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Belize issued warning by IMF

The International Monetary Fund. (Photo: Associated Press)

The International Monetary Fund (IMF) has issued a warning for Belize amid a slowing of its economic recovery.

With real gross domestic product growth (GDP) of 3.2 percent in 2018 and an estimated four percent in the first quarter of this year, it was reported that Belize’s economic recovery, “continues but the pace is slowing”.

The IMF team was headed by Deputy Division Chief in its Western Department Daniel Leigh who led discussions with Prime Minister Dean Barrow, Central Bank Governor Ambassador Joy Grant, financial secretary Joseph Waight and other members of the government, opposition and private and public sector unions.

Prime Minister of Belize Dean Barrow at a press conference in Guatemala City on March 16, 2011. (Photo: Johan Ordonez, AFP)

IMF notes a range of risks

Other notable highlights include the reduction of the unemployment rate to 7.6 percent with inflation near zero, according to the visit’s concluding statement issued on Monday.

” The current account deficit widened to 7.9 percent of GDP in 2018…”

— The IMF, during fourth mission to Belize earlier in October

What’s more, “tourist arrivals grew by double digits in 2018, reflecting marketing initiatives, more flights from major cities, and strong trading-partner growth”.

However, a severe drought contributed to a slowdown in activity and a minor contraction in the second quarter of this year. That said, growth for 2019 is projected at 1.5 percent.

“The current account deficit widened to 7.9 percent of GDP in 2018 from 7.7 percent in 2017, despite higher tourism earnings, reflecting increased imports of construction materials, including for large foreign-financed projects,” the statement said.

The Port of Belize in Belize City (Photo: PortAuthority.bz)

‘Belize’s economic growth hinges on improved business environment’

A major push to consolidate expenditure has also slowed with the budget for the current financial year, which targeted a fiscal surplus of just over two percent of GDP, now at risk.

The financial institution’s assessment shows that increased spending on wages and public investment, coupled with weaker than expected revenue, is the main factor.

With that said, real GDP growth of just below two percent is projected over the medium term, in line with current trends.