Just before five this evening, the IMF posted the findings of its Article Four consultation with Belize, and what's surprising is that even in the worst of times, it is generally favorable, if not altogether upbeat.
The IMF notes that the government has "taken commendable steps in the last year and a half" and positively gushes, stating that the authorities, and the country, can, "rise to the challenge..." For proof of that, the IMF quotes the sharp cut in the overall deficit which shows the overall deficit cut from almost 9% of GDP in 2004-to-2005, to 3.5% last year. It's of note that in 2004, the then Finance Minister Ralph Fonseca had projected that it would be 2.1%.
On the downside, the report warns that reserves are dangerously low, less than one month of imports, and Belize's debt burden is high now, but will get higher from 2012 to 2015, when there will be a debt explosion. And no one's sure who'll pay for it. The fund warns that, "foreign financing of this magnitude may not be forthcoming."
In the meantime, the IMF urges government to tighten the tax net even more, urging it "resist pressure to dilute the GST base." The report also discloses that the money in the banking sector will become even tighter as government will again increase the reserve requirement on September first. In the long term, the IMF urges government to cancel the pension plan for new public servants, and force current public servants to make a contribution.
And while that is one provocative recommendation, one standard fixture noticeably absent from this report is the devaluation bogeyman, which gets only a cursory mention and no serious consideration.
You can read the full report by clicking here.
