NS4540 Winter Term 2018 Belize Overview

Overview I The former colony of British Honduras gained independence in 1981 and is a parliamentary democracy. Prime Minister Dean Barrow of the United Democratic Party (center left) was elected to his third and final consecutive five-year term in 2015. He is in ill health and may step down early The economy relies primarily on tourism and exports of marine products, citrus, sugar, and bananas. The economy’s vulnerability to fluctuating agricultural commodity prices complicates policymaking.

Overview II Heightened scrutiny of international financial intermediation in Belize has resulted in actions to tighten controls against money-laundering and the financing of terrorism Foreign reserves could be under pressure in 2018 as the government draws on U.S. dollars to make payments to shareholders of Belize Telemedia Payments are part of the settlement of a dispute arising from the firm’s 2009 nationalization.

Belize Governance Trends

Recent Macroeconomic Trends

Policy Dilemmas Major economic problem currently unsustainable levels of public debt Fiscal adjustments necessary, but in context of Weak budgetary controls, Pressing social needs, Low growth and overstretched government capacity in many areas. Process has begun with Higher tax revenue and Sharp cuts in capital spending Government rejected IMF’s recommendation to set a target for a primary fiscal surplus of 4-5% of GDP Instead opted for 2% for next two fiscal years

Economic Freedom I Belize’s economic freedom score is 57.1, making its economy the 116th freest in the 2018 Index. Its overall score has decreased by 1.5 points, with declines in the scores for fiscal health, labor freedom, government spending, trade freedom, and property rights These overwhelmed an improvement in judicial effectiveness. Belize is ranked 23rd among 32 countries in the Americas region, and its overall score is below the regional and world averages.

Overall Economic Freedom

Trade Freedom

Business Freedom

Economic Freedom II Economic reform in Belize Has been uneven, and More dynamic growth is constrained by lingering policy and institutional weaknesses in many parts of the economy. Entrepreneurial activity remains limited Recent growth has been narrowly based. Private sector activity and diversification has been limited by Burdensome tariff and nontariff barriers The high cost of domestic financing and The inefficient regulatory infrastructure . The judicial system remains vulnerable to political interference, Corruption is common.

Economic Freedom III Bureaucratic delays can make it difficult to do business in Belize. In general, employers are free to adjust their workforce in response to fluctuating market conditions. Due to a recent influx into the labor market, the unemployment and underemployment rates have risen by 1 percent and 3 percent, respectively. The government subsidizes electricity and maintains price controls on various products such as rice, sugar, and flour.

Economic Freedom IV Unreliable land title certificates have led to numerous property disputes involving foreign investors and landowners. The nominally independent judiciary is often influenced by the executive. In 2016, Belize finally bowed to pressure from public, private-sector, and civil society groups and acceded to the U.N. Convention Against Corruption.

Economic Freedom V Trade is extremely important to Belize’s economy; the combined value of exports and imports equals 125 percent of GDP. However trade restrictions The average applied tariff rate is 10.0%. Many nontariff barriers further impede trade. Government openness to foreign investment is below average. The revised Domestic Banking and Financial Institutions Act has significantly expanded the role of the central bank. Credit allocation is influenced by the government. Overall country needs reforms to strengthen economic freedom if the economy is to recover, and sustain rates of growth capable of improving budget and debt situation.

Refugee Problems I In addition to increasing fiscal instability and unsustainable debt levels, the country is facing A refugee crisis High levels of gang-related violence Tougher approach to migration in the U.S. Has sparked a surge in refugees seeking to enter Belize from the Northern Triangle countries However Belizean authorities are reluctant to receive more refugees Concerns over the potential for increased gang activity in Belize

Refugee Problems II Belize with a population of only 360,000 has long welcomed migrants from neighboring countries, particularly to work in its agricultural sector In the past Belize has taken in many refugees 30,000 refugees during the Central American civil wars of the 1980s and 1990s. However a cash-for-visas scandal in 2015 has seen work permits come under much closer scrutiny, making them more difficult to obtain No applicant has been granted asylum since the former program of the 1980s and 1990s was reintroduced Situation has led to the claims that the government is failing to meet its obligations under international refugee law.

Refugee Problems III The government claims the UNHCR (UN High Commissioner for Refugees) is putting unfair pressure on Belize and that it does not have the resources to meet them. Security concerns are a major factor contributing to the problem The government wants to prevent Central American gangs from expanding their presence However they contend they do not yet have the mechanisms in place to screen asylum seekers properly to ensure they are not gang members. There is evidence that Central American gangs have increased their presence in Belize.

Refugee Problems IV In addition Belize is coping with its own domestic gang problems In recent years they have been involved in drug trafficking along the Atlantic coast Has driven related violence. With U.S. crackdown on undocumented migration More refugees likely to be attracted to relatively stable Central American countries such as Belize and Costa Rica Should increased deportations from U.S. to Central America and Reduced US aid exacerbate criminal violence in the Northern Triangle --- numbers of refugees attempting to enter Belize may increase even further.