An IMF mission conducted discussions on the 2010 Article IV consultation
with Belize during June 21-July 1. The mission met with Prime Minister
Dean Barrow, the government's economic team, the private sector, and
civil society. The mission focused on the
economic outlook for 2010 and the medium term, and the government's
macroeconomic strategy.

Mario Garza, chief of the International Monetary Fund mission to Belize, stated in a press release  that "Economic activity stagnated in 2009…"

"Growth has resumed
since late 2009, but the recovery is still narrowly based, while
inflation appears to be picking up somewhat, driven by the rise in fuel
prices. For 2010, the mission expects growth to resume modestly, and
export prices and tourist receipts to recover slightly, allowing foreign
reserves to stabilize at just over three months of imports of goods and
services. Despite the recent tax revenue actions, the overall fiscal
deficit is likely to widen in FY2010/11, owing largely to upward
pressure on primary current spending and increased investment, while the
public debt would remain high. The overall banking system appears
liquid and well capitalized, but the mission is concerned about the rise
in nonperforming loans (NPLs).

"The consultation discussions centered on strategies to promote
sustainable growth and reduce poverty. The mission underscored the need
to strengthen fiscal and external buffers to deal with future shocks.
Building on the recent revenue measures and in order to put the public
debt-to-GDP ratio on a firm downward path, the primary fiscal surplus
would need to be raised significantly over the medium term, by
restraining the growth in current spending; prioritizing investment; and
placing the pension system on a strong and sustainable footing. The
mission also encouraged the authorities to press ahead with current
plans to improve tax and customs administration.

"In the monetary and banking area, the mission welcomed recent reforms
to improve the conduct of monetary policy, by relying more on
market-based monetary instruments and further reducing non-remunerated
reserve requirements. It encouraged the authorities to advance these
reforms, which should help reduce intermediation spreads, while
maintaining a disciplined monetary stance. The mission also advised the
authorities to remain vigilant in their supervision of domestic and
offshore banks, ensure that sufficient provisioning is made to cover
NPLs, and further strengthen prudential regulations."