BELMOPAN, Belize, CMC – A new World Bank study has identified reforms to improve public spending in Belize, saying that the Caribbean Community (CARICOM) member-state could reduce government debt to below 50 percent of Gross Domestic Product (GDP) by undertaking reforms in targeted areas.
The World Bank’s Public Expenditure Review, launched on Thursday, shows that for Belize to maintain the current positive trend in the quality of its fiscal policies, the country needs to “increase its ability to respond to external shocks, improve value for money in critical social and investment programs, manage growth in public sector wages, and optimize spending related to climate change.
“While Belize has made important progress in reducing public debt and strengthening fiscal management, constraints remain,” the report adds.
It finds that budget credibility and fiscal discipline remain challenging, stating that inconsistencies in budget reporting and strategic planning make it “difficult to use resources more efficiently” and that “a high public sector wage bill continues to limit fiscal space.”
As of 2022, the wage bill accounted for 41 percent of total public spending, the report says.
“The compounding challenges of high debt, global financial conditions, and low growth rates intensify the strain on public budgets. This review takes a close look at the core of Belize’s fiscal challenges and identifies steps toward establishing a sustainable fiscal framework for public expenditure in Belize and maximizing value for money in important sectors such as health and education,” said Lilia Burunciuc, World Bank Country Director for the Caribbean.
To address these challenges, the report recommends a range of policy measures. Specific recommendations include adopting a Fiscal Responsibility Law, “which will feature explicit rules to guide transparent and predictable debt reduction.”
The report also emphasizes establishing an Independent Fiscal Council, “which will produce unbiased projections and evaluate compliance with fiscal rules.”
The report finds that Belize’s climate change mitigation and adaptation spending – which poses significant risks to its economy –is “limited and in need of reprioritization.”
The Public Expenditure Review recommends creating a Natural Disaster Reserve Fund, a fund of about one percent of GDP, replenished annually, to help expedite the financing of immediate recovery and response expenses arising from floods and hurricanes.
The study identifies opportunities to improve education and health services, “which could convert spending into better results.”
It recommends health and education financing reforms, more robust accountability mechanisms, and other effective policy strategies to improve the productivity of schools and health facilities.
The Washington-based World Bank says the publication is the culmination of four rounds of consultations with Belize’s Ministry of Education, Culture, Science and Technology, the Ministry of Health and Wellness, and the Ministry of Finance, Economic Development and Investment.
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