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International Monetary Fund. Western Hemisphere Dept.
The COVID-19 pandemic had a severe impact on Belize in 2020, leading to a 16.7 percent contraction in real GDP and a rise in public debt to an unsustainable level of 133 percent of GDP. To address this situation, the government presented a medium-term plan to lower public debt to 85 percent of GDP in 2025 and 70 percent in 2030 by implementing fiscal consolidation, structural reforms, and debt restructuring. Significant progress towards restoring debt sustainability was made in 2021.
International Monetary Fund. Western Hemisphere Dept.
Belize has been hit hard by the COVID-19 pandemic, which led to a deep recession and worsened fiscal and external positions from already weak levels. The opposition People’s United Party won the November 2020 elections by a wide margin, which gives the new government a unique opportunity to jump start much needed reforms to reduce large imbalances and anchor strong and inclusive growth.
Johanna Tiedemann, Veronica Piatkov, Dinar Prihardini, Juan Carlos Benitez, and Ms. Aleksandra Zdzienicka
Small Developing States (SDS) face substantial challenges in achieving sustainable development. Many of these challenges relate to the small size and limited diversification of their economies. SDS are also among the most vulnerable countries to the impact of climate change and natural disasters. Meeting SDS sustainable development goals goes hand-in-hand with building their climate resilience. But the additional costs to meet development and resilience objectives are substantial and difficult to finance. This work adapts the IMF SDG Costing methodology to capture the unique characteristics and challenges of climate-vulnerable SDS. It also zooms into financing options, estimating domestic tax potential and discussing the possibility of accessing ‘climate funds.’
Hippolyte W. Balima, Deirdre Daly, and Mr. Boileau Loko
Domestic revenue mobilization (DRM) is essential for low-income and emerging economies to sustainably finance their development needs and has received increasing attention in recent years. Studies have centered on structural factors such as the size and the structure of the economy, and the quality of institutions, notably to account for weaknesses in revenue administrations. Nevertheless, DRM can take time and carry political costs. Raising more financing through donors or private investors may be an easier and more politically palatable way for countries to meet spending needs. Using an impact assessment methodology and panel regressions over a sample of 72 developing countries, we found no evidence that access to bond markets or external commercial loans undermines the countries’ efforts to collect tax revenue. On the contrary, we found that access to markets has a positive impact on domestic revenue mobilization. Plausible explanations are that private financing must be repaid, and strong macroeconomic fundamentals are key for maintaining market access. We have also found that macroeconomic stability and the strength of institutions do matter for domestic revenue mobilization.
International Monetary Fund. Monetary and Capital Markets Department
Cybersecurity risk is embedded in the CBB’s supervisory framework, but additional enhancements are needed to formalize guidance and develop more intensive supervisory practices. Supervisory expectations on cybersecurity are presented in an informal guidance note, which should be formalized into regulation to ensure enforceability; and an IT/cybersecurity supervisory manual should be developed to promote effective and consistent practices. With its principle-based guidance note, the CBB highlights its priorities in strengthening the cybersecurity posture of Belizean financial institutions. The principles are an appropriate interpretation of international best practices on incident prevention, detection, response, and recovery measures, adapted to the cyber maturity of the Belizean financial institutions, and can be used as a foundation for the formalized guidelines. The manual could emphasize the review of cybersecurity strategies, policies, and responsibility specifications and should address obtaining assurance on the effectiveness of the financial institutions’ processes for cyber risk identification, assessment, and mitigation.
International Monetary Fund. Fiscal Affairs Dept.
The level of public investment in Belize has varied over the past years in the context of existing constraints. The sharp increase in public debt has limited available fiscal space.1 This has resulted in an increase in externally financed investments as a share of the capital budget and a growing interest in public private partnerships (PPPs) to help achieve the government of Belize’s national strategy objectives.2 However, the correlation between Belize’s public investment and GDP growth remains weak, and the public capital stock as a ratio to GDP shows a sharp deterioration, possibly pointing to investment inefficiencies.