The International Monetary Fund country report was released on September 19th and follows consultations conducted in April and May with Belizean officials on economic developments and policies which was led by Jacques Bouhga-Hagbe. Issues that stand out in respect of social indicators which remain daunting, adding to spending pressures; are unemployment, poverty, accrued inflation, just to name a few.
The report concludes that unemployment stood at 14.2 percent in September 2013 and is on an upward trend since it hit its lowest level in 2008 . The latest country poverty assessment (CPA) was conducted in 2009, which showed that poverty increased substantially since the previous assessment in 2002. The share of households living in poverty increased from 25 percent to 33 percent, with the share living in severe poverty rising from 8 to 10 percent. The report indicates that Poverty increased mainly because of stagnating economic growth. According to the 2013 UN Global Study on Homicide, Belize has one of the world’s highest homicide rates with 44.7 homicides per 100,000 inhabitants.
The report notes that large wage increases for public employees and the fiscal space created by the debt restructuring of March 2013 has not been used to put the fiscal position on a sustainable path. In particular the primary surplus remains well below levels recommended by staff. On tax reform, the authorities still plan to review the list of exemptions and zero-ratings under the GST.
The report also shows that Macroeconomic performance has weakened since the Real GDP growth plummeted to 0.7 percent in 2013, from 4 percent in 2012, mainly due to continued declines in oil production and weak agricultural output, especially sugarcane and citrus. Average inflation eased to 0.5 percent from 1.3 percent a year ago, as commodity price pressures abated. In March 2014, inflation picked up to 1.4 percent mainly as a result of higher prices in the food and housing, water, electricity, gas and other fuels categories.
In its segment on key policy advice, the IMF said the Government of Belize could improve its fiscal stance by “allowing spending on goods and services to rise only in line with inflation; containing the expansion in the wage bill; requiring public workers to contribute to their pensions; and by widening the tax base and strengthening revenue administration.”
The IMF notes that Belize’s implementation of the recent staff advice has been a mixed bag.
It is of note that the preliminary IMF report which was released two weeks ago, called unto the Government to implement ‘strong measures” and as reported by the Amandala Newspaper who posed the question to the Prime minister, his answer to the assessment was that “Belize will continue to grow and grow in its own way”, end of quote.
The 67 page report also signals the IMF’s disapproval of the recently announced sizeable wage increases for public employees and Governments commitment to allocating half of the annual growth in recurrent revenues to increases in public sector wages during Fiscal Year 2014/2015–and Fiscal Year 2016/2017.
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