BELMOPAN, Belize, Saturday June 24, 2017 – Belize Prime Minister Dean Barrow has turned his back on International Monetary Fund (IMF) recommendations to fix his country’s nagging economic woes, insisting that his Government will stick to its own programme.
A team from the Washington-based financial body recently wrapped up Article IV consultations with the Barrow administration, warning that public debt remains too high and further fiscal consolidation is needed.
It proposed a series of corrective measures, including a hike in the General Sales Tax (GST) from 12.5 to 15 percent and the removal of tax exemptions, among other measures.
However, Barrow flatly rejected the advice, insisting it was not in the best interest of his country.
“With respect to the recommendations as to raising the GST and as to doing away with exemptions and the recommendations having to do with pensions and public officers, we absolutely reject those as we have made clear repeatedly,” he told Channel 5 Belize.
“The Article IV Consultation is a prescribed, as it were, feature of membership and we will always…be respectful and treat the IMF team with extreme courtesy. But we absolutely will not follow any of the prescriptions which, in our view, would result, if followed, in a fracturing of the social compact,” Barrow added.
The Prime Minister made it clear the Belize is quite capable of writing its own prescriptions and suggested that its current efforts were working.
Barrow said the local economy “is already on the rebound and I am absolutely certain that we can in fact find our way out of these temporary difficulties relatively easily and, certainly, most successfully”.
On March 15, this year, Belize reached a restructuring agreement with private external bondholders on the debt estimated at US$526 million, or about 30 per cent of gross domestic product (GDP).
The agreement reduced the interest rate on the bond to 4.9375 per cent – the rate was set to step up from 5 to 6.767 percent in August 2017, and amended the amortization schedule by pushing back principal repayments to 2030-34 instead of starting semi-annual installments in August 2019.