Belize

Politics:

• Analysis

  Belize politics: Quick View - Government designates crime "hotspots"

  Event

  The government has ramped up its efforts to tackle crime by designating crime "hotspots". An enhanced police presence in these areas will have special powers to limit freedom of movement and to search premises.

  Analysis

  In an attempt to control the high and rising rate of violent crime, on November 7th the authorities defined five "crime-ridden areas". Police and the Belize Defence Force will make joint patrols and set up vehicle checkpoints in these areas, with a 25% increase in personnel deployed. Under the 1994 Crime Control and Criminal Justice Act, the government can grant the police special powers of search without a warrant. However, with public finances tight, a job-creation scheme in crime hotspots is being sharply cut back.

  Crime rates in Belize are high, with 41 killings per 100,000 inhabitants in 2011, almost matching Jamaica's perennially high murder rate (42 per 100,000). Only 26 suspects were detained for the 125 murders recorded in 2011, and the intimidation or killing of witnesses sharply reduces conviction rates in the cases that reach trial. In 2012 Belize's murder rate is expected to reach 46 per 100,000, with 119 killings having taken place by November 5th. Most murders stem from turf wars between rival neighbourhood gangs. However, concerns were heightened in October by the killings of two businessmen.

  The US State Department noted in March that obstacles to lowering crime rates in Belize included limited funds and equipment, corruption and deficiencies in intelligence gathering, and failures of political will. In response to these concerns, plans to tackle crime include a corrective training facility for juvenile criminals, new police forensic equipment (including a DNA testing facility), strengthening of the public prosecution service and efforts to persuade the courts to apply tougher bail conditions. In 2011 police training was revamped, gun controls were tightened and telephone wiretaps legalised, while a heavily armed gang suppression unit has been active since 2010.

  November 09, 2012

• Background

  Belize: Key figures

  Dean Barrow

  Mr Barrow has been prime minister since the general election held on February 7th 2008, when he led his United Democratic Party (UDP) to a sweeping victory, taking 25 of the 31 seats in parliament. He was chosen as leader of the UDP at an October 1999 party convention, following the resignation of Manuel Esquivel, who lost his seat and resigned as prime minister and party leader after his defeat in the 1998 elections. Mr Barrow was formerly a partner in the law firm of Barrow and William. He was born on March 2nd 1951 in Belize City, and won a parliamentary seat in the 1984 general election, serving initially as minister of foreign affairs and economic development and then as attorney-general from 1986. He was deputy leader of the party from March 1990, and after the UDP's 1993 election victory was deputy prime minister, minister of foreign affairs and economic development, and attorney-general. In 1995 national security, immigration and nationality matters were added to his portfolio and economic development was removed. He became leader of the UDP following the party's election defeat in August 1998 and the resignation of Mr Esquivel.

  John Briceno

  John (often referred to as Johnny) Briceno has been leader of the opposition People's United Party (PUP) since March 2008, when he narrowly won a contest to succeed the former prime minister, Said Musa. He was deputy prime minister from 1998 to 2007, but led cabinet rebellions by groups of dissident ministers (notably the G-7 alliance in August 2004). He resigned from the cabinet in June 2007 over the government's proposal to pay the debts of Universal Heath Services, a failed private hospital. He was born in 1960 in Orange Walk in northern Belize, the town he represents in parliament.

  Said Musa

  Prime minister from 1998 to 2008, Said Musa retains a high political profile despite having formally stepped down as leader of the PUP. Born in 1944, he studied banking and law in the UK. He returned to Belize in 1967, where he served as Circuit Magistrate and Crown Counsel at the Public Prosecutions Office. He served as an appointed senator from 1974 to 1979, and in 1979 he became a government minister. Mr Musa succeeded the founder of the PUP, George Price, as its leader in 1996, taking the party to election victory in 1998 and winning a second term in 2003.

  December 16, 2008

• Structure

  Belize: Political structure

  Official name

  Belize

  Form of state

  Representative democracy

  Head of state

  Queen Elizabeth II, represented by a governor-general

  The executive

  Prime minister, chosen from the majority party in the legislature, heads a cabinet of ministers responsible to the legislature

  National legislature

  Bicameral National Assembly: 12-member Senate (the upper house), six of whom are appointed on the advice of the prime minister, three on the advice of the leader of the opposition and one each by the churches, the business community and the trade unions; 31-member House of Representatives (the lower house), comprising directly elected members serving five-year terms

  Legal system

  UK-style judicial system; the final court of appeal is the Trinidad and Tobago-based Caribbean Court of Justice (CCJ)

  National elections

  March 7th 2012; next election due by March 2017

  National government

  The UDP currently holds 17 of the 31 seats in the lower house

  Main political organisations

  Government: United Democratic Party (UDP)

  Opposition: People's United Party (PUP)

  Key ministers

  Prime minister & minister of finance & economic development: Dean Barrow

  Deputy prime minister & minister of natural resources & agriculture: Gaspar Vega

  Attorney-general & foreign affairs: Wilfred Elrington

  Education, youth & sports: Patrick Faber

  Energy, science & technology & public utilities: Joy Grant

  Forestry, fisheries, sustainable development & indigenous people: Liselle Alamilla

  Health: Pablo Marin

  Housing & urban development: Michael Finnegan

  Human development, social transformation & poverty alleviation: Anthony Martinez

  Labour, local government & rural development: Godwin Hulse

  National security, police, Belize Defence Force: John Saldivar

  Public services, elections & boundaries: Charles Gibson

  Tourism & culture: Manuel Heredia

  Trade, investment, private-sector development & consumer protection: Erwin Contreras

  Works & transport: Rene Montero

  Central Bank governor

  Glenford Ysaguirre

  January 09, 2013

Economy:

• Background

  Belize: Economic background

  Real gross domestic product by sector
  (% share of GDP)
  	2003	2004	2005	2006	2007
  Agriculture	14.8	14.7	13.7	13.1	11.1
  Industry	14.6	14.8	14.6	17.4	18.1
  Services	61.4	61.3	62.4	60.4	61.7
  Source: Economist Intelligence Unit.

  Download text file (csv format)

  December 16, 2008

• Structure

  Belize: Economic structure

  Economic structure: Annual indicators

  	2008a	2009a	2010a	2011a	2012b
  GDP at market prices (Bz$ bn)	2.7	2.7	2.8b	2.7b	2.7
  GDP (US$ bn)	1.4	1.4	1.4b	1.3b	1.4
  Real GDP growth (%)	3.6	0.0	2.7b	2.0b	3.6
  Consumer price inflation (av; %)	6.4	-1.1	0.9	-2.5	1.4
  Population (m)	0.3	0.3	0.3	0.3b	0.3
  Exports of goods fob (US$ m)	480.1	383.9	475.7	603.3	530.3
  Imports of goods fob (US$ m)	788.2	620.5	647.2	773.9	779.5
  Current-account balance (US$ m)	-144.9	-82.8	-45.7	-31.3	-46.9
  Foreign-exchange reserves excl gold (US$ m)	166.2	213.7	218.0	237.1	243.7
  Exchange rate (av) Bz$:US$	2.00	2.00	2.00	2.00	2.00
  a Actual. b Economist Intelligence Unit estimates.

  Download the numbers in Excel

  Origins of gross domestic product 2010	% of total	Components of gross domestic product 2010	% of total
  Agriculture	9.8	Private consumption	68.8
  Industry	20.4	Government consumption	16.4
  Services	58.1	Gross fixed investment	27.1
  		Change in stocks	1.0
  		Exports of goods & services	68.6
  		Imports of goods & services	82.1
  		GDP at market prices	100
  Principal exports 2009	US$ m	Principal imports cif 2009	US$ m
  Marine products	32.0	Machinery & transport equipment	133.5
  Sugar	44.6	Manufactured goods	136.5
  Citrus concentrate	37.0	Fuels	124.8
  Banana	33.4	Food, beverages & tobacco	78.3
  Garments	0.0	Chemicals	62.6
  Main destination of exports 2010	% of total	Main origins of imports 2010	% of total
  US	42.3	US	34.3
  UK	29.0	Central America	16.8
  Caricom	15.2	Mexico	10.2
  Mexico	6.4	EU	3.0

  Download the numbers in Excel

  Download text file (csv format)

  January 09, 2013

• Outlook

  Belize: Country outlook

  Belize: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  OVERVIEW: The prime minister, Dean Barrow, won a second consecutive five-year term for the ruling centre-right United Democratic Party (UDP) in 2012, but the government's slim majority will make it vulnerable to defections. Fiscal constraints will limit the government's ability to meet the population's expectations for improved public services and living standards. Rising crime rates and efforts to curb them will stay at the forefront of the agenda. The fiscal deficit will average 3% of GDP in 2012/13 (April-March) but will decline to 2.3% of GDP in 2014 assuming a swift and amicable debt restructuring with bondholders is accomplished. The outlook for growth in the global economy (particularly in the euro zone) in the 2013-14 forecast period will remain weak. This will slow the pace of recovery in Belize, but the Economist Intelligence Unit expects real GDP growth to continue at 2.6% in 2013 and 2.9% in 2014. Inflation will rise, but will remain contained in 2013-14 at an annual average of 1.5%. The current-account deficit will narrow slightly in 2013-14 as import bill growth slackens, while capital inflows remain weak.

  DOMESTIC POLITICS: Although the government is not expected to face any immediate difficulty in enacting its legislative agenda, it will struggle to fulfil election promises to stimulate the economy, spur employment growth and meet expectations for improved public services, owing to fiscal constraints. Mr Barrow has also staked his political reputation on achieving substantial debt relief through negotiations with bondholders of Belize's US$547m superbond. The political gamble that debt reduction will free resources for popular spending plans could easily backfire and harm Mr Barrow's popularity. Efforts to curb high and rising crime rates-Belize has the third-highest murder rate in Central America and the second-highest in the Caribbean, according to the UN-continue to play a prominent role in the political agenda. In an attempt to address the problem, in November the authorities invoked special powers of search without warrant, in five defined high-crime areas. The police and Belize Defence Force (a paramilitary force) will now make joint patrols with vehicle checkpoints in the designated areas. However, with public finances tight, the ability of the government to direct significant additional resources to crime prevention and detection is limited. Until a more comprehensive policy response is formulated, crime rates will continue to grow and pose increasing costs and risks to the business environment in 2013-14. The combination of heavy-handed policing methods and likely poor results also holds the potential to erode public approval of the government. The next legislative election is not due until March 2017. Both the UDP and the opposition People's United Party accused each other of vote-buying to influence the 2012 election outcome, but challenges lodged with the Supreme Court failed to overturn any of the results. Barring an unexpected and major revolt by lawmakers to deprive the government of its slim majority, electoral considerations will stay in the background in 2013-14.

  INTERNATIONAL RELATIONS: Belize's relations with Guatemala, long tainted by a border dispute, will remain delicate, despite confidence-building measures under the auspices of the Organisation of American States. The two countries intend to hold simultaneous referendums on October 6th 2013 to decide whether to submit the dispute to binding arbitration at the International Court of Justice in The Hague. The government will continue to attach importance to relations with Venezuela, while the benefits from that country's oil diplomacy remain available. Relations with Taiwan (which has lent large sums to finance infrastructure projects in Belize) will remain strong, although aid could be redirected, in which case relations would wane. Support from the US and the UK will remain focused on combating the illegal drug trade and money-laundering, both of which are fuelling the spread of violent crime. In this context, evidence of corruption within the security, customs and other law-enforcement services will continue to undermine prospects for improvement. The US will press for tighter control over intellectual property rights and the eradication of human-trafficking, but progress in 2013-14 will remain hampered by Belize's challenging geography and porous borders.

  POLICY TRENDS: Belize's economy performed better in 2012 than those of many of its Caribbean neighbours, but the rising cost of servicing a heavy debt burden has proved a major challenge to policymaking. Previous unsustainable fiscal policies, slow GDP growth and recent government willingness to renege on its external debt liabilities inhibit a near-term rebound in private investment. Fiscal revenue growth has successively failed to meet expectations, leading to a persistent financing gap and difficulties in meeting payments on the country's US$547m 2029 superbond. A large rise in the bond's yield, which stepped up gradually from an original 4.3% to 8.5% in 2012, is driving the government to seek better terms from bondholders and a negotiated debt restructuring is under discussion following a late partial payment on the superbond in September 2012. Despite only slow progress and several missed deadlines, we assume that a negotiated settlement will eventually be reached with bondholders, as both sides appear committed to further talks and bondholders will be reluctant to declare a full default through a demand for immediate repayment and legal action for recovery. A deal is likely to entail some extension of term limits and a lowering of interest yield on part of the bond, falling far short of the government's proposals, which include substantial debt-forgiveness. We assume that the government will stick to its pledge to avoid fresh commercial borrowing in the 2013-14, but that bondholders will refuse to take a cut in the face value of the superbond. As such, debt levels would decline only gradually, to around 72% of GDP in 2014 (from an estimated 78% of GDP in 2012). Depending on the terms of the restructuring, the sharp fall in debt-service costs would provide the government with fiscal breathing space and a much easier path to fiscal consolidation. Under this scenario, we expect that the government would swiftly advance with its plans to stimulate the economy through increased public investment. The latest fiscal data for January-September from the Central Bank of Belize show a deterioration in the non-financial public-sector fiscal balance, as weakening revenue and higher capital expenditure widened the overall fiscal deficit to 2% of GDP in the period. However, this is broadly in line with the government's budget for 2012/13, which anticipated a deficit of 2.5% of GDP. Given recent fiscal and external trends in trade and US growth, we expect that this revenue target will now be only narrowly missed. Stronger than expected economic growth in the second half will have a beneficial impact on earnings, preventing the deficit from expanding much beyond projections. However, the government will remain reluctant to implement more stringent austerity measures in 2013/14 to narrow the fiscal deficit, in order to avoid choking off economic recovery. The uncertain outcome of debt negotiations also clouds the fiscal forecast, but we assume that the government will succeed in winning some relief and that the deficit will be held at or below 2% of GDP in 2013/14. Failure to achieve a swift and amicable debt restructuring with bondholders is a major downside risk to this forecast. Without a restructuring, ballooning debt-service costs (up by 36% year on year in 2012/13) will account for 17.5% of current spending-and will continue to far outstrip revenue growth. The authorities will remain dependent on multilateral and official bilateral sources of financing on concessional terms and will seek to attract grants wherever possible. The IMF has urged a fiscal-consolidation strategy geared towards reducing public debt to a more sustainable level through delivering primary surpluses (before interest payments), as well as reducing dependence on grants and oil revenue. Although the government had some success regarding this in 2011/12 and 2012/13, further progress is largely dependent on new oil discoveries and firm international oil prices. High oil prices have supported revenue, but with prices easing and output declining from recent peaks, earnings from this source will continue to ebb. As domestic demand gradually picks up in the latter part of 2013-14, in line with stronger growth, tax revenue from imports will increase. The sale of Crown land will also provide some support to capital revenue.

  ECONOMIC GROWTH: The uncertain outlook for the global economy, and especially the US business cycle, will weigh on growth prospects for Belize in 2013-14. Better than expected economic performance in the first half of 2012, with growth accelerating to 7.4% in June, has led us to raise our estimate for real GDP growth of 3.6% of GDP in 2012 (from 2.4% previously). A stronger than expected rebound in agricultural output, combined with recovering construction and tourism demand, has been driving the expansion, but activity appears to have slowed in the second half as seasonal and one-off factors linked to the sugarcane harvest fell out of the equation. External downside risks to our forecasts for Belize in 2013 are already materialising, with external demand for goods and services slackening as the US recovery stays weak and the recession in some Euro zone economies shows little signs of reversing. A recovery in Belize's sugar industry output will be insufficient to offset the weaker outlook for other sources of earnings and investment in 2013 and our forecast is for real growth to slow again to 2.6% of GDP. Beyond 2013, we expect firmer prices for commodities to support earnings and fiscal revenue. We expect a modest boost to public consumption growth as fiscal resources are freed up to bolster public investment and stimulate the economy in the latter half of 2013-14. This would also help to boost currently weak growth in private consumption. Overall, a mild economic recovery will gather pace in 2014, assuming that public investment expands, with GDP growth of 2.9%. The economy will continue to depend on tourism and investment in tourist-related infrastructure, the small energy sector and the agricultural sector (notably its exports of citrus, sugar, seafood and bananas). Construction will benefit from a range of small-scale public-sector projects, which led to a marked expansion of spending in 2012/13, but the recovery in construction will decelerate over the course of 2013. Borrowing restraint, stemming from the need to reduce the high public debt burden, will temper spending on large-scale infrastructure projects, limiting the overall potential for public sector investment growth. Growth in private consumption will be constrained by high unemployment and low income growth. Despite a steady fall in domestic lending rates since 2011 (the weighted average lending rate fell to a low of 12.1% in October), credit demand remained sluggish in 2012, reflecting weak consumer and business confidence.

  EXTERNAL ACCOUNT: The tepid nature of the US recovery will limit demand for key exports such as sugar, citrus and seafood, and will also prevent a more robust recovery in tourist arrivals in 2013-14. Furthermore, remittances from workers abroad will continue to grow slowly in 2013-14, providing only modest support to the current account. Although we do not expect major increases in oil production or export volumes in the near term, international prices will remain sufficiently firm to continue to underpin export revenue in 2013-14. However, this will also put upward pressure on the import bill, given Belize's lack of oil-refining capacity, making it dependent on imports of refined fuel products. Despite continued oil exploration, a discovery of substantial new reserves would only be felt late in the 2013-14 period, given the time lag involved in bringing new wells into production. After the current-account deficit widened to an estimated 3.5% of GDP in 2012-on the back of a sharp recovery in import demand-we expect it to narrow again to 3.3% and 3.1% of GDP, respectively, in 2013 and 2014, as export earnings growth broadly outpaces slackening import demand growth. A faster than currently anticipated recovery in public and private investment growth, or any upward spike in commodities prices, would result in a wider than forecast deficit. Assuming that capital inflows remain weak, as no new privatisations or major infrastructure projects are planned, the capital-account surplus will continue to shrink, owing to relatively low foreign direct investment inflows. Reserves levels are therefore not set to expand significantly in 2013-14.

  January 11, 2013

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Country Briefing

Land area

22,963 sq km

Population

312,698 (official census, 2010)

Main towns

Population in '000 (official census, 2010):

Belize City: 53.5

San Ignacio/Santa Elena: 17.0

Orange Walk town: 13.4

Belmopan (capital): 13.3

San Pedro: 11.5

Corozal town : 9.9

Dangriga: 9.1

Climate

Sub-tropical

Weather in Belize City

Hottest month, August, 24-31°C (average monthly minimum and maximum); coldest month, January, 19-27°C; dry season, February-May; wet season, June-October. Annual average rainfall, 1,270 mm (north); 4,318 mm (south). The country is periodically subject to tropical storms and hurricanes

Languages

English (official), Creole and Spanish

Measures

UK (imperial) system; fuel is measured in US gallons

Currency

Belize dollar (Bz$) = 100 cents. Pegged at Bz$2:US$1

Time

6 hours behind GMT

Public holidays

January 2nd; March 12th (National Heroes and Benefactors Day); Good Friday; Holy Saturday; Easter Monday; May 1st; May 21st; September 10th (National Day); September 21st (Independence Day); October 15th (Pan-American Day); November 19th (Garifuna Settlement Day); December 25th and 26th

January 09, 2013