The government has gotten another glowing report form the IMG after its Article Four consultation in Belize from February second to the 14th.

The report notes that "Economic activity has rebounded strongly from the COVID-19 pandemic, while inflation has risen….real GDP rebounded by 15.2 percent in 2021 and 11.6 percent in the first three quarters of 2022, driven by retail and wholesale trade, tourism, and business process outsourcing."

Meanwhile, inflation rose to 6.3 percent in 2022. The IMF forecasts that economic activity and inflation are projected to moderate going forward with GDP growth tapering off at 3 percent in 2023.

The IMF also praises the government for slicing the public debt. First off though - the rebasing of the debt brought it down from 133 percent of the old GDP to 101 percent of the new GDP.

And then that 101% fell further to 64.1 percent of GDP in 2022 with eh combination of the Blue Bond, a deep discount on the Petrocaribe debt, along with cost containment and sustained strong GDP growth.

Today at another event, the CEO in the Ministry of Economic Development beamed about the favorable report:

Osmond Martinez, CEO, Ministry of Economic Development
"It has become an excellent meeting, with the unprecedented macro economic indicators, we have seen very positive response form IMF."

"They're impressed because Belize's homegrown economic plan is performing well, their most impressive point is that our debt to GDP went from 133% in 2020 to 63% which is over 60 points which up to now, it is, for many economies, and people who wants to argue, how have we managed to bring down debt to GDP but it's a combination of components, one is renegotiation of some of the, or the restructuring of the sovereign debts, and two is the growth of GDP and, for example, what we are doing here today contributes to GDP growth because there is an increase in economic activity and enables an environment to continue with economic growth in Belize so IMF is very happy with Belize right now."

Reporter:
"The blue bond is one of the aspects that helped with that decrease, right?"

Osmond Martinez, CEO, Ministry of Economic Development
"Of course, the blue bond had an impact of 12% directly onto GDP but it still having, you know when there is an explosion somewhere, you don't know the damage it creates, you know it takes time to know, the blue bond transaction has created a positive damage to Belize whereby Belize has something to offer whereby now international agents, they want to know about the blue bond and so the blue bond should be one of the main marketing tools for Belize, not only for renegotiations of any sovereign debt but also to let the whole world know, hey, Belize has something to offer."

IMF Recommends More Taxes And Pension Reform

But, the report isn't an investment brochure. It does warn about an increase in non performing loans in the banking sector and states quote, "banks more exposed to the sectors most affected by the pandemic have experienced larger increases in NPLs."

And, as they always do, the IMF wants the government to take some basic food items out of the zero rated basket and subject them to GST. They also suggest raising fees on vehicle registrations and driver licenses, and increasing excises on fuel.

And, the IMF also urges the government to move toward pension reform for the public service. They say the Pension Plan for Public Officiers is, quote, "a non-contributory defined-benefits pension system with a low retirement age and high benefits." They advise, quote, "Gradually increasing the contribution rate to 10 percent, raising the retirement age from 55 to 65…The sooner these reforms are implemented, the more gradual and less disruptive they can be." End quote.

And the IMF met with the joint unions to give them this proposal? How did it go? We challenged the PSU president about it when he appeared on Uncut:

Jules Vasquez
"95.8 million for pensions. That is too much. That's a hundred million dollars, that was in 2020. That's a hundred million dollars - 8% of the budget overall is being spent on pensions. Union leaders, how can we continue to have a non-contributory pension? It makes no sense. 100 million dollars. The IMF already explained to you all its too much." Dean Flowers, President, PSU
"Yeah, a hundred million. Have you ever seen an audit report from the auditor general that substantiate that number?"

Jules Vasquez
"I have not. The Prime Minister would not make that up, sir."

Dean Flowers, President, PSU
"Have you ever heard of the auditor general, this one or past one, did an audit on the pension scheme, in terms of what its really costing us?"

"That has never happen."

Jules Vasquez
"Is this the number the IMF gave you all though?"

Dean Flowers, President, PSU
"Yes, and you know I will ask the question; where did you get those numbers from? Well, this is what the ministry of finance gave us. Did you substantiate those numbers? Did you get the raw data to.... No, we just go with what the SIB and the financial secretary does."

"So, we agree, let's do it. Let's have the conversation and let's come up with a plan. We are not fighting there, but the prescription has to be well thought out and it has to ensure that if you will take from here, you have to give me here, so we maintain a balance and after we understand that, then I think we'll be better able to come up with a formula that speaks to this. The IMF is also telling you that not only do I want you to effect pension reform, but I want you to extend the retirement age to 65. Now, as we discuss, the payscale does not accommodate that, because the payscale is design for 55."

"So, its wishful thinking if we think we could fix this thing overnight."

Jules Vasquez
"Will you all accept in principle that a non-contributory pension is unsustainable in the long term?""

Dean Flowers, President, PSU
"No. I don't accept it at face value. Why? I said to the IMF, remove zero rated items. That was one of the recommendations. Oh, the zero-rated list is too big and broaden the tax base. And I said to the guy from Chile, what's your recommendation for revenue enhancement? What's your recommendation to address the fleecing private sector? who keeps getting and getting and not paying their fair share. Ahm, well, we're looking at..."

"You come and talk to me about expenditure and you didn't bring absolutely nothing on the revenue side?"

The report also urges government to expand expenditure on infrastructure, targeted social programs such as the BOOST program, and crime prevention.

Channel 7