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Ms. Sumiko Ogawa, Mr. Joonkyu Park, Ms. Diva Singh, and Ms. Nita Thacker
Financial sector linkages have increased continuously in the Caribbean with cross border capital flows and financial conglomerates dominating the financial system. While the greater interconnectedness can heighten systemic risks and likelihood of contagion, it can have positive impacts provided the regional authorities take steps to prevent the systemic risk. In this context, financial sector reform measures aimed at bolstering and harmonizing prudential regulations in line with international best practices, the strengthening and enhancement of financial sector supervision to include cross border linkages through consolidated supervision, increased cooperation across supervisors in the region, and the establishment of deposit insurance and crisis resolution frameworks will be critical to maintain financial sector stability and minimize the repercussions of any negative shocks.
International Monetary Fund
Overly expansionary macroeconomic policies contributed to a widening of current account deficits, an unsustainable buildup of public debt, and the erosion of international reserves. The Belize government has already made commendable strides in correcting macroeconomic imbalances, based on measures to increase tax collection, rein in discretionary current expenditure, and cut capital expenditure. However, these efforts alone are not sufficient to bring the public finances and the balance of payments back on a sustainable path; supportive structural reforms in the fiscal and monetary areas should be implemented.