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IMF: Fuel price stabilization measures should be temporary

HeadlineIMF: Fuel price stabilization measures should be temporary

While the IMF has commended Belize for its economic growth, it also advised that the Government’s measures for fuel price stabilization should only be temporary. Prime Minister Hon. John Briceño, however, says his focus is on the people, not the numbers.

By Khaila Gentle

BELIZE CITY, Thurs. May 12, 2022

On Tuesday, May 10, the International Monetary Fund (IMF) issued an official report on Belize’s financial standing following the release of its preliminary findings back in February. While the report highlighted Belize’s strong economic recovery, citing the increase of GDP by almost 10% in 2021, it also pointed out that the country’s primary balance (the difference between its revenue and its expenditure) is expected to decline to 0.1 percent of GDP this fiscal year, as a result of the Government’s recently implemented measures for mitigating fuel price increases.

For the country’s primary balance to stabilize at near 0.6 percent of GDP for fiscal years 2023 to 2032, the IMF stated that Belize would need “a passive scenario with no additional measures.”

It also noted that for Belize to restore its debt sustainability and increase its primary balance, the fuel subsidies and other measures such as the fuel stabilization fund, all of which were implemented to mitigate the rise in fuel prices, should be temporary.

In response to the report, however, Prime Minister Hon. John Briceño told local media that while the IMF is focused on the numbers, the Government’s aim is reducing poverty through economic growth—something which would have been stifled by the skyrocketing fuel prices.

“The IMF looks at numbers. We look at people. We’re here to try our very best to make the lives of our citizens better. And if that means that we have to get the IMF upset, well, so be it. We need to be able to see what we can do. We have every confidence that with what we’re doing and continuing to push the growth of the economy, that the primary balance, we hope that it can be able to improve by the end of the year,” he stated.

The Prime Minister also highlighted the fact that while the IMF’s report early last year was largely negative, it eventually ended up praising the country for its economic rebound.

In addition to emphasizing Belize’s economic recovery over the past year, the IMF report also commended the country for its novel Blue Bond initiative, which it referred to as a “debt for marine protection swap” deal with The Nature Conservancy.

“Jaime Guajardo, the IMF’s mission chief for Belize, said the deal is of tremendous benefit to the country and contributes to the authorities’ objectives of restoring debt sustainability, promoting sustainable development, and enhancing resilience to natural disasters and climate change,” wrote the IMF’s Nicholas Owen.

Through the Blue Bond arrangement, Belize has been lent funds by a subsidiary of The Nature Conservancy (TNC) in order to buy back its previous Superbond—a debt of US $553 million—at a discounted price of 55 cents per dollar. In exchange, Belize has committed to spending US $4.2 million annually on marine conservation until the year 2041. It has also committed to expanding its Biodiversity Protection Zones, which include coral reefs, mangroves, and fish spawning sites, from 16 percent of its ocean area to 20 percent by the year 2026. Additionally, the country established an endowment fund of US $23.5 million to fund marine conversation after 2041.

“These initiatives will also support the authorities’ efforts to strengthen resilience to natural disasters and climate change and reduce greenhouse gas emissions,” said the IMF.

According to the report, the Blue Blond reduced public debt by 12 percent of GDP in 2021 and will also enhance the protection of the marine environment going forward.

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