noimageA team from the International Monetary Fund (IMF) led by Jacques Bouhga-Hagbe, has concluded a consultation mission to Belize on the state of the economy. The report issued by the IMF says that the economy accelerated to 3.6 percent in 2014 from 1.5 percent in 2013 on the back of a rebound in agriculture, and strong performances in tourism, electricity, construction and services.

The fall in international oil and food prices pushed down headline inflation to -0.2 percent as of December 2014. Despite strong tourism receipts, falling exports, particularly of crude petroleum, and relatively strong imports widened the external current account deficit to 7.6 percent of GDP in 2014, up from 4.4 percent of GDP in 2013.

The report states that PetroCaribe and other official disbursements continued to finance the current account deficit and help build international reserves equivalent to 5 months of imports at end December 2014. And that although revenue collection remained in line with budget targets, spending continued to grow well above budget targets, driven by Petrocaribe-financed spending.

The mission is of the view that Inflation would remain subdued and the fiscal primary balance would remain in deficit because of expansionary fiscal policies -- including wage increases and new projects financed with PetroCaribe resources. Public debt would rise significantly, especially if a court decision calls for the payment of compensation to the former owners of the recently nationalized companies.

“The mission noted that significant downside risks to the economic outlook deserve close monitoring, including a protracted period of weak growth in advanced and emerging economies, complications with PetroCaribe financing, and the expected drop in sugar prices after the EU sugar reform takes full effect in 2017.

During its visit, the IMF team met with Prime Minister Dean Barrow, Financial Secretary Joseph Waight, Central Bank Governor Glenford Ysaguirre, other government and central bank officials, representatives of the private sector, labor unions, sugar farmers and members of the opposition. 

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