WASHINGTON, DC – After remarkable recovery following the COVID-19 pandemic, an International Monetary Fund (IMF) team has predicted “subdued growth” in the near term for Belize.
The IMF team, which concluded the 2025 Article IV consultation with Belizean authorities from July 1-11, said on Friday that preliminary economic data also points to deceleration of inflation and sharp declension of the public debt-to-GDP (gross domestic product) ratio.
“Growth is expected to converge to its potential of about 2 percent over the medium term, reflecting capacity constraints,” the mission said.
“In an unchanged policies scenario, the public debt-to-GDP ratio is projected to fall more slowly, requiring additional fiscal consolidation and growth-enhancing structural reforms to reduce debt to 50 percent of GDP by 2030,” it added.
The mission said policy priorities include revenue mobilization and reprioritization of expenditure; greater spending in priority areas; expanded access to finance; accelerating growth-enhancing and structural reforms; and building resilience to natural disasters.
The IMF mission said Belize’s economy has recovered strongly following the pandemic, supporting improvements in social outcomes and financial stability.
After expanding by a cumulative 27.6 percent between 2021 and 2023, the mission said real GDP grew by 8.1 percent in 2024, driven by tourism, trade, and transport.
Consequently, it said the poverty rate declined substantially to 22 percent in 2024, from 36 percent in 2021, according to the multidimensional poverty index.
The IMF mission said strong economic recovery, combined with the prudent management of public sector wages and a sharp rebound in government revenues, improved the primary fiscal balance to 1.7 percent of GDP in Fiscal Year 2024.
Consequently, the team said public debt fell sharply to 61.1 percent of GDP by end-2024 from 103.3 percent of GDP in 2020, supported as well by a “debt-for-marine protection swap and a negotiated discount on Belize’s Petrocaribe debt.”
The IMF mission said financial stability risks have declined, following the accumulation of additional tier 1 capital among vulnerable banks and a decline in aggregate nonperforming loans.
The IMF staff’s preliminary analysis suggests Belize’s external position in 2024 was “stronger than the level implied by fundamentals and desirable policies.
“Growth is expected to slow considerably in the near term before converging to its potential of about 2 percent over the medium term,” the analysis says.
“Staff projects growth to decelerate to 1.5 percent in 2025 in line with the observed slowdown in stayover visitor arrivals growth and weak agricultural sector performance as a result of unfavorable weather conditions and fungal disease affecting sugarcane,” it adds.
The team said growth is expected to recover in 2026, before gradually moderating to 2 percent over the medium term, absent increased hotel and flight capacity.
The IMF staff said it expected inflation to decline further to 1.3 percent over the medium term, as inflationary pressures from major trading partners and oil prices subside.
It said public debt is expected to fall more slowly as a percentage of GDP, reflecting slower nominal growth and higher spending on salaries.
The IMF mission said current account deficit is expected to moderate to about 1.2 percent of GDP over the medium term, largely on account of lower oil prices.
It projected a gradual increase in international reserves to about four months of imports, albeit not reaching the ARA metric by 2030.
The IMF staff said external downside risks stem from higher global policy uncertainty and increased trade barriers—which would weigh on Belize’s growth and current account—and higher-for-longer global interest rates.
“Domestically, increased or sustained climate-related disasters could cause severe damage to the agriculture, energy, and tourism sectors,” the mission said.
It said a slowdown in the economy could also increase risks to the financial sector.
However, the mission said implementation of several large infrastructure projects—particularly in the energy, utilities, and transport sectors—could push growth higher over the medium term.
It said the policies implemented by Belizean authorities have been broadly consistent with the staff advice and technical assistance recommendations.
“Legislative amendments to allow for the introduction of electronic tax invoicing, new penalties for tax noncompliance, and a requirement that all taxes are paid before the sale of any entities or businesses have sought to improve tax administration,” the IMF mission said.
It noted that the central bank has reduced its holdings of government securities and increased the level of international reserves.
The team said the passage of the Fiscal Incentives Act—which encourages the formalization of firms—and the establishment of the collateral registry have the potential to increase firms’ access to credit.
The central bank also required vulnerable banks to accumulate additional tier 1 capital to reduce financial stability risks, the mission said.
However, it said reforms to the Pension Plan for Public Officials (PPPO) have been delayed.
Going forward, the mission said Belizean authorities “remain committed” to making use of capacity development to further strengthen institutions and the policy framework.
“Reducing public sector debt to below 50 percent of GDP would help build fiscal buffers against adverse shocks,” it said, adding that this would require gradually increasing the primary surplus to 2 percent of GDP by Fiscal Year 2026, supported by, among other things, greater revenue mobilization; reprioritization of current expenditure; expanding priority spending on targeted social programs, infrastructure, and crime prevention; and accelerating the implementation of growth-enhancing structural reforms that would foster job creation and boost potential growth.
The IMF mission said “addressing key bottlenecks in the tourism sector is necessary to accelerate growth in stayover arrivals and support tourism growth over the medium term.”
It said priorities include developing road infrastructure to ease cross-district transportation and expanding flight capacity.
The team noted that the degree of resource misallocation among firms in Belize is one of the highest in the Caribbean, “leading to lower aggregate productivity.
“Continued efforts to improve the business climate and address structural barriers, in particular reforms to improve firms’ access to finance, business license and permits processes, tax administration, and workforce education, would help foster productivity growth and job creation,” the mission said.
It said rising sea levels, hurricanes, floods, droughts, and coastal erosion pose “significant threats to the economy,” particularly to tourism, agriculture, and energy.
Given Belize’s vulnerability to natural disasters, the mission said continued efforts to enhance resilience to natural disasters “remains essential.”
It however noted that Belizean authorities have made considerable progress toward building resilience, including plans to invest in a battery energy storage system and renewable energy, and developing a Climate Finance Strategy.
“In this context, adoption of a Disaster Resilience Strategy to complement the National Preparedness and Response Plan would further help to provide a coherent guide to the authorities’ efforts and could help facilitate coordination of donor support,” the IMF mission said.
It said successfully implementing structural reforms and fiscal consolidation—combined with a gradual reduction in the central bank’s large stock of government securities—is “crucial to accelerating official reserve accumulation.”
The team said that combining this with reforms to develop the domestic capital market, including the introduction of a fully market-based auction for Treasury Notes, would also increase the government’s access to domestic private sector finance and help to reduce excess liquidity in the financial system.
“Such reforms would also provide opportunities for the Social Security Board to reduce the share of cash instruments in their investment portfolio, improving the General Social Security Scheme’s long-term viability,” it said.
In addition, the mission said that improving the private sector’s access to finance and enhancing the financial safety net should be “key policy priorities.”
It said accelerating growth in private sector credit could be supported by initiatives to increase the demand for credit from domestic firms and households by removing constraints to expanding the supply of credit, and operationalizing the deposit insurance framework and improving coordination across regulatory agencies.
The IMF mission urged Belizean authorities to build on the successful completion of its Anti-Money Laundering/Countering-Terrorism Financing (AML/CFT) assessment with the Caribbean Financial Action Task Force (CFATF).
In its report published in January 2025, the mission noted that the CFATF assessed Belize as compliant or largely compliant on all of the FATF’s 40 Recommendations and “substantially effective in achieving several immediate outcomes of a sound AML/CFT framework.”
Going forward, the team also urged the authorities to continue addressing the remaining shortcomings in the AML/CFT framework, including finalizing and approving the National Risk Assessment, enhancing risk-based supervision, and strengthening the collection of beneficial ownership information of legal entities.
