7 News Belize

IMF Frowns On Belize Finance
posted (June 1, 2016)

The IMF concluded its article IV consultation with Belize last week, and the initial review is not encouraging.  The team was here for two weeks, from May 11 to the 25th, and concluded that the economy is on a slowdown, and more vulnerable than a year ago.  They note falling exports, shrinking reserves, a widening fiscal deficit, and the worsening situation with the loss of correspondent banking relationships.   

They conclude grimly, â€œThe economic outlook has worsened…since the 2015 Article IV Consultation and is subject to significant downside risks. Growth is projected to decline further to 0.5 percent in 2016…These vulnerabilities could be exacerbated by both domestic and external risks, such as a the end of PetroCaribe financing…and challenges posed by withdrawal of correspondent banking relationships.â€￾

The IMF calls for, quote, “strong revenue and expenditure measures, including broadening the tax base…containing the public sector wage bill, (AND) initiating a parametric reform of the public pension system…â€￾  Now, in small change that suggests, fewer GST exemptions on basic foodstuffs, cutbacks in the public service, and increasing the eligible age for government pension.  These are basic plays from the IMF textbook, and the Barrow Administration – which has always been anti-IMF is not likely to adopt any of them.  But, with the BTL debt bomb on the horizon, the pressure is mounting, and that reduces government’s leverage with multilaterals.

The PUP issued a statement today saying, that the IMF recommendations mean, quote, “retrenchment of public officers and further raising of taxes on hard working Belizeans.â€￾  The PUP statement concludes, quote, “Our country is in an economic crisis as a result of the UDP’s excessive and unsustainable borrowing and spending.â€￾

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