IMF impressed with Belize’s Economic Performance Print E-mail
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Thursday, 18 July 2013 00:00

Belize continues to receive praises for its debt restructuring exercise and impressive economic performance in 2012. The International Monetary Fund (IMF) says the completion of the exchange of the Super Bond for new United States denominated bonds has brought “substantial cash-flow relief” to Belize, according to the Trinidad and Tobago Guardian.  The IMF says that the new bond has resulted in a cash flow relief of US0 million over the next five years.

In 2011, Belize’s economy was severely injured by weather related damages in commodity exports but 2012 saw a strong rebound as the output growth for Belize was estimated at 5.3 per cent in 2012. The IMF is optimistic about the health of the economy because the “international reserve coverage is estimated at 3.4 months of imports up from three months in 2011, thanks in part to strong foreign direct investment inflows in the sugar sector”. Another reason for optimism is the public debt is expected to decline to about 75 per cent of GDP at end-2013 which is due to the net face value haircut of three per cent from the recent debt restructure exercise.

The IMF also points at reasons for concern in the medium term outlook of the economy. According to the IMF, the external current account deficit is projected to widen to about 1.9 per cent of GDP due to the continued deterioration in crude oil exports and rising imports of fuel and electricity. The IMF says the weight of loan write-offs and non-performing loans (NPLs) in the banking system, 20 per cent of total loans at end of 2012, continue to hold back private sector credit growth and are eroding banks’ net earnings. Another cloud hanging over the economy is the uncertainty of the extent of compensation for the nationalized companies. The IMF says, “The Government may face large financing needs over the medium term largely associated with compensation to the former shareholders of nationalized companies, pending legal rulings.”

The IMF applauds Government’s commitment to revamp the debt management framework and encourages the acceleration of it financial sector reform. The IMF recommends that “options to develop the domestic debt market should also be explored to mobilize domestic financing.”