewable vitality sources, in addition to creating a Local weather Finance Technique.
“On this context, adoption of a Catastrophe Resilience Technique to enhance the Nationwide Preparedness and Response Plan would additional assist to offer a coherent information to the authorities’ efforts and will assist facilitate coordination of donor help,” the IMF mission stated.
It stated efficiently implementing structural reforms and financial consolidation—mixed with a gradual discount within the central financial institution’s intensive inventory of presidency securities—is “essential to accelerating official reserve accumulation.”
The group said that combining this with reforms to develop the home capital market, together with the introduction of a completely market-based public sale for Treasury Notes, would additionally improve the federal government’s entry to home non-public sector finance and assist scale back extra liquidity within the monetary system.
“Such reforms would additionally present alternatives for the Social Safety Board to scale back the share of money devices of their funding portfolio, bettering the Basic Social Safety Scheme’s long-term viability,” it stated.
As well as, the mission stated that bettering the non-public sector’s entry to finance and enhancing the monetary security internet needs to be “key coverage priorities.”
It said that accelerating development in non-public sector credit score might be supported by initiatives to extend demand for credit score from home companies and households by eradicating constraints on increasing the credit score provide, operationalizing the deposit insurance coverage framework, and bettering coordination throughout regulatory businesses.
The IMF mission urged Belizean authorities to construct on the profitable completion of its Anti-Cash Laundering/Countering the Financing of Terrorism (AML/CFT) evaluation with the Caribbean Monetary Motion Activity Drive (CFATF).
In its January 2025 report, the mission famous that the CFATF assessed Belize as compliant or largely compliant on all 40 of the FATF’s Suggestions and “considerably efficient in reaching a number of speedy outcomes of a sound AML/CFT framework.”
Sooner or later, the group additionally urged the authorities to proceed addressing the remaining shortcomings within the AML/CFT framework, together with finalizing and approving the Nationwide Threat Evaluation, enhancing risk-based supervision, and strengthening the gathering of helpful possession info of authorized entities.
