Prime Minister and Minister of Finance Dean Barrow revealed at the Second Business Forum held at Old Belize this morning that the International Monetary Fund (IMF) is presently in town – on a dual mission.
The last Article IV Executive Board Consultation with Belize was on October 21, 2011, according to the IMF’s website. The 2012 mission has begun, and the IMF team is due to meet with officials from the Belize Ministry of Finance on Monday, November 5, 2012, an official in the Ministry told us.
Barrow also announced this morning that experts from the IMF’s capital markets division are already in-country to execute their mission, simultaneously with the 2012 Article IV review, to provide technical assistance for Belize, at the country’s request.
Whereas Barrow said that Belize has sought the assistance of the IMF to review our entire tax system and to make recommendations for its restructuring and improvement, he said that the IMF’s “special technical assistance” is focused on bolstering Belize’s debt management capacity.
The debt restructuring scenarios released by the Ministry of Finance in August have formed the basis for negotiations with creditors who have subscribed to the US$544 mil super-bond, Barrow said.
He announced this morning that he is travelling to Miami this weekend, ahead of the meeting with the IMF, to meet with Government’s US financial advisors, preparatory to a face-to-face meeting the advisors will have with representatives of the creditor committee.
“I want to make clear that our stance remains altogether resolute: For any outcome to be acceptable, it must be based on reasonable, realistic and sustainable assumptions,” said Barrow.
Coming out of last year’s consultation, the IMF noted the deterioration in Belize’s debt profile, especially due to contingent liabilities accrued in the process of the nationalization of Belize Telemedia Limited (BTL) and the Belize Electricity Limited (BEL).
The IMF again recommended that Belize should increase the rate of General Sales Tax (GST)—a consumer tax—to the regional level of 15%. This morning, Barrow pointed to “declining net yields [in GST receipts] in the face of increasing transactions volumes.” He said that Belize had asked the IMF for help with tax reform as well.
“We made this request some time ago, and there had been some delay in the IMF’s response owing to pressure for the same service from other member countries. I met with senior Fund staff on another matter about a month ago, and the tax review for Belize is now a priority item,” said Barrow.
The IMF team meets first with the government’s finance team, before it extends its consultations to the Central Bank, the commercial banks, private sector organizations such as the Belize Chamber of Commerce and Industry, and other stakeholders.
The IMF mission in Belize should last roughly two weeks, the Ministry official told us.