• TABLE OF CONTENTS
HIDE
 Front Cover
 Title Page
 Front Matter
 Directors and principals
 Table of Contents
 Overview of the bank
 Economic review
 Operations
 Administration
 Statistical appendix
 Auditor's report














Title: Central Bank of Belize Annual Report
ALL VOLUMES CITATION PDF VIEWER THUMBNAILS PAGE IMAGE ZOOMABLE
Full Citation
STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00098955/00004
 Material Information
Title: Central Bank of Belize Annual Report
Physical Description: Archival
Language: English
Creator: Belize National Library Service and Information System (BNLSIS)
Publisher: Central Bank of Belize
Publication Date: 2003
Copyright Date: 2010
 Record Information
Bibliographic ID: UF00098955
Volume ID: VID00004
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved by the source institution and holding location.

Downloads

This item has the following downloads:

newAR03revised ( PDF )


Table of Contents
    Front Cover
        Page 1
        Page 2
    Title Page
        Page i
    Front Matter
        Page ii
        Page iii
    Directors and principals
        Page iv
    Table of Contents
        Page v
        Page vi
        Page vii
    Overview of the bank
        Page viii
        Page ix
        Page x
        Page xi
    Economic review
        Page 1
        Page 2
        Page 3
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
        Page 10
        Page 11
        Page 12
        Page 13
        Page 14
        Page 15
        Page 16
        Page 17
        Page 18
        Page 19
        Page 20
        Page 21
        Page 22
        Page 23
        Page 24
        Page 25
        Page 26
        Page 27
        Page 28
        Page 29
        Page 30
        Page 31
        Page 32
        Page 33
        Page 34
        Page 35
        Page 36
        Page 37
        Page 38
        Page 39
        Page 40
        Page 41
        Page 42
        Page 43
        Page 44
        Page 45
        Page 46
        Page 47
        Page 48
    Operations
        Page 49
        Page 50
        Page 51
        Page 52
        Page 53
        Page 54
    Administration
        Page 55
        Page 56
        Page 57
        Page 58
    Statistical appendix
        Page 59
        Page 60
        Page 61
        Page 62
        Page 63
        Page 64
        Page 65
        Page 66
    Auditor's report
        Page 67
        Page 68
        Page 69
        Page A-1
        Page A-2
        Page A-3
        Page A-4
        Page A-5
        Page A-6
        Page A-7
        Page A-8
        Page A-9
        Page A-10
        Page A-11
        Page A-12
        Page A-13
        Page A-14
        Page A-15
        Page A-16
Full Text





~d~~~~'~~;2~d~d~jt~~~


^ PfflnRO ~iu^1?


TT














Central Bank of Belize


Annual Report and Accounts, 2003








Annual Report 2003
Ceta ak fBlz


Abbreviations and Conventions used in this Report


Abbreviations:


African, Caribbean and Pacific
Annual Percentage Rate
Belize Electricity Limited
Banks and Financial Institutions
Acts, 1995
Banana Growers Association
Bank for International Settlements
Belize Sugar Industries Limited
Belize Social Security Board
Belize Tourism Board
Belize Telecommunications Ltd.
Belize Water Services Limited
Caribbean Community and Common
Market
Central American Bank for Economic
Integration
Caribbean Centre for Monetary Studies
Caribbean Development Bank
Common External Tariff
Caribbean Financial Action Task Force
Commercial Free Zone
Citrus Growers Association
Cost Insurance and Freight
Consumer Price Index
Central Statistical Office
Development Finance Corporation
Eastern Caribbean Central Bank
Economic Commission for Latin
America and the Caribbean
European Currency Unit


EDF
EIB
EU/EEC
FY
GDP
GOB
IBC
IBM
IBRD

IDB
IFS
IMF
NFC
OECD

OECS

PAYE
PGIA
ps
RECONDEV

RMB
ROC
SIF
UK
US/USA
WTO
WASA


European Development Fund
European Investment Bank
European Union
Fiscal Year
Gross Domestic Product
Government of Belize
International Business Company
International Bank of Miami
International Bank for Reconstruction
and Development
Inter-American Development Bank
International Financial Statistics
International Monetary Fund
Not from concentrate
Organisation for Economic
Cooperation and Development
Organisation of Eastern Caribbean
States
Pay As You Earn
Phillip Goldson International Airport
Pound solid
Reconstruction and Development
Corporation
Royal Merchant Bank
Republic of China, Taiwan
Social Investment Fund
United Kingdom
United States
World Trade Organisation
Water and Sewerage Authority


Notes and Conventions:
--$ refers to the Belize dollar unless otherwise stated
--mn denotes million
--bn denotes billion
--The figures for 2002 in this report are provisional, and the figures for 2001 have been revised.
--Since May of 1976 the Belize dollar has been tied to the US dollar at the rate of US$1.00 = F. : ,
--Totals in tables do not always equal the sum of their components due to rounding.


ACP
APR
BEL
BFIA

BGA
BIS
BSI
BSSB
BTB
BTL
BWSL
CARICOM

CABEI

CCMS
CDB
CET
CFATF
CFZ
CGA
CIF
CPI
CSO
DFC
ECCB
ECLAC

ECU


















April 30, 2004


Hon. Ralph Fonseca
Minister of Finance and Home Affairs
New Administration Building
Belmopan
BELIZE


Dear Minister Fonseca:

In accordance with Section 58 of the Central Bank of Belize Act, 1982, I have the honour
of submitting to you, in your capacity as Minister of Finance, the Report on the Central
Bank of Belize's operations for the period January 1 to December 31, 2003, together with
a copy of the Bank's Statement of Accounts, as certified by the External Auditors.

Yours sincerely,



Sydney J. Campbell
Governor







Annual Report 2003



DIRECTORS AND PRINCIPALS

At December 31, 2003

BOARD OF DIRECTORS

JORGE M. AUIL
Chairman

SYDNEY CAMPBELL
Vice Chairman

MARION PALACIO

DAVID FONSECA

JAIME BRICENO

ROBERT SWIFT

HUGH McSWEANEY
Financial Secretary

PRINCIPAL OFFICERS

SYDNEY CAMPBELL
Governor

MARION PALACIO
Deputy Governor

CAROL HYDE
Manager, Human Resources & Administration

HOLLIS PARHAM
Manager, Finance

MARILYN GARDINER
Manager, Banking and Currency

NERI MATUS
Manager, Financial Sector Supervision

CHRISTINE VELLOS
Manager, Research

KENT HAYLOCK
Chief of Security










TABLE OF CONTENTS

Directors and Principals ......................................................................... iv
Table of Contents ....................................................................................... v
List of Tables ................................................................................................ vi
List of Charts .............................................................................................. vii
List of Boxes ............................................................................................... vii

Overview Of The Bank ................................................................................ viii
Mission, Goals and Objectives ........................................... ....... .................. viii
O organization and Functions ............................................ ................................. ix

Economic Review ........................................................ ............................... 1
Overview ........... .. ........................ .......... 1
International and Regional Developments ........................................................... 3
Domestic Production, Prices and Employment......... .............. ..................... 9
Monetary and Financial Developments .......................... ..................................... 20
Central Government Operations and Public Debt........ ........ ............................ 26
Foreign Trade and Paym ents ........................................... ................................. 32
E conom ic P rosp ects ........................ .. ........................................... ................... 47

O operations ................................................................................................... 49
Foreign Exchange Operations .............................. ... ..................................... 49
Relations with Commercial Banks ......... ................................................. ...................... 49
Transactions with Central Government ................................................................. 50
Supervision of the Financial System ................................. ....................................... 52
Information Systems Developments .................................. ................................. 53

Administration ..................................................................................55
The B oard of D directors ...................... .... ............... ........................ ................... 55
O overseas M meetings ............................................. ................................................... 55
Finance ....................................................... ......................... 55
Internal Audit .................... .................... .................. 55
H um an R sources .................................................... ........................................ 57


Statistical Appendix ......................................................................................... 59

Auditor's Report ......................................................................................... 67







Annual Report 2003



LIST OF TABLES


Table I.1: M major E conom ic Indicators ....................................................................................................................

International and Regional Developments .................................... .......... 3
Table II.1: Selected Indicators for Some OECD and Newly Industrialized Countries .......................................... 4
Table 11.2: Selected Indicators for Some Caribbean Countries ......................... ........ .................................. 6
Table 11.3: Selected Indicators for Mexico and Central America ............................ ................................ 7

Domestic Production, Prices and Employment............................. ........... 9
Table III.1: Annual Percent Change in Selected Indicators........................................................ 9
Table III.2: Sugarcane D deliveries .......................................................... ......................................... 10
Table III.3: C itrus Fruit D deliveries ...................................................... ................................. ..... 11
Table III.4: Sugar and Molasses Production ........................ ................................. .......................... 14
Table III.5: Production of Citrus Juices and Pulp .......................................... .......................... 15
Table III.6: Bonafide Tourism Arrivals ............................................................ ........................... 16
Table III.7: Quarterly Percentage Change in CPI Components by Major Commodity Group ............. 18
Table III.8: Employed Labour Force by Industrial Group ....................................... ............... 18


Monetary and Financial Developments ............................................ ...... 20
Table IV. 1: Factors Responsible for Money Supply Movements .......................................... ..................20
Tab le IV .2 : M money Supply .......................................................................................... .................................... 21
Table IV 3: Net Foreign Assets of the Banking System ............................................. .............................. 22
Table IV 4: N et D om estic Credit Sum m ary .................................................................................. .................. 22
Table IV.5 : Commercial Banks' Holdings of Approved Liquid Assets ..................................................... 24

Central Government Operations and Public Debt....................................... 26
Table V 1: Government of Belize-Revenue and Expenditure .................................................... ....................... 26
Table V.2: Central Governm went's D om estic D ebt ........................................................ ....................................29
Table V.3: Financial Flows on Public Sector External Debt ........................................ ............................ 29
Table V 4: Public Sector External D ebt by Source .................................................. ......................................... 31


Foreign Trade and Payments .............................................. ................... 32
Table VI. 1: Balance of Payments Summary and Financing Flows ........................................ ................. 32
Table VI.2: Balance of Payments M erchandiseTrade ............................................... .............................. 33
T ab le V I.3 : D om estic E exports .................................................................................... ........... ................. ....... 33
Table V I.4: Exports of Sugar*and M olasses ........................................................................... ....................... 34
Table VI.5: Export Sales of Citrus Juices and Pulp* ......................... ..........................................36
Table V I.6: E exports of B ananas ....................... ................................................................ .......... ................. ....... 37
Table V I.7: E exports of M marine Products ............................................................................. ............................. 38
Table V I.8: O therM ajorE exports ...................... ...................................................................................................... 39
Table V I.9: D direction of V visible Trade .................................................................. ........................................... 42
Table VI. 10: Balance of Payments Services, Income and Current Transfers..................... ................... 42
Table VI. 11: Balance of Payments Capital and Financial Accounts................ ............ ...................... 44
Table V I. 12: O official and International R deserves .................................................................................. .......................46












Operations..................................................................................................... 49
Table IX. 1: Central Bank Dealings in Foreign Exchange 2003 .............. ............................................... 49
Table IX .2: E xte alA assets R atio 2003 ...................................................................................... .......................50
Table IX.3: Commercial Bank Balances with the Central Bank ................................. ........................................ 50
Table IX .4: Currency in Circulation2003 .................................................................... ................................ 51
Table IX.5: Central Bank Credit to Central Government ............................................... .............................. 51
Table IX.6: Government of Belize Treasury Bill Issues ................................................ .............................. 52
Table IX .7: B anks ................ ... ..... ... ..... ... ..... ... ..... ... ..... ............. .. ..................... .. 53

Statistical Appendix .................................................................................... 59
Table 1: Gross Domestic Product (GDP) by Industrial Origin..................................... ....................................59
Table 2: Percentage Share of GDP by Industrial Sector at Current Prices ..................................... .................. 59
Table 3: Real Gross Domestic Product by Industrial Origin at Factor Cost (2000=100) ...................................... 60
Table 4: Annual Percent Change In GDPby Sector at Constant 2000 Prices ....................................................60
Table 5: GDP by Expenditure in Current Prices ....... ........................................................... .................. 61
Table 6: GDP by Expenditure in Constant 2000 Prices .......................................................... ............................61
Table 7: Sectoral Composition of Commercial Banks' Loans and Advances ................................. ................... 62
Table 8: Commercial Banks' Weighted Average Interest Rates ............... ............................................... 62
Table 9: Balance of Payments Summary ..................................................................................................63
Table 10: Gross Im ports (CIF) by SITC Categoies............................................................................................ 64
Table 11: Central Governm ent's D om estic D ebt ......................................................................... ..................64
Table 12: Government of Belize Revenue and Expenditure ................. ................................................ 65
Table 13: Public Sector External Debt by Creditors ................................ ........................................... 66




LIST OF CHARTS


C hart III.1: B anana A create .......................................................................................... ................................... 12
Chart IV 1: R atio of M 2 to GD P ......................................................................................................................... 21
Chart IV2: Annual Change in Net ForeignAssets of Central Bank & Commercial Banks ..................................21
Chart IV3: Sectoral Distribution of Outstanding Commercial Banks Loans.....................................23
Chart IV4 : Quarterly Change in Excess Liquidity ......... ..................................................... ..................24
Chart IV 5 : Quarterly Change in Excess Cash Reserves ........................................................... .................. 24
Chart IV6 : Commercial Banks' Weighted Average Interest Rate Spread .........................................................25
Chart V. 1: Central Government's Development Expenditure ........................................ ............................. 27
Chart V2: Sources of Central Government's Domestic Debt .........................................................................28
Chart V 3: Sources of Public Sector External D ebt .................................................................... ....................... 31

LIST OF BOXES


B ox 1: Tourism D evelopm ents and Prospects ........................................................................................................ 17
Box 2: External Debt and Publicly Guaranteed Debt ..................................... ............................. ................ 30
B ox 3: Corozal Com m ercial Free Zone ............................................................................ .................................. 40
B ox 4: C ruise Ship Tourism ....................................................................................... .................. 43
Box 5: Meetings Attended by the Governor and Deputy Governors during 2003 ..............................................56







Annual Report 2003



OVERVIEW OF THE BANK


Mission, Goals and Objectives


The Central Bank of Belize's objectives are stated in the Central Bank of Belize Act, 1982.

"\\ within the context of the economic policy of the Government the Bank
shall be guided in all its actions by the objectives of fostering monetary
stability especially as regards stability of the exchange rate and promoting
credit conditions conducive to the growth of the economy of Belize."

In light of these objectives, the Bank has the following Mission:

"to foster the development ofan economic and financial environment
in Belize that will facilitate economic growth."

In the pursuit of its mission, the Bank sets a number of goals and operating objectives.
These are listed below Emphasis is added in the first section to indicate the respective
clients) to which each of the Bank's goals is geared.


Goals
Provide prompt and well-considered macroeconomic advice to the Government,
the business sector and the general public.
SProvide efficient banking services to the commercial banks, the government and
various public sector bodies and regional and international organizations that
hold accounts at the Bank.
SProvide guidelines to the banking community on matters such as money supply,
interest rates, credit and exchange rates.
Set high standards of efficiency and organisation so as to encourage higher levels of
attainment in the Bank.

Objectives
SPromote monetary stability.
" Regulate the issue and availability of money and its international exchange.
" Regulate and monitor the financial environment.











Organization And Functions

The Bank's mission and objectives are pursued through its various departments, with core
functions as follows:

Office of the Governor


* Managing the operations of the Bank.
* Co-ordinating the various functions of
the Bank's Departments.
* Formulating, developing and reviewing
the Bank's policy prescriptions.
* Maintaining security operations within
the Bank.


* Streamlining and monitoring systems
and procedures to ensure appropriate
internal controls.
* Ensuring that all communications
necessary for the deliberations of the
directors are prepared and submitted.


Administration


* As secretariat to the Board, ensuring
that the decisions and relevant
directives of the Board are
communicated to all parties concerned.
* Procuring supplies, and conducting
stock keeping and inventory exercises.
* Managing the Bank's records
management system.


* Disseminating information produced
by the Bank, particularly economic
reports and bulletins, research papers,
relevant acts and regulations and
related guidelines.
* Managing the Bank's numismatic
operations.


Human Resources


* Advising on personnel policy matters.
* Promoting the conditions necessary for
staff development and training.
* Providing employee assistance.
* Administering staff compensation and
benefits.


* Recruiting and selecting suitable staff.
* Fostering healthy industrial relations
between the Bank and its employees'
union.







Annual Report 2003


Finance


* Preparing the Bank's budget and
monitoring and controlling the Bank's
financial activities.


*Performing fiscal agent functions on
behalf of the Central Government
and other public sector entities for the
trading of securities.


Banking and Currency


* Issuing notes and coins.
* Providing banking services to Central
Government, other public sector entities
and financial institutions.


* Management of the Central Bank's foreign
reserve holdings.
* Conducting clearing-house operations for
the domestic banking system.


Financial Sector Supervision


*Screening and processing applications for
domestic and international bank licenses.
* Supervising and regulating banks and
financial institutions through on-site
examination and off-site surveillance.


* Processing of applications for large credit
exposures under section 21(2) of the Banks
and Financial Institutions Act and 21 b (2)
of the International Banking Act.
* Promoting and conducting anti money-
laundering surveillance of financial insti-
tutions licensed under the BFIA.


Research


* Monitoring economic activities in Belize
on a continuing basis.
* Conducting focused economic research on
the Belizean economy and aspects
pertaining to its development.
* Maintaining the Bank's library of
Information


* Preparing monthly, quarterly and annual
economic reports.
* Processing and monitoring foreign
exchange transactions of the financial
system.
* Producing appropriate statistics.


Other Operations


* Monitoring and maintaining the Bank's
information technologies.
* Oversight of Internal Audit programme.


* Maintaining the Bank's plant and
equipment.











1)


Table L1: Major Economic Indicators
199 199 0I0I 2001 2I00 2I0I0


POPULATION AND EMPLOYMENT
Population (Thousands)
Employed Labour Force (Thousands)
Unemployment Rate (%)
INCOME
GDP at Current Market Prices ($m n)
Per Capita GDP ($, Current Mkt. Prices)
Real GDP Growth (%)
Sectoral Distribution of Constant 2000 GDP (%)
Prim ary Activities
Secondary Activities
Services
MONEY AND PRICES ($mn)
Inflation (Annual average percentage change)
Currencyand Demand deposits (M1)
Quasi-Money (Savings and Time deposits)
MoneySupply(M2)
Ratio of M2 to GDP (%)
CREDIT ($m n)
Commercial Bank Loans and Advances
Public Sector
Private Sector
INTEREST RATE (%)
Weighted Average Lending Rate (WALR)
Weighted Average Deposit Rate
Weighted Average Interest Rate Spread
CENTRAL GOVERNMENT FINANCES ($mn)
Current Revenue
Current Expenditure
Current Account Surplus (+)/Deficit(-)
Capital Expenditure
Overall Surplus(+)/Deficit(-)
Ratio of Budget Deficit to GDP at m kt. Prices (%
Domestic Financing (Net)
External Financing (Net)
BALANCE OF PAYMENTS (US $mn)
Merchandise Exports (f.o.b.)1
Merchandise Imports (f.o.b.)2
Trade Balance
Remittances (Inflows)
Tourism (inflows)
Services (Net)
Current Account Balance
Capital and Financial Flows
Gross Change in Official International Reserve:
Gross Official International Reserves
Import Cover of Reserves (in months)
PUBLIC SECTOR DEBT
Disbursed Outstanding External Debt (US $m n
Ratio of Outstanding Debt to GDP at Mkt. Prices
External Debt Service Payments (US $mn)
External Debt Service Ratio (%)5
Disbursed Outstanding Domestic Debt ($ mn)
Domestic DebtService Payments ($ mn)


238.0
73.3
14.3

1,377.8
5,789
3.7


243.0
77.8
12.8

1,464.7
6,028
8.8


249.8
83.7
11.1

1,663.5
6,659
12.3


255.3
85.9
9.1

1,734.8
6,795
4.9


262.7
84.7
10.0

1,851.9
7,049
4.3


15.4 15.7 15.6 14.9 14.5
16.1 16.1 17.9 16.9 16.5
68.5 68.2 66.5 68.1 69.0


(0.8)
206.1
561.3
767.4
55.7

625.6
18.9
606.8

16.3
6.0
10.3

294.5
260.0
34.5
93.6
(28.6)
(2.1)
27.6
14.2

194.4
294.1
(99.7)
31.2
105.4
49.5
(40.9)
17.1
15.4
43.9
1.6

260.7
37.8
33.2
9.8
180.0
15.7


(1.2)
255.1
585.1
840.2
57.4

654.5
8.4
646.1

16.3
5.7
10.6

327.1
278.8
48.3
165.3
(29.1)
(2.0)
(8.6)
38.5

261.5
379.9
(118.4)
33.5
105.6
46.7
(73.9)
99.7
(27.2)
71.1
2.1

252.5
34.5
33.7
8.1
171.5
12.2


0.6
310.2
655.7
965.9
58.1

695.4
11.1
684.3

15.8
5.0
10.8

349.8
308.4
41.4
247.5
(139.9)
(8.4)
(74.0)
213.5

281.8
484.4
(202.6)
52.6
117.1
34.2
(165.5)
206.7
(51.6)
122.8
3.2

433.7
52.1
43.1
9.8
176.0
22.6


1.1
364.8
676.0
1,040.8
60.0

788.5
12.9
775.6

15.4
4.3
11.1

372.1
333.7
38.4
267.4
(142.4)
(8.2)
72.7
69.8

269.1
481.9
(212.8)
41.8
119.2
52.5
(186.1)
179.1
2.8
120.1
3.2

486.6
56.1
68.0
15.3
210.8
17.7


2.3
358.1
705.3
1,063.4
57.4

904.5
15.9
888.6

14.5
4.5
10.0

425.8
334.4
92.3
260.3
(68.8)
(3.7)
(220.9)
278.3

309.7
497.9
(188.2)
37.7
129.3
52.9
(164.3)
160.3
5.5
114.7
3.2

574.5
62.0
75.2
15.2
174.2
19.2


271.1
89.2
12.9

1976.8
7,292
9.4

17.7
15.0
67.3

2.6
361.1
740.0
1101.1
55.7

1041.7
26.4
1015.5

14.2
4.9
9.3

422.2
393.0
29.1
216.0
(213.6)
(10.8)
(62.4)
276.7

316.3
525.6
(209.3)
44.2
150.4
72.6
(182.0)
146.8
30.1
84.6
2.1

749.7
75.8
72.0
13.6
257.8
13.7


Sources Ministry of Finance, Central Statistical Office, & the Central Bank of Belize
Includes CFZ gross sales in 1999 to 2001
2 Includes CFZ direct imports in 1999 to 2001
3 Minus = increase
4 Excludes guaranteed debts
5 = amounts related to refinancing w ere excluded









1)


ECONOMIC REVIEW


Overview


GDP growth in real terms accelerated to 9.4% in
2003 largely due to a considerable expansion in
output of banana and farmed shrimp. A bouyant
tourism industry provided an additional boost as
increases of 79.9% in cruise ship arrivals and 11.6%
in stayover tourists set the stage for expansion in
hotels and restaurants and other related services. A
small contraction occurred in the secondary sector
as reduced construction activity outweighed modest
growth in manufacturing and utilities.

With much of the economy's growth being traced
to productivity gains in farmed shrimp and the post
hurricane recovery of the banana industry, labour
force growth outstripped the pace of job creation.
The unemployment rate consequently rose from
10.0% to 12.9%. Consumer prices also rose with
higher costs for fuel at the pump and other imports
contributing to a 2.6% increase in the Consumer
Price Index (CPI).

Robust growth in domestic exports was largely
offset by a sharp contraction in re-exports, andwhile
imports and external debt related payments
accelerated, current transfers from abroad declined.
The current account deficit consequently widened
to $361.9mn (18.3% of GDP) The gap was mainly
financed by external loans and to a lesser extent by
foreign direct investment inflows, and the drawing
down of international reserves by some $60.4mn.
At year-end the international reserves stood at
$169.2mn, the equivalent of 2.1 months of imports.


Growth in the broad money supply accelerated
slightly to 3.5% while liquidity conditions in the
banking system tightened. Propelling M2's growth
was a 19.5% expansion in net domestic credit with
both the private sector and Central Government
receiving substantial increases. The bulk of
commercial bank loans to the private sector went
to various service providers and the building &
construction sub-sector. Net advances for
agriculture (mostly traditional export crops)
accounted for 8.0% of the total.

The heightened growth in credit and debt servicing
underpinned a 48.0% contraction in the net foreign
asset component of the money supply over the
period reviewed. As in 2002, monetary growth
lagged behind the pace of GDP expansion partly
due to current account outflows and the shift of
business to offshore banks by EPZ and CFZ
companies. The latter also had a negative impact
on liquidity as accelerated lending coincided with
lower deposit inflows even as the number of banks
competing for the same deposit base had increased
from 4 to 5. Excess statutory liquidity consequently
fell to a six-year low in October before recovering
in November and December.

As some banks took measures to maintain market
shares in conditions of tightened liquidity, the
weighted average interest rate on deposits began to
move upward. Competition on the lending side also






Annual Report 2003
SAnnual Report 2003
Ct Bn o.f Beli


drove the weighted average lending rate down and
the result was a 70 basis points contraction in the
weighted average spread of the banks to 9.3%.

During the calendar year, the Government's fiscal
operations generated an overall deficit of 10.8%
of GDP with revenue and grants decliningby 13.6%
while total expenditure increased by 12.3%. A 17.9%
growth in current outlays drove the increase in
expenditure while the fall-offin revenue was largely
explained by the winding down of the privatization
programme and advanced receipts of grant funds
in 2002 for projects undertaken in 2003. Financing
came mostly from external sources with loan
disbursements significantly exceeding amortization
payments as well as loans from the domestic system.

Increased use of overdraft financing combined with
loan disbursements from a local commercial bank
caused the Government's domestic debt to grow
by 47.9% to $257.8mn and raised its domestic debt
to GDP ratio from 9.4% to 13.2%. Principal and
interest payments amounted to $1.8mn and
$11.9mn, respectively. The external debt of the
public sector (excluding publicly guaranteed debt
of $287.2mn) grew by 30.5% to $1,499.3mn
(75.8% of GDP). Disbursements and upward


valuation adjustments during the year totaled
$503.2mn and $8.6mn, respectively, while principal
and interest payments (excluding refinancing outlays)
amounted to $144.6mn.

The outlook for 2004 is for real growth in GDP
ranging between 4.0% to 5.0%. Further expansion
in export agriculture and farmed shrimp should
boost domestic exports by at least 4.0% and the
secondary sector should contribute positively as
agro-processing expands to cope with larger sugar
and citrus crops. Steady growth in the services sector
should also continue in view of expected increases
of 30.0% in cruise ship arrivals and 4.0% in stay-
over tourists. Meanwhile, some fiscal tightening
is expected in view of the government's stated
commitment to roll back the deficit to within 3.0%
of GDP Toward this end, several new tax
measures are likely to be instituted early in 2004.
Inflation should continue to be moderate with
some increase expected due to the recent 1.0%
increase in the sales tax and higher rates for
international freight. Monetary policy will focus on
protecting the fixed exchange rate through close
monitoring of commercial bank credit and liquidity
trends in the coming months to determine whether
any further changes in reserve requirements are called
for.









1


International and Regional Developments


Soaring oil prices linked to the war in Iraq, the SARS
epidemic in Asia and a general rise in the level of
market uncertainty created temporary setbacks for
the world economy in 2003. Although the
developed economies appeared to suffer the
greatest impact with consumer and business
confidence declining as political/war tensions in the
Middle East increased, some Latin American
countries also experienced further deterioration. In
the first part of the year, a weakening American
dollar and tight domestic economic policies caused
the rate of expansion in several European Union
(EU) countries to be restrained. However, early
cessation of major hostilities in Iraq paved the way
for oil price declines and the start of a global
economic recovery led by the United States (US),
which experienced one of its largest growth spurts
in the third quarter. India and China enjoyed
boisterous growth of 8.4% and 9.1%, respectively,
and Japan delivered its highest growth rate of the
past four years. Europe's recessionary trend also
eased so that after a rather dismal start, the world
economy was able to grow by a respectable 3.2%
over the year.

Developments in Select OECD and
Newly Industrialized Countries

Notwithstanding concerns about the size of its trade
and budget deficits, the United States economy
achieved an overall expansion of 3.2% in 2003 with
its third quarter growth being particularly
remarkable. The recovery was fueled by fiscal
stimulus, the restoration of consumer confidence,


low interest rates, higher labour productivity and a
weaker dollar. Companies reported record profits
as industrial production expanded by 2.3% and
businesses successfully kept inventories at the lowest
levels ever. Housing construction regained
momentum, while the depreciation of the dollar
spurred a recovery in US export and import
substituting activities. Inflation was held at 2.3%
and unemployment marginally improved from
6.0% to 5.7%, with the improvement attributed
mostly to people leaving the labour force altogether.
The 'jobless recovery' was blamed on the
globalisation of the labour market in which both
low paid manufacturing and upscale service jobs
are increasingly being funnelled abroad.

After a -.I- --lih first quarter performance, the
United Kingdom's economy gained momentum,
with GDP moving from 0.1% in the first quarter,
accelerating steadily to 3.8% in the last quarter and
finishing the year with overall growth of 2.1%. On
the downside, the appreciation of the pound
contributed to a 0.5% contraction in industrial
production and unemployment rose to 4.9%. To
counteract the effects of a slow recovery in the euro
area and depressed equity markets, the Bank of
England cut its interest rate by a quarter of percent
in February and July, bringing it down to 3.5%.
Subsequent strong consumer spending and the rising
cost of housing caused inflation to rise above the
2.5% target to 2.8%. With the economy on the
upswing and inflation on the rise, monetary policy







4 Annual Report 2003
SAnnual Report 2003
C t Ban of Be


began to be tightened in the latter part of the year
with the interest rate being raised by a quarter percent
to 3.8% in November.

Growth in the Canadian economy decelerated to
1.7% in 2003 with domestic production, exports
and tourism hurt by the SARS epidemic, mad-cow
disease, hurricanes, and forest fires. From an all-
time low of C$1.61, the Canadian dollar appreciated
against the US dollar to a ten-year high of C$1.30,
and this cut into overall growth by weakening
exports and simultaneously increasing the level of
imports. To keep inflation in check, the Bank of
Canada raised its overnight rate several times. With
oil prices declining, the inflation rate consequently
fell from a high of 4.6% in February to 2.7% by
year-end. Waning profits and flat industrial
production caused the loss of over 80,000 jobs and
maintained unemployment at 7.4%. A tightened
fiscal stance is expected to produce a higher-than-
projected budget surplus for 2003/04 as measures
are taken to cut costs while higher tax revenues from
banks is being projected.

Japan's recovery continued through 2003 with the
economy growing by 2.3%. Driving this growth
were an expansionary monetary policy, booming


export sales to China and the restructuring of some
large firms. With growth highly dependent on
exports, the government continuously intervened
in the market to keep the yen weak against the dollar,
a strategy that paid off with a 5.7% boost in
industrial production and a notable decrease in
unemployment from 5.5% in 2002 to 4.9% in 2003.
Interest rates remained at practically zero (0.1 2"..
and while easing off for a few months, a prevailing
deflationary trend persisted, producing a further
0.4% decline in consumer prices.

After a temporary setback in the first half of the
year induced by the SARS epidemic, the Taiwanese
economy rebounded and achieved an overall
expansion of 3.2% for the year. Travel bans during
the outbreak dampened business, restricted exports
and lowered spending and consumption. After
being declared disease free in July, the economy
regained momentum, boosted by robust exports,
especially of computers and electronic gadgets. The
export resurgence contributed to a 12.4% increase
in industrial production, while unemployment
declined from 5.2% to 5.0%. With consumer
confidence still somewhat shaky and domestic
demand only slowly recovering, the general price
level contracted by 0.1%.


Table II.1: Selected Indicators for Some OECD and Newly Industrialized Countries


Country Rat^^^^ile (%) Production (%) M Rate (%)il~i^
2002 2003 2002 2003 2002 2003 2002 2003^U^X^^^


United States
Canada
Taiwan
United Kingdom
Japan
Sources: Economist,


2.4
3.9
4.1
2.1
2.2
Bloomberg,


3.2 (3.5) 2.3 2.8
1.7 5.6 0.0 3.9
3.2 10.5 12.4 1.2
2.1 (1.3) (0.5) 2.9
2.3 5.5 5.7 (0.3)
International Financial Statistics


2.3
2.7
(0.1)
2.8
(0.4)







International and Regional Developments A)


Developments in Select Regional
Economies


The Caribbean

After contracting in each of the previous two years,
the Barbadian economy expanded by an estimated
2.2% in 2003 driven by the strong performance of
tourism, and to a lesser extent, wholesale and retail
activity. Arrivals of stay-over tourists rose by 6.6%
while cruise ship visitors rose by 10.8%. An increase
in construction activity offset declines in sugar
production and manufacturing Unemployment
rose marginally from 10.6% to 10.7%, while
increases in the prices of food, fuel, electricity,
medical and personal care led to inflation of 1.7%.
The fiscal position improved as a 6.7% increase in
tax revenues alongside a 1.3% growth in central
government expenditure lowered the deficit to
GDP ratio from 5.7% in 2002 to 4.5% in 2003.
Substantial inflows from divestment compensated
for stronger import demand and a 1.9% decline in
domestic exports, hence, net international reserves
rose by US$67.7mn to approximately
US$750.0mn.

The Jamaican economy picked up momentum with
GDP expandingby an estimated 3.0%, as compared
to 1.2% in 2002. Growth was driven by a highly
buoyant tourism sector, improvements in
agricultural production, financial services and
construction. However, inflation rose sharply from
7.1% to 12.0% in response to increases in utility
charges, transportation costs and an 11.0%
adjustment in the minimum wage rate. Contributing
to the inflationary pressures were steady increases
in the costs of key imports such as oil and growth


in the money supply that was fueled by Central Bank
financing of the fiscal deficit. The fiscal stance
therefore limited the effectiveness of monetary
policy to keep core inflation down.

Strong growth in the. i -. sector supplemented
by expansion in distribution, transportation, storage,
communication and construction activities
underpinned GDP growth of 3.4% in Trinidad
and Tobago during the first nine months of 2003.
The rate of unemployment declined from 11.0%
in 2002 to 10.3%, despite the loss of jobs arising
from the restructuring of CARONI Ltd. and British
West Indian Airlines Ltd. (B\\ IA). An increase in
average oil prices to L'.-' 1.60 per barrel compared
to L '*24.01 in the previous fiscal year enabled the
government to post a large fiscal surplus, a
turnaround from the deficit realized in the previous
year. With oil fuelling an export surge, the current
account of the balance of payments registered a
surplus and official reserves increased by
US$137.2mn to US$2.2bn, the equivalent of 6.3
months of imports. The price level declined by 3.9%
to 3.0% at the end of September and interest rates
were kept low with high levels of liquidity and
Central Bank reduction of its benchmark
repurchase rate.

Growth in Guyana's real GDP decelerated from
2.3% to 1.1% in response to high fuel prices and a
slowdown in domestic consumption. Consumer
confidence remained shaky, as government faced
an uphill political battle to implement a series of
fiscal, financial and regulatory reforms to improve
the economy's macro-economic fundamentals. A
rising crime rate also dampened domestic private
investment and raised security costs, particularly in







4 Annual Report 2003
SAnnual Report 2003
C t Ban of Be


the mining sub-sector. Inflation declined by 1
percentage point to 5.0% mostly due to lower food
costs as price competition prompted by weakened
domestic demand contributed to a decline in
vegetable and fruit prices. With increased export
earnings from sugar, other agricultural products and
tourism, the Guyana dollar stabilized against other
currency, ending the year at G'' 1'4.25 to the US
dollar. Notwithstanding the deterioration in the
current account of the balance of payments, net
international reserves increased marginally by 0.6%
to US$128.8mn because of inflows received under
the International Monetary Fund's Poverty
Reduction & Growth Facility (PRGF) and debt
relief from the Heavily Indebted Poor Countries
(HIPC) Initiative.

OECS

Economic activity in the Organization of Eastern
Caribbean States (OECS) in the first six months of
2003 expanded, driven by growth in tourism,
wholesale and retail trade, communication and
government services. Total visitors to the currency
union fell by 3.2% to 1.2mn as a decline in cruise
ship arrivals was only partially offset by an increase


in stay-over visitors. The continued loss of
preferences in traditional markets saw agricultural
production decline, while the performance of the
manufacturing sector was sluggish in the face of
increased competition in international markets.
Although the current fiscal deficit of the combined
central governments increased, a reining in of capital
expenditure combined with an increase in grants
caused the overall deficit to decline by 14.5% to
EC$160.3mn.


Mexico

A flurry of export activity in Mexico's oil industry
only partly compensated for dampened domestic
demand and stagnation in the non-oil sectors.
Growth in the economy consequently slowed from
1.9% in 2002 to 1.3% in 2003. The global upswing
in oil prices led to a 29.2% narrowing of the trade
deficit to US$5.6bn and sufficiently boosted
government's revenues to lower the fiscal deficit as
a percent of GDP from 1.3% to 0.5% despite the
loss of income from other productive sectors. To
a large extent, the anemic performance in the non-
oil sector reflected the loss of Mexican
manufacturing's competitive edge to China and


Table 11.2: Selected Indicators for Some Caribbean Countries


() Inftion R e () R e () (


Barbados (0.4) 2.2 2.1 1.7
Jamaica 1.2 3.0 7.3 14.1
Trinidad 3.1 3.4 4.5 3.0
Sources: Central Bank of Barbados, Central Bank of Trinidad & Tobago,
Vest Caribbean Quarterly Forecast Report
n.a: not available


10.5 10.6
15.0 n.a
11.0 10.3


(4.1) n.a.
(6.0) n.a.
n.a. n.a.







International and Regional Developments A)


Central America. In a bid to check inflation,
monetary policy was tightened, leading to higher
interest rates that prevailed for much of the year.
This slowed the rate of growth in credit as well as
domestic consumption. Nonetheless, inflation
stubbornly rose by 0.3 percentage points to 4.0%.
Unemployment also rose from 2.8% to 3.0% in
response to a small upturn in labour force
participation and slow job growth.

Central America

Except for El Salvador, growth in all Central
American countries accelerated in 2003, averaging
above 2.0%. This growth was export led and driven
mainly by increased world demand '-f i,_ 1 .l! i- nin
the US and China) as well as by higher export prices
for key commodities such as sugar and coffee.
Improved exchange rate stability alongwith prudent
monetary and fiscal policies resulted in relatively low
inflation across the region. However, the moderate

upturn in economic activity was not sufficient to
reverse high levels of unemployment (a hangover
from the poor economic performances of recent
years).


At 5.6%, the Costa Rican economy recorded its
highest GDP growth in 5 years. High-technology
and agriculture were the most dynamic sectors,
contributing to a 15.0% (US$780.0mn) increase in
total exports. The strong expansion in real sector
activities pushed the trade deficit downward from
5.7% of GDP in 2002 to 5.5% and kept the
unemployment rate steady at 6.7%.
Notwithstanding the upsurge in economic activity,
increased government spending during the year
resulted in the fiscal deficit to GDP ratio declining
only marginally to 4.1%. Meanwhile, the Central
Bank raised interest rates and intervened in the
foreign exchange market to reduce monetary
expansion in order to achieve its objective of low
and stable inflation.

After experiencing minimal growth of 0.5% in 2002,
the Nicaraguan economy bounced back in 2003
with a 2.3% rise in GDP. The upturn was
attributable to household consumption, higher
wages and increases in credit and family remittances
from abroad. The modest revival in domestic
demand and higher fuel prices pushed inflation
upwards from 4.2% in 2002 to 6.5%. Meanwhile,


Table 11.3: Selected Indicators for Mexico and Central America


Rate C/) () Re C
200 200 200 200 200 200 200 200 200 200


Costa Rica 2.8 5.6 10.0
Mexico 1.9 1.3 3.7
El Salvador 2.0 1.8 2.8
Honduras 2.0 2.5 8.0
Guatemala 2.0 2.4 6.3
Nicaragua 0.5 2.3 4.2
Sources: ECLAC, Business Monitor International
n.a: not available


6.8
2.8
7.1
6.2
3.4
12.9


6.7
3.0
10.0
28.0
7.5
24.0


(4.3)
(1.3)
(2.7)
(5.2)
(1.5)
(9.0)


(4.1)
(0.5)
(3.5)
(5.8)
n.a
(6.9)


n.a
(8.2)
n.a
(1.1)
(0.2)
n.a


n.a
(5.6)
n.a
n.a
(1.1)
n.a






Annual Report 2003
SAnnual Report 2003
Ct Bn o.f Beli


fiscal policies continued to focus on driving down
the fiscal deficit (from 9.0% of GDP in 2002 to
6.9% ofGDP in 2003) in order to enable Nicaragua
to qualify for access to the HIPC initiative.

GDP growth in Panama quickened to 3.0% in
response to upturns in tourism (especially cruise ship
arrivals), the construction sector and in Canal and
port operations. As at September, construction
activities were up 50.8% (US $453.4mn) over the
2002 position. Increased tax revenues helped
officials keep the fiscal deficit manageable while
inflation, typical of dollarized economies, remained
low at 0.9%. In other developments, unemployment
remained unchanged at 16.0%, indicating that the
labour market has not yet recovered from the
lackluster economic performance of recent years.

The Guatemalan economy grew by 2.4%, a
modest improvement over the previous year.
Increased exports to the US market, particularly
from the maquiladora sector, and improvements
in coffee prices were the main factors underpinning
this performance. Domestic consumptionwas also
spurred by increased receipts of family remittances
from abroad. Inflation declined from 6.3% to
5.5% as monetary policy was tightened and the
exchange rate remained relatively stable. Meanwhile,
the government kept the fiscal deficit to a minimum
in line with the commitments it has made under the
stand-by agreement negotiated with the IME


Growth in Honduras measured 2.5%, up from
the 2.0% realized in 2002. The economy benefitted
from a surge in maquiladora exports to the US
market and the improvement in coffee prices,
another key export commodity. Stability in the
exchange rate helped to maintain the downward
trend in inflation (recorded at 7.2% at the end of
2003). On the other hand, unemployment rose
significantly from 6.2% to 28.0% as labour costs
surged and non-export sectors experienced a
slowdown. Increased government spending led to
a 0.6 percentage point increase in the fiscal deficit
from 5.2% of GDP in 2002 to 5.8% of GDP in
2003.

GDP growth in El Salvador held steady at 2.0%
in 2003 as a turnaround in agricultural exports
(mainly coffee and sugar) influenced by increased
world demand and high export prices was
somewhat offset by reductions in construction
activities and industrial output. Unemployment
continued its upward trend during the year,
increasing by 3.9 percentage points to 10.0% while
tight monetary policies contributed to a decline in
the inflation rate from 2.8% to 2.2%.
Notwithstanding a general focus on tight fiscal
policies in this dollarized economy, the deficit as a
percent of GDP increased from 2.7% to 3.5%.
On a positive note, an 8.8% increase in remittances
(expected to exceed US$2.0bn in 2003) allowed
the economy to cover 79.0% of its visible trade
deficit.









'1)


Domestic Production, Prices and Employment


Production

Real GDP accelerated to 9.4%, more than doubling
the 4.3% increase of 2002. Growth was led by the
primary sector, which expanded by a substantial
36.6% after an anemic 0.7% increase in 2002.
Bolstered by a 5.5% increase in services, this
performance was more than sufficient to
overshadow a small contraction in the secondary
sector.

The production surge in the primary sector was
closely linked to a 111.0% expansion in fishing that
was propelled by the doubling of farmed shrimp
output. The latter was facilitated by the introduction
of a Taura resistant strain and an increase in active
pond acreage. Agriculture also expanded by 15.4%


as production of almost all major grains increased
and banana rebounded from hurricane damage with
a 79.5% yield improvement. In contrast, forestry
and logging contracted by 5.6% as operations to
salvage pine trees affected by the pine bark beetle
ceased and the country complied with CITES
(Convention on International Trade On Endangered
Species) regulations regarding the export of
mahogany.

The secondary sector contracted by 1.6% as a
reduction in construction activities outweighed
modest increases in manufacturing and utilities
(electricity and water). The lackluster performance
in construction was associated with the slowdown


Table III.1: Annual Percent Change in Selected Indicators

GDP at Current Market Prices 4.4 6.8 6.4
Real GDP (2000 prices) 4.9 4.3 9.4


Primary Activities
of which: Agriculture
Fishing
Forestry

Secondary Activities
of which: Construction
Manufacturing


(0.2)
(2.4)
3.8
16.6

(0.8)
(1.7)
(0.7)

7.8
13.5
7.6
5.8
11.8
4.2

1.1
0.9


Services
of which: Restaurant & Hotel
Trade
Public Administration
Transport and Communication
Financial intermediation
Consumer Price Index
Average
End of period
Source: Central Statistical Office


0.7
2.9
(6.7)
17.0


36.6
15.4
111.0
(5.6)


2.7 (1.6)
5.2 (13.0)
1.5 3.1


6.6
2.5
4.0
2.7
11.2
16.5

2.3
3.2


5.5
8.0
4.8
5.1
2.6
10.1

2.6
2.3







Annual Report 2003
Ceta BankS mf Bei


in government funded, residential housingprojects
and the wrap-up of major projects on highways
and hurricane rehabilitation and preparedness.

The healthy growth in services reflected heightened
activity in tourism, financial intermediation, real estate
and government services. Increases of 10.5% in
stay-over and 79.9% in cruise ship arrivals led to an
8.0% expansion in the hotel and restaurant sub-
sector. Financial intermediation grew by 10.1% with
increased lending and earnings by domestic and
offshore banks licensed in Belize. Transport and
telecommunications rose by 2.6% as a new
telephone company completed its initial phase of
infrastructural development and began offering
cellular telephone service in the latter part of the
year.

With productivity gains accounting for much of
the economic expansion, growth in the labour force
outstripped the pace of job creation. The
unemployment rate consequently rose from 10.0%
in 2002 to 12.9% in 2003.

Prices rose consistently throughout the year, resulting
in an annual inflation rate as measured by the CPI
of 2.6%. Increased market uncertainty due to the
Iraq conflict drove up the acquisition cost of fuel
during 2003 and contributed significantly in raising
overall living costs. Pressuring prices upward as


well was the estimated 1.5% increase in the cost of
imported goods as proxied by the US export price
index.

Agriculture


Sugarcane

The 2002/2003 sugarcane crop contended with
drought conditions during its critical growth phase
as well as declining field inputs as many farmers
struggled with high debt burdens and low sugarcane
prices.

Sugarcane deliveries for the crop year consequently
declined by 6.7% to 1,073,339 long tons. Of total
deliveries, the Belize Sugar Industries (BSI) cane-
growing project yielded 33,590 long tons, while the
company's research division produced 13,508 long
tons. The cane-growing project demonstrated the
tremendous potential for productivity
improvements in crop management with an average
yield per acre of 35 long tons compared to the
industry's average of 17 long tons.

While the quality of the sugarcane was stable, high
mud levels persisted in the factory deliveries, as
farmers have been very slow to adjust harvest
practices to accommodate the use of mechanical
harvesters.


Table III.2: Sugarcane Deliveries


2000/01 g001/ g g002/0g


Deliveries to BSI (long tons)
Source: Belize Sugar Industries Ltd.


1,023,440 1,150,656 1,073,339







Domestic Production, Prices and Employment


In contrast to the previous year when farmers
received a total of $39.35 per long ton of sugarcane
($38.08 from the processor and $1.27 in relief
payments from the Sugarcane Stabilisation Fund and
the Sugarcane Industry Development Fund), the
average price for 2002/2003 improved markedly
to $44.09 in response to higher international prices.


Citrus


Citrus production fell for the second consecutive
year as factory deliveries for the 2002/2003 crop
shrank by 4.2% to 5.1mn boxes. The decliningyields
were mostly due to the inadequate use of inputs
and lax agronomic practices that have become
prevalent as cash squeezed farmers cope with the
string of low prices experienced in recent years.
Putting a further damper on output was the loss of
approximately 30,000 boxes of fruit from heat
damage caused by drought and extremely high
temperatures during the first months of 2003.
Additional pressures came from the decline of trees
on single rootstock and the presence of several
pests and diseases.

While orange deliveries fell by a modest 1.8% to
4.1mn boxes, those of grapefruit, where price
pressures were greater, contracted by 12.4% to
1.lmn boxes. Notwithstanding a weakening in
export prices for orange juices caused by huge global


inventories, an expansion in regional sales coupled
with an improvement in fruit quality led to an
equivalent average box price for oranges of $5.90,
slightly above the $5.88 paid in 2002. In contrast,
the grapefruit price fell by 3.4% to $4.58 per box
as .1.i i. h demand in key markets pushed down
export prices overall.

Payment for oranges based on the pound solids
(ps) system resulted in equivalent prices per box of
fruit ranging from $4.50 to $7.90. Of the 520
growers who delivered fruit this year, 76.0% (mostly
small growers) received a per box payment
equivalent to $5.90 or more. Only four growers
received less than $5.00 per box equivalent. A Pound
Solids Authority (PSA) established through the joint
efforts of the Citrus Growers Association (CGA)
and the Citrus Products of Belize Limited (CPBL)
oversees the quality system. This focus on quality
was so successful that discussions subsequently
started on the feasibility of incorporating grapefruit
into the pound solids programme.

Banana

Replanting efforts and European Union (EU)
funded improvements in field drainage and
irrigation raised field productivity and banana output
significantly. Annual production, a substantial portion
of which was in the first half of the year, rose from
2.4mn boxes in 2002 to 4.0mn boxes in 2003.


Table III.3: Citrus Fruit Deliveries*


1goolo g000olo0 200 0 o gIoI,/


Deliveries ('000 boxes) 7,195
Oranges 5,734
Grapefruits 1,461
Source Citrus Grow ers Association
* Crop year runs from September to June


5,350
4,119
1,231


5,124
4,046
1,078







S Annual Report 2003
1) C r B- So Beliz


In January, the acreage under banana cultivation
stood at 6,384 acres with 5,292 producing and 641
under plantilla (trees too young to produce fruit).
Another 451 acres were ready for planting. By
December 2003, the acreage under banana
cultivation stood at 6,132 acres, ofwhich 5,729 were
producing, 393 had plantilla and only 10 were ready
for planting. An additional 26 acres were earmarked
for expansion.

Encouraged by a pricing system that set a higher
box price for the first half of the year, farmers
continued the costly process of shifting more
production into the January to June period when
prices in Europe are higher.. This effort raised the
proportion of export production occurring during
the first part of the year from an average of about
37.0% to 46.0%, notwithstanding the prevalence of
high pressure systems during this period that lower


temperatures and negatively impact plant yields. Net
payment to growers, after deducting for licenses
and quality penalties, amounted to L '. 2') per box.


Papaya

Approximately 973 acres were under papaya
cultivation during the year (517 acres having
harvestable trees and 456 acres containing young
non-producing trees). The Corozal district
accounted for practically all acreage under
cultivation.

Low world prices for the small solo papaya
compounded by quality problems precipitated an
industry shift towards the cultivation of only large
papayas. During2003, some 100 acres were retired
and only 8 acres remained under solo papaya
cultivation. The possibility of future cultivation of
small papayas does remain if trials with small


Chart III.1: Banana Acreage


January 2003



To eFarted
451 aces


December 2003




To be Pated
Platillab s
310acres
393acres


522acres


5,72odr
5,72a9rff







Domestic Production, Prices and Employment


Brazilian fruits are successful in identifying a high
yielding but hardy variety that has a longer shelf
life.

Even though export prices plunged in 2003 as fruit
supplies from major producers such as Brazil and
Mexico increased, the outlook for Belizean papaya
production remains highly positive since the large
papayas currently dominating local production are
superior in quality to those from Brazil and freight
charges are lower due to proximity to the US
market.

Other Agricultural Production

Except for sorghum, production of all major grains
increased in 2003. Given the inverse relationship
between sorghum and corn as substitutes in animal
feed, corn output increased by 8.0% to 79.5mn
pounds while sorghum decreased by 24.3% to
20.2mn pounds. Soybean production expanded
by 70.8% to 3.5mn pounds due to the continuation
of the government funded soybean project and a
minimum guaranteed purchase price of $0.34 per
pound of grade "A" beans. By year-end, the area
under cultivation had increased from 2,088 acres
to 2,602 acres. Rice output also grew by 11.1% to
26.8mn pounds as acreage under mechanization and
irrigation expanded, while favourable weather
conditions enabled a doubling in production of red
kidney beans.

The performance of the livestock sub-sector was
mixed. High farm gate prices (between $0.95 to
$1.15 per pound for quality animals) and the absence
of major diseases enabled a 10.7% production
increase in cattle dressed weight to 4.5mn pounds.


Milk output grew by 8.2% to 9.0mn pounds as
producers improved pastures and feeding regimes.
High farm gate prices also contributed to a 9.2%
rise in pig dressed weights to 2.3mn pounds. On
the other hand, poultry dressed weights contracted
by 4.5% following a strong heat wave in May that
pushed up bird mortality rates, resulting in the death
of some 27,500 broilers and 200 breeder broiler
birds. Meanwhile, the improvement in honey yields
was held to a minimal 0.1mn pounds as
deforestation, forest fires, the burning of sugarcane
fields and a prolonged dry spell affected flora
production.


Marine Products

Higher yields of shrimp and conch raised fisheries
production from 11.1mn pounds in 2002 to
23.6mn pounds in 2003.

White-farmed shrimp output more than doubled
to 22.3mn pounds with the timely re-stocking of
ponds and the use of a Taura resistant strain that
raised survival rates from ;' i.. to between 60%
and 70%. Yields would have been even higher were
it not for the presence of bacteria that depressed
production at one of the largest farms during the
second half of the year. In contrast to the white-
farmed shrimp, wild shrimp capture declined by
37.0% due to a late start in trawler activities. On
the other hand, wild capture of conch grew by
18.1% as product demand surged due to a US
moratorium on the importation of Queen Conch
meat, shell and products from the Dominican
Republic, Honduras and Haiti.







S Annual Report 2003
1) Ce-tSa Ban ofBlz


Reports from the fishing cooperatives showed their
purchases ofwhole fish falling from O.lmn pounds
in 2002 to 0.02mn pounds in 2003, a decline which
followed a determination by the cooperatives that
the required processing was uneconomical.
Fishermen consequently sold the bulk of their catch
directly to consumers at higher prices in the local
market.

Forestry, Mining and Construction

After positive growth in 2001 and 2002, forestry
and logging activities declined by 5.6% in 2003 due
to the completion of salvaging efforts to retrieve
logs from trees damaged by the pine bark beetle
and a reduction in the quantity of mahogany
exported as the country complied with its
commitments to CITES. The CITES listing
requires that mahogany logging be done only in
areas that have a certified forest management plan
to ensure that its extraction is not detrimental to the
survival of the species in the wild. Government
also placed a moratorium on logging in the
northern districts to address overexploitation issues.

Notwithstanding an increase in private sector
construction loans, construction activity declined by
13.0%, as the government reduced the scale of its
residential projects and began to focus specifically
on low-income housing. Also contributing to the


slowdown was the completion of major works
on highways and the wrap-up of construction
relevant to the hurricane preparedness program.
Mining activity grew by 6.8% due to various land
development projects, the initial stages of the
construction of the Chalillo hydroelectric dam and
the resumption of exploration for precious metals.

Manufacturing

Sugar and Molasses

Factory operations commenced on November 25,
2002, and closed on June 25, 2003, after 214 days
of operation compared to 220 days for the 2001/
2002 year.

In response to a 6.7% contraction in sugarcane
deliveries, sugar production fell by 6.2% to 104,433
long tons. High mud content in deliveries reduced
the average grinding rate from 270 tons cane per
hour (TCH) in the previous crop to 266 TCH in
2003. To address this problem, the processor
installed new mud filters and urged farmers to adjust
their mechanical harvesting practices. During the
year, a major failure of the factory's power
generating plant resulted in a 0.2% increase in factory
down time. Although cane purity was stable, the
cane/sugar ratio improved from 10.34 to 10.28
because of a 2.2% improvement in the sucrose


content (Pol) of the sugarcane.
Table III.4: Sugar and Molasses Production
/ 21 /03L Sgool]


Sugar Processed (long tons)
Molasses Processed (long tons)
Performance
Overall Factory Efficiency
Cane Purity (%)
Cane/Sugar Ratio
Source: Belize Sugar Industries Ltd.


103,862
34,410


88.6
85.65
9.85


111,312
40,947


93.28
85.08
10.34


104,433
42,944


93.11
85.08
10.28







Domestic Production, Prices and Employment


Lower mill extraction and sugar recovery rates
caused by the higher fibre content and mud levels
in the sugarcane increased losses of sucrose to the
factory's by-products and consequently boosted the
output of the molasses by 4.7% to 42,944 long
tons.


Citrus Juices and Pulp

Notwithstanding a 4.2% shrinkage in factory
deliveries caused by a variety of agronomic and
climatic factors, production of juices was up 3.4%
to 28.4mn ps for the 2002/2003 crop year. The
stress on the delivery of high quality fruit alongwith
improvements in factory efficiency saw the average
yield of juice per box of orange increase 3.0% to
5.78 ps, while the out-turn for grapefruit amounted
to 3.96 ps per box.

The bulk of fruits went into the production of
concentrate juices, the mainstay of the industry.
Nonetheless, concentrate production contracted by
a miniscule 0.1%, as a 2.6% expansion in orange
juice almost compensated for a 14.3% fall in that
of grapefruit, the fruit with the steepest decline in
deliveries.

In contrast to the concentrates, production of Not-
From-Concentrate (NFC) juices more than doubled
to 1.6mn ps with orange and grapefruit makingup


two-thirds and one-third of output, respectively.
Although Brazil and Spain dominate this niche
market, production of NFC juices is done on a
minimal scale to retain a small market presence and
take advantage of transitory price hikes as occurred
with orange NFC in 2003.

Pulp production fell by 20.3% to 0.4mn pounds
even with the resumption of grapefruit pulp
extraction this year, albeit on a very modest scale
(0.05mn pounds). Sales of this commodity had
been affected by quality problems so output was
scaledbackto ensure that rigorous quality assurance
standards are met.


Other Manufacturing Production

Production of other manufactured goods increased
in 2003, except for beer and batteries, which fell by
9.2% and 30.2%, respectively. Since 2000, battery
manufacture has been in decline and the closure of
one producer in mid 2002 had a big impact on
2003 production levels. On the other hand, output
of soft drinks, fertilizers, flour, rum and cigarettes
all rose to meet domestic demand. Continuing its
steady growth of the past six years, annual soft drink
production increased by 3.5% to 5.7mn gallons.
Fertilizer output also rose by 11.1% to 30,866 metric
tons as usage in the citrus, sugarcane and banana


Table III.5: Production of Citrus Juices and Pulp
2000/0l1l c0cll/0 2002/Ioo


Production ('000 ps)
Orange Concentrate
Grapefruit Concentrate
Not-from-concentrate (NFC)
Production (pounds)
Pulp
Source: Citrus Products of Belize Ltd.


37,205
31,677
4,557
971

2,427


27,482
22,506
4348
627


28,413
23,099
3728
1,586







S Annual Report 2003
1 Ce-tSa Ban ofBlz


fields expanded. Flour production grew by 3.4%
to 26.9mn pounds, a record high level, while that
of cigarettes expanded by a more modest 2.7% to
86.4mn units, still below the 87.6mn units achieved
in 2001. After a temporary setback some years
ago, rum production grew steadily over the last four
years and recorded a 13.8% increase to 17.0mn
gallons in 2003.

Tourism

Tourism grew robustly notwithstanding a 1.2%
decline in world tourism caused by the US Iraq
war, the SARS epidemic and heightened security
measures, particularly on international air travel. Total
stay-over bona fide tourists increased by 11.6% and
cruise ship arrivals were up by 79.9%.

With the upswing in arrivals of stay-over bona fide
tourists that began in December 2002 continuing
throughout 2003, the annual count rose from
177,120 in 2002 to 197,746 in 2003. Air arrivals
were up by 19.8% and more than offset a 11.0%
decline in land travellers. Fortunately, the suspension
of AirJamaica flights to Belize in mid-year did not
affect air travel to the country negatively. The route
was intended to transfer US passengers to Belize


through AirJamaica's Montego Bay hub, but could
not compete with US Air, which had a similar
strategy for its hub in Charlotte, North Carolina.

An intensive marketing campaign in the US helped
to boost visitor volumes and attracted those who
wished to stay closer to home in view of SARS
and fears of terrorist reprisals. Hence, the US
accounted for 62.9% of all tourists and for virtually
all the growth in overnight visitors. At 12.7% of all
arrivals, Europeans comprised the second largest
market. Already under pressure from negative
factors, travel by European visitors to the country
grew by only 2.4% as economic growth slowed
overall in Europe.

Building on the phenomenal growth of the previous
year, the number of cruise ship visitors rose sharply
from 271,737 to 488,917 in 2003. This was
achieved with several new cruise lines coming to
Belize and the addition of more port calls by
existinglines.


Table III.6: Bonafide Tourism Arrivals

Stayover Arrivals
Air 128,975 127,305 152,447
Land 36,914 41,399 36,857
Sea 10,144 8,416 8,442
Total stayovers 176,033 177,120 197,746
Cruise Ship Arrivals* 40,899 271,737 488,917
Expenditure by stay-overs $220. m n $220.2 $246. mn
Expenditure by cruise visitors $3.7mn $24.7mn $44.5mn
Sources: Immigration Department, Belize Tourism Board, Central Bank of Belize
*Arrivals measure tourists disembarking from the ship

16








Domestic Production, Prices and Employment




Box 1: Tourism Developments and Prospects


Developments in 2003

In stark contrast to the slowdown in global tourism, Belize's tourism industry did exceptionally well during
2003. An intensive marketing campaign in the major market, the United States, boosted the volume of stay-
over tourists by 10.5%, while the cruise ship sub-sector surged as several cruise lines came to Belize and existing
cruise lines added more port calls.

During the year, tourism administrators focused on enhancing human resources and physical infrastructure to
improve the quality of visitors' stay in the country. The last phase of the Belize Tourism Village was completed
with the construction of a fourth terminal that houses between 50 to 60 new stores, all catering mostly to the
rapidly growing cruise ship market. The consolidation and enhancement of thirteen key Mayan sites completed the
scheduled restoration works on the archaeological sites. The entrance to Placencia was paved to improve accessibility
to this increasingly popular tourist destination and in Caye Caulker, another popular tourist destination, a water
taxi dock was constructed. New immigration and customs facilities at the northern and western borders were
officially inaugurated and the fourth phase of the project to put up directional signs on the major highways and in
the main towns went ahead on schedule. Work also commenced on the reclamation of land on Belize City's
seafront which will enable the construction of a marine parade to relieve the traffic congestion caused by tour buses
servicing the Tourism Village. On the cultural front, the renovation of the House of Culture was completed, while
considerable progress was made in construction works on the Bliss Centre for the Performing Arts.

Efforts were also made to build in-country capacity to deliver quality services at all levels through various training
programmes. In this regard, the Belize Tourism Board's Training Unit trained approximately 1000 individuals in
diverse areas such as tour guide operations, bar tending, communications and other various aspects of service
provision. In other developments, the management of the international airport, Philip Goldson International
Airport (PGIA), was privatised with a view to improving efficiency and attracting new capital for future expansion.

With air traffic to the country up substantially and accounting for virtually all the increase in stay-over tourists,
overall airline activities were quite buoyant. On the down side, AirJamaica suspended its flights from Belize to
Montego Bay on June 1s 2003, some seven months after opening this route, since it could not compete with US
Air. The three US carriers, on the other hand, instituted additional flights and increased the frequency of some
flights at various times of the year to cope with the surge in air arrivals.

Prospects:
During 2004, major developments in the tourism industry are expected to include:
a)Completion of the project to enchance archaeological sites and improve on-site facilities;
b)Expansion of the runway at the Philip Goldson International Airport;
c)Upgrade of the road from the Northern Highway to Altun Ha;
d)Continuation of the Tourism Training Project;
e) Completion of the Marine Parade in Belize City and the construction of a boardwalk at the mouth of the river;
f)Increased advertising outreach to the European market;
g)Re-opening of the Bliss Centre for the Performing Arts.








Annual Report 2003



Table III.7: Quarterly Percentage Change in CPI Components by Major Commodity Group


Food, Beverage and Tobacco
Clothing and Footwear
Rent, Water, Fuel and Power
Household goods & Maintenance
Medical Care
Transport and Communication
Recreation Education, Culture
Personal Care
All items
Source: Central Statistical Office


346.6 0.8 0.5 0.9 0 2.6
92 1.1 0.1 -0.2 -0.5 0.7
167 1.1 -0.6 0.0 4.0 3.1
85.3 0.1 0.0 0.2 -0.4 0.1
20.1 0.1 0.6 0.0 0.2 0.7
170.1 0.4 0.7 1.7 0.4 5.1
80.4 -0.5 0.2 0.0 0.7 1.0
37.9 0.1 -0.4 0.1 -0.6 0.2
1000 0.6 0.2 0.6 0.8 2.6


Prices


The conflict in Iraq drove up fuel acquisition costs

during 2003 and contributed significantly in raising

the overall price level. Also contributing to the

upward pressure was a 1.5% increase in the cost of

imported goods as proxied by the US export price
index. Approximately half of Belize's imports are

sourced from the USA, so Belize's inflation rate

closely parallels that of the USA. Hence, with prices


rising consistently throughout the year, the annual

inflation rate as measured by the Consumer Price

Index (CPI) was 2.6%.


The increase was across the board with the largest

occurring in 'Fransport and Communication' as higher

fuel prices at the pump pushed up the cost of public

and private transportation. The next largest increase

was in the 'Rent, WIater FuelandPower category. The

latter was particularly affected by the raising of the


Table III.8: Employed Labour Force by Industrial Group


Agriculture nec 17,570 18,422 17,164
Forestry, logging, saw milling 1,248 773 864
Fishing and fish processing 2,242 1,188 2,120
Mining and Quarrying 341 210 360
Manufacturing 5,952 6,182 6,739
Electricity, gas & water 1,011 644 778
Construction 7,275 7,652 7,475
Wholesale, retail, repair 14,326 14,002 14,687
Tourism (Hotels & Restaurants) 7,870 9,203 9,400
Transport and Communication 3,437 3,006 3,297
Financial intermediation 1,457 1,536 1,518
Real Estate, renting 1,593 1,448 1,770
General Government Services 11,094 8,639 10,309
Community, Social & Personal Services 10,356 11,348 10,779
Work Abroad* 38 299 1,676
Activities not classified elsew here 58 168 286
Total, All Sectors 85,868 84,720 89,222
Source: Central Statistical Office
* Covers work abroad and in 2003, workers in commercial free zone as w ell.







Domestic Production, Prices and Employment


price for butane gas as well as the water company's
decision to change from meters based on imperial
gallons to meters based on US gallons, a smaller
unit of measurement. Costs for Food, Beverage and
Tobacco'rose by 2.6%, while more modest increases
occurred in the remaining categories making up the
CPI's basket of goods and services.


Employment

The pace of job creation was slower than expected
since much of the economic expansion consisted
of productivity gains in farmed shrimp production,
increased output of banana and larger profits from
financial intermediation by onshore and offshore
banks. While the number of employed persons rose
by 5.3% to 89,222, the labour force grew by 8.8%
to 102,441 individuals. The rate ofunemployment
consequently rose from 10.0% in 2002 to 12.9% in
2003.


At 19.2%, agriculture was the largest job market in
the country, followed by trade with 16.5% of the
employed labour force. Community, social services
and public administration ranked third and fourth
in job provision, while tourism, at 10.5% of total
employment, was the fifth largest employer. In line
with the surge in marine production, employment
in this sub-sector increased by a significant 78.5%,
while land development projects expanded new job
opportunities in mining/quarrying and real estate
by 71.4% and 22.2%, respectively. Building on the
employment gains of the previous year, a bouyant
tourism industry accommodated a 2.1% job
increase.

Most of the increase in the labour force came from
the female population who accounted for the larger
proportion of unemployed workers as well. The
latter indicated that women were entering the work
force at a much faster rate than the jobs they
traditionally do were being created.







Annual Report 2003
Central Bank ofB


Monetary and Financial Developments


Money Supply


M2 (broad money) grew by 3. Y" .. driven by a 19.3%
expansion in net domestic credit during the year.
While supporting the acceleration in economic
activity, the credit expansion also facilitated the
growth of imports and other payments abroad and
resulted in a 48.0% contraction in net foreign assets.
As in 2002, monetary growth lagged behind the
pace of GDP expansion largely due to the shift of
business to offshore banks by several EPZ and CFZ
companies. After increasing in the first quarter, bank
liquidity progressively tightened as rapid growth in
lending coincided with the lowering of EPZ/CFZ
inflows and shifts in market shares as the system
adjusted to accommodate the rapid growth of the
newest bank. The heating up of competition led to
a further narrowing of the commercial bank
weighted average interest spread, reversing a
consistent upward trend in the previous decade.


M1 (narrow money) grew marginally as a $6.5mn
rise in demand deposits was partly offset by a
$3.5mn decline in the public's currency holdings.
Growth in quasi-money accelerated slightly (from
4.3% in 2002 to 4.9%) reflecting an upward surge
in time deposits. The 9.4% expansion in the latter
contrasted with a 5.2% contraction in savings
deposits, a partial indication of increased depositor
responsiveness to the higher interest rates that were
being offered by the banks.

Net Foreign Assets

Strong credit growth, higher external debt payments
and reduced EPZ inflows accounted for an
approximate halving in net foreign assets of the
banking system (from $256.3mn to $133.3mn).
Central Bank foreign asset holdings shrank by
26.2% with outflows of $675.3mn relative to


Table IV.1: Factors Responsible for Money Supply Movements


$mn


PositionasatChaeI s
I- 66 I- 66 66 66urn
^^^^^^^^^^^^^^^^Dec 2001 Dec 2002 Dec 2003 2003^^^^^^


Net Foreign Assets
Central Bank
Commercial Bank

Net Domestic Credit
Central Government (Net)
Other Public Sector
Private Sector


Central Bank Foreign Liabilities (Long-term)

Other Items (net)


294.2
237.3
56.9

986.3
110.9
97.0
778.4

93.5

146.1


256.3
223.3
33.0

951.2
30.4
29.5
891.3

18.5

125.6


133.3
163.4
(30.1)

1,135.1
90.7
21.2
1,023.2


7.5

159.8


-123.0
-59.9
-63.1

184.0
60.4
-8.3
131.9

-11.0

34.3


1,040.8 1,063.4 1,101.1


'1)


Money Supply M2


37.7







Monetary and Financial Developments


Chart IV.1: Ratio of M2 to GDP


Chart IV.2: Annual Change in Net Foreign
Assets of Commercial Banks & Central Bank


300

250

200
S150

E 100
50


65.0%

60.0%

55.0%

50.0%

45.0%

40.0%


97 98 99 00 01 02

-- ComTercial Banks -- Central Bank


inflows of $615.2mn. Loan disbursements

accounted for 78.2% of the latter, notable among
which were receipts of $191.3mn from a Bear
Stearns bond issue and $154.4mn from the
International Bank of Miami. Sugar exports
contributed $64. mn and $52.0mn was purchased
from a local commercial bank. Grants, revaluation

gains and interest earnings made up the remainder.
Outflows were dominated by sales to the public
sector of some .4- 4.9mn, much ofwhich was used


to service the external debt and effect a down
payment for Belize Telecommunication Limited
(BTL) shares. Sales to the commercial banks rose
by 10.8% to $141.9mn, and Belize Electricity
Limited (BEL) received $52.6mn for debt servicing
and fuel purchase. The Bank's short-term foreign
liabilities declined marginally with decreases in EU
Banana Support Programme deposits and the
CARICOM Bilateral Clearings balance
overshadowing increases in EDF deposits.


Table IV.2: Money Supply


$mn
Psito as at Changes
Duing
Dec 200 Dec 200 Dec 200 200


Money Supply (M2)


Money Supply (M1)
Currency with the Public
Demand Deposits


Quasi-Money
Savings Deposits
Time Deposits


1,040.8 1,063.4 1,101.1


*Includes Non-Residents Foreign Currency Time Deposits of $33.8mn


364.8
105.2
259.6

676.0
216.9
459.1


358.1
106.8
251.3

705.3
216.8
488.5


361.1
103.3
257.8

740.0
205.5
534.5


37.7

3.0
-3.5
6.5

34.7
-11.3
46.0








Annual Report 2003



Table IV.3: Net Foreign Assets of the Banking System
$mn

Positon a at Cange
I- 66 66Duri6n6


Net Foreign Assets of Banking System

Net Foreign Assets of Central Bank
Central Bank Foreign Assets
Central Bank Foreign Liabilities(Demand)*


294.2 256.3 133.3


237.3
240.2
2.9


223.3
229.3
6.0


163.4
169.2
5.8


Net Foreign Assets of Commercial Banks 56.9 33.0 (30.1) -63.1
Commercial Bank Foreign Assets 133.7 113.5 119.5 6.0
Commercial Bank Foreign Liab. (Short-Term) ** 76.8 80.5 149.6 69.1
* Does not include Central Bank Long-term Foreign Liabilities of $7.5mn
** Does not include Non-residents Foreign Currency Time Deposits of $33.8mn held with Commercial Banks.


The foreign asset position of the commercial banks

deteriorated for the third consecutive year, with net

holdings plungingby $63. lmn to negative $30. lmn.

While foreign assets rose by a minimal $6.0mn, short-

term foreign liabilities ballooned by $69.lmn, an

85.8% increase over 2002, as additional borrowings

from head offices and foreign banks were

undertaken to finance the domestic lending

programme and provide liquidity support.


Net Domestic Credit


Strong reliance on overdraft financing from the

Central Bank during the first quarter build-up to

elections contributed to a 198.7% ($60.4mn) rise in

net domestic credit to Central Government over

the year. The overdraft balance heldwith the Central

Bank rose by $74.1mn and advances from the

commercial banks totalled $11.2mn. Foreign loan

inflows 'p ii.l il !- inJune and December) enabled


Table IV.4: Net Domestic Credit Summary


$mn
Position as at ChaI$n s


Total Credit to Central Government
From Central Bank
From Commercial Banks

Less Central Government Deposits

Net Credit to Central Government
Plus Credit to Other Public Sector
Plus Credit to the Private Sector
Net Domestic Credit of the Banking System


166.0
78.2
87.8

55.1

110.9
97.0
778.4
986.3


126.8
63.8
63.0

96.4

30.4
29.5
891.3
951.2


220.5
165.5
55.0

129.8

90.7
21.2
1,023.2
1,135.1


-123.0

-59.9
-60.1
-0.2


93.7
101.7
-8.0

33.4

60.4
-8.3
131.9
184.0







Monetary and Financial Developments


deposit holdings with the Central Bank to eventually
rise by some $39.4mn. Credit to statutory bodies
declined by $8.3mn as DFC (with Central
Government assistance) made repayments to the
Central Bank and a local commercial bank.

Activity in the secondary market for Treasury Bills
reflected the heating up of domestic lending with
commercial banks tradingin some $19.2mn (34.0%
of their holdings) and substituting higher interest
loans in their asset portfolios. Other private sector
entities also surrendered $8.4mn leaving the Central
Bank with 82.0% of total Bills being traded at year-
end.

In consonance with the quickening pace of
economic activity, credit to the private sector
accelerated to 14.8%. The bulk went to the tertiary
sector with loans to various service providers up
22.5%, an increase that followed a 17.0% expansion
in the previous year. Construction dominated the
secondary sector once again with a net increase of
$30.8mn (15. '.. Most of these funds (71.0(1'
were for residential and commercial projects being
undertaken by the private sector. Loans for primary
production focused largely on the recoveringbanana
industry, which experienced a 23.5% rise in funding
from the banks. Loans for miningwere up by nearly
50.0% due to various land development projects
and the renewed search for precious metals. Lending
for citrus cultivation rose by 17.6% after a minimal
increase in 2002 when the industry shifted its main


Chart IV.3: Sectoral Distribution of
Outstanding Commercial Banks Loans

250

200

S150
0



50-




Sq
Q- jb\-
C


source of funding to offshore banks. Forestry also
attracted additional financing with some $2.0mn
being advanced to this usually quiet sector.


Liquidity

After a first quarter upward boost that was partly
linked to the rise in pre-election spending, bank
liquidity tightened even though external funds were
increasingly relied upon to facilitate the acceleration
in domestic lending. Higher payments abroad, lower
EPZ/CFZ inflows and shifts in market shares as
the system adjusted to accommodate the rapid
growth of the newest bank contributed to the
general contraction. With substantial increases in
credit to the private sector, particularly in the second








Annual Report 2003
Central Bank ofB


Chart IV.4: Quarterly Change in Excess Liquidity


160
140
120
S100
0
80

40
20
0
Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4-
'02 '02 '02 '02 '03 '03 '03 '03

E Excess Uquid assets



and third quarters, excess statutory liquidity fell to a

six-year low of $18.9mn at the end of October.

As the fourth quarter approached, the Central Bank,

acting in its lender of last resort capacity, provided

temporary liquidity support while prevailing on

commercial banks to restrain the growth in lending

and redirect credit from the consumption-based

sectors (where loan demand was strongest) to the

more productive, income generating sectors. By

year-end, excess statutory liquidity rebounded,


Chart IV.5: Quarterly Change in Excess Cash
Reserves

70
60
50
40
30
20
10

01 02- Q3- Q4- Q1- 02- Q3- Q4-
'02 '02 '02 '02 '03 '03 '03 '03
E Excess cash reserves



though still finishing some $9.6mn lower than the

position at the start of the year. Among notable

portfolio changes were increases in cash balances

held with the Central Bank and other approved

assets (i.e. new housing loans) of $14.8mn and

$13.0mn, respectively. Short-term foreign balances

fell by $17.7mn, reflecting the sustained pressure

from the imbalance in private sector transactions

with entities abroad.


Table IV. 5 : Commercial Banks' Holdings of Approved Liquid Assets
$mn

Position ~ asa.hne
I- II I- I IDurIing


Holdings of Approved Liquid Assets
Notes and Coins
Balances with Central Bank
Money at Call and Foreign Balances (due 90 days
Treasury Bills maturing in not more than 90 days
Other Approved assets
Required Liquid Assets
Excessl(Deficiency) Liquid Assets
Daily Average holdings of Cash Reserves
Required Cash Reserves
Excessl(Deficiency) Cash Reserves


354.3
22.9
87.2
97.2
64.6
82.4
232.5
121.8
86.6
35.1
51.5


304.2
27.4
64.8
91.7
33.1
87.2
243.4
60.8
64.4
60.8
3.6


303.4
29.8
79.6
74.0
19.8
100.2
252.2
51.2
79.9
63.1
16.8


-0.8
2.4
14.8
-17.7
-13.3
13.0
8.8
-9.6
15.5
2.3
13.2







Monetary and Financial Developments


Chart IV.6 : Commercial Banks' Weighted Average Interest Rate
Spread

12


86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03


Shored up by external funding from headquarters
and affiliates, commercial banks were able to raise
the level of excess primary liquidity more than four-
fold to $16.8mn by the end of the year with daily
average holdings of cash reserves rising by
$15.5mn relative to a $2.3mn increase in required
holdings.

Interest Rates

Increasingly competitive behaviour led to a
narrowing of the weighted average interest rate
spread for the second year in a row as the banks


sought to maintain market shares in conditions of
tightened liquidity by offering more attractive rates
to customers. The change represented a reversal of
the consistently upward trend observed in the
previous decade. The weighted average deposit rate
rose to 4.9%, some 40 basis points higher than at
the start of the year led by a 70 basis points increase
in the weighted average time deposit rate.
Competition on the lending side also drove the
weighted average lending rate down by 30 basis
points to 14.2%.










'1)


Central Government Operations


Fiscal operations during the 2003 calendar year
generated an overall deficit of$213.6mn (10.8%
of GDP) While revenue and grants shrank by
13.6%, expenditure rose by 12.3% with current
and capital expenditure up 17.9% and 5.2%,
respectively. The sharp increase in current
expenditure coincidedwith a 0 ." .. decline in current
revenue and the current surplus therefore contracted

from $92.3mn in 2002 to $29.1mn in 2003.


While increases were recorded in all major categories
of current expenditure, the largest was in interest
payments on the public debt, which rose by 49.4%


to $77.4mn. Salary and pension payments rose by
approximately 11.5% reflecting increased payments
to government executives, teachers, the police
department and the Belize Defence Force BDF).
Although purchases of goods and services rose
by 20.8%, its share of current outlays declined
further to 18.9%.


Current revenue fell to $422.2mn (21.4% of GDP)
as a $19.7mn contraction in non-tax revenue
overshadowed a $16.2mn increase in tax receipts.
The contraction in the former reflected lower
receipts from repayments of old loans, government
departments and property income. On the other


Table V.1: Government of Belize-Revenue and Expenditure


Jan-Dc JanDec Jn-Dec ChnIeii
66 66 d u66n6
^^^^^^^^^^^^^^^^^^^^^^^2001 2002 2003 2003^^^^^^^^


Current Revenue
Tax Revenue
Non-Tax Revenue
Current Expenditure
CURRENT BALANCE
Capital Revenue
Capital Expenditure (Capital II local sources)
OPERATING SURPLUS
Total Grants
(of which non-project)
Total Revenue and Grants
Total Capital Expenditure
of which Hurricane Reconstruction
Unidentified Expenditure
Total Expenditure
OVERALL BALANCE
balance excluding Hurricane ERF
FINANCING
Domestic Financing
External Financing
Other

Ratio of Overall Balance to GDP (%)


Annual Report 2003



Central Government Operations and Public Debt


372.1
322.3
49.8
333.7
38.4
73.8
81.6
30.6
12.8

458.7
267.4
57.8

601.1
(142.4)
(84.6)
142.4
72.7
69.8
(0.1)


(8.2)


425.8
354.0
71.7
333.4
92.3
67.5
108.8
51.1
31.7

524.9
260.3
26.0

593.8
(68.8)
(42.8)
68.8
(220.9)
278.3
11.4


(3.7)


422.2
370.2
52.0
393.0
29.1
24.8
89.6
(35.7)
6.4

453.4
273.9
2.5
36.0
667.0
(213.6)
(211.1)
213.6
(62.4)
276.7
(0.7)

(10.8)


(3.6)
16.2
(19.8)
59.6
(63.2)
(42.7)
(19.1)
(86.7)
(25.3)

(71.5)
13.6
(23.6)
36.0
73.2
(144.8)
(168.3)
144.8
158.5
(1.6)
(12.1)


(7.1)







Central Government Operations and Public Debt


Chart V.1: Central Government's Development Expenditure


100%
80%
60%
40%
20%
0%


2000 2001 2002 2003


Capital II

hand, tax revenue rose by 4.6% with vigorous
growth in economic activity pushing up receipts
from taxes levied on income and profits as well as
those on goods and services. Income from
international trade and transactions rose only
marginally as an 11.6% rise in imports into the
customs territory was largely offset by duty
exemptions awarded to EPZ's. With no privatization
inflows to boost receipts in 2003, capital revenue
subsided to a more modest $24.8mn and the early
receipt of grant funds in 2002 for projects
scheduled in 2003 almost fully accounted for the
steep decline in grant revenue.

The declines in capital II and III outlays was not
sufficient to offset the almost trippling of net lending
to DFC and unidentified expenses, thus leading to
a 5.2% increase in the overall capital expenditure.
Roughly 25.0% of capital outlays was allocated to
infrastructural development, hurricane preparedness,
land reclamation and acquisitions, the University of
Belize, the Museum of Belize and counterpart
funding for the southern highway. The balance
covered a multiplicity of small items ranging from
the Social Investment Fund (SIF) to tertiary level
scholarships.


SCapital III


Financing for the overall deficit came principally
from external sources with loan disbursements of
$499.5mn outweighing amortization payments of
$100.9mn, partial payment for BTL shares
($104.0mn), deposits into a sinking fund ($27.4mn)
as well as overdraft financing provided by the
Central Bank.

Central Government's Domestic Debt

The Government's domestic debt rose by $83.5mn
as a loan disbursement of$10.0mn from the Belize
Bank and a $75.3mn increase in its overdraft balance
(mainly with the Central Bank) eclipsed amortization
payments made on loans from the DFC, the BSSB
and commercial banks and the US/GOB debt for
nature swap. The domestic debt to GDP ratio
consequently rose from 9.4% to 13.2%. The bulk
of the overdraft financing from the Central Bank
took place in the period prior to the elections in
March.

Interest payments totalled $11.9mn, with
approximately $5.1mn consisting of charges
associated with the overdraft balance. Holders of
Treasury Bills and Treasury Notes received $2.7mn







SAnnual Report 2003
Central Bank If-U Bl-.


and $2.1mn, respectively. The $1.9mn balance was
shared among the DFC, the Belize Bank, the BSSB
and the US/GOB debt for nature swap.


External Public Sector Debt

The public sector's disbursed outstanding external
debt increased by approximately 30.5% to
$1,499.4mn, raising the debt to GDP ratio from
62.0% to 75.8%. Central Government's share
stood at $1,413.5mn. External financing from
commercial sources increased from 48.9% to 60.3%,
while financing from all other sources contracted.

Disbursements totalled $503.2mn and of this
amount, $100.4mnwas used to retire existing loans.
Hence, of the $245.0mn expended in principal and
interest payments, $144.6mn was used to effect
normal debt service payments. The debt service
ratio consequently fell from 15.3% to 13.6%.


Approximately 99.3% of total disbursements were
to Central Government and included some
'.4 .2mn from commercial sources. Notable
among these were $191.3mn from the International
Bank of Miami and $200.0mn from Bear Stearns,
which was used to effect the refinancing
programme. Another $53.6mn came from
multilateral creditors led by the IDB, which extended
$30.6mn for projects such as Southern Highway
construction, tourism development, and hurricane
rehabilitation. The $9.5mn balance came from
bilateral creditors like the Banco Nacional De
Comercio (Bancomex), which advanced $8.1mn for
the cultural infrastructure project. Disbursements to
the financial public sector consisted entirely of loans
to DFC from the EEC ($2.1mn) and the CDB
($1.6mn).


Chart V.2: Sources of Central Government's Domestic Debt


Central Commercial Social
Bank Banks Security
S2001 0 2002


180.0
160.0
140.0
c 120.0
o
S100.0
E
e 80.0
N
m 60.0
40.0
20.0


Other


H* 2003







Central Government Operations and Public Debt


Table V.2: Central Government's Domestic Debt


Instumen 201 2


Loans & Advances
Treasury Bills
Treasury Notes
Defence Bonds
Debentures
Total
Sources: Ministry of Finance, Central



Of the $100.9mn in Central Government
amortization payments, the bulk ($74.1mn) went
to commercial creditors with the International Bank
of Miami and commercial suppliers accounting for
$32.0mn and $22.0mn, respectively. The latter was
largely made up of prepayments to Banco
Santander and Barclays Bank, which were facilitated
by the proceeds of the US$100.0mn Bear Stearns
bond issue. Payments on bilateral loans amounted
to $16.5mn and included $7.4mn to Taiwan and
$4.8mn to the UK Government. Multilateral
agencies such as IBRD, CDB and the OPEC Fund
received a combined total of $10.3mn.

Loan repayments by the financial public sectorwere
dominated by the $55.1mn paid to commercial
creditors. Again, much of this consisted of
prepayments using funds derived from the Bear
Stearns bond issue. In comparison, multilateral and


95.6
70.0
24.0
15.0
6.2
210.8
Bank of Belize


35.2
100.0
24.0
15.0

174.2


118.8
100.0
24.0
15.0

257.8


bilateral agents received $3.1mn and $0.4mn,
respectively. Amortization payments by the non-
financial public sector totalled $2.0mn.

Interest and other payments grew by 49.9% to
$83.5mn as Central Government made sizeable

payments to commercial creditors such as Bear
Stearns & Co. Inc. ($33.2mn), the Royal Merchant
Bank ($11.4mn), Salomon Smith Barney ($5.4mn)
and the International Bank of Miami ($4.0mn).
Other Central Government payments to multilateral
and bilateral creditors totalled $8.7mn and $10.0mn,
respectively. Interest payments by the financial and
non-financial public sectors summed to $5.9mn with
57.6% going to commercial lenders and multilateral
and bilateral lenders accounting for 33.9% and 8.5%,
respectively.


Table V.3: Financial Flows on Public Sector External Debt

$mn

Disbursem ents 219.9 482.2 503.2
Repaym ents 70.3 293.1 161.5
Net Financing Flows 149.6 189.1 341.7
Interest Payments 60.1 55.7 83.5
Net Transfers 89.5 133.4 258.2
Sources: Ministry of Finance and the Central Bank of Belize








Annual Report 2003



Box 2: External Debt and Publicly Guaranteed Debt



At the end of 2003, the outstanding public sector external debt stood at $1,499.4mn, a figure that
does not include publicly guaranteed debt, which totals $287.2mn. These contingent liabilities include
mortgage securitization liabilities of the DFC and the BSSB, and the guaranteed debt of the privatized
enterprises. Under the mortgage securitization operations, the public sector maintains the credit, liquidity
and exchange risks inherent to the operations by way of a subsidiary guarantee provided by the
government. In addition to the securitizations, the government has a contingent liability for the
external borrowing of three privatized enterprises, BEL, BWSL and Port of Belize Limited. When
these are added to the outstanding public sector debt, the total outstanding debt increases to $1.8
billion for 2003 and the external debt/GDP ratio rises to 90.4%.

External Debt and Publicly Guaranteed Debt


2001 2002 2003
(In millions of Bz dollars)
External Debt Outstanding (end of period) 1,290.2 1,534.2 1,783.6
Public Sector Debt 973.2 1,149.0 1,499.4
Central Government 682.2 1,009.3 1,413.6
Non-Financial Public Sector 39.6 16.2 14.3
Financial Public Sector 251.4 123.6 71.5
Publicly Guaranteed Debt 317.0 385.2 284.2
Debt for Privatized Enterprises 95.4 112.0 96.4
Securitization proceeds 221.6 273.2 187.8

(In percent of GDP)
External Debt Outstanding (end of period) 74.4 82.8 90.4
Public Sector Debt 56.1 62.0 75.8
Central Government 39.3 54.5 71.5
Non-Financial Public Sector 2.3 0.9 0.7
Financial Public Sector 14.5 6.7 3.6
Publicly Guaranteed Debt 18.3 20.8 14.5
Debt for Privatized Enterprises 5.5 6.0 4.9
Securitization proceeds 12.8 14.8 9.5








Central Government Operations and Public Debt 4)




Table V.4: Public Sector External Debt by Source
$mn




Bilateral 247.6 9.5 17.5 10.5 2.1 241.6
Multilateral* 296.2 57.4 13.4 10.7 4.6 344.8
Commercial Banks* 561.9 432.5 92.1 60.8 1.8 904.2
Suppliers Credit 43.4 3.9 38.5 1.6 8.8
Total 1,149.0 503.2 161.5 83.5 8.6 1,499.4
Effective 31/12/02 the Port Authority loans were classified as private sector debt follow ing its full privatization.


Appreciation of the euro, pound sterling and dinar

against the US dollar led to upward valuation

adjustments of $8.6mn during the year with the

outstanding value of dinar, sterling and euro

denominated loans increasing by $0.3mn, $1.8 and

$6.5mn, respectively.



















Chart V.3: Sources of Public Sector External Debt


1000 0
800 0
600 0
400 0
200 0
00
2001 2002 2003


IBilateral EMultilateral *Commercial Banks ESuppliers Credit







Annual Report 2003
SAnnual Report 2003
C t Bn o Bli-z


Foreign Trade and Payments


After narrowing in 2002, Belize's current account
deficit grew by 10.0% to $361.9mn (from 17.8%
to 18.3% of GDP), as a surge in tourism and export
revenues was overshadowed by increased imports,
larger external debt service payments and a decline
in receipts from current transfers. The deficit was
partly financed by $288.0mn in net capital and
financial inflows and by the drawing down of some
$60.1mn from the official international reserves.
While still substantial, the capital and financial account
surplus was 8.3% lower than the previous year as
increased government and private sector borrowings
and foreign direct investment inflows were partly
offset by the government's partial payment for BTL.
Withdrawals from the official reserves caused the
gross position to decline from '22'1.3mn to
$169.2mn, the equivalent of 2.1 months of imports.


Merchandise Trade

Exports (fo.b.) and imports (fo.b.) were up by 2.1%
and 5.6%, respectively, causing the merchandise trade
deficit to widen by 11.2% to $418.6mn (21.2% of
GDP).

Domestic exports fuelled the expansion in the export
sector with a healthy 20.7% increase that outweighed
the contraction in merchandise sales from the CFZ.
This contrasted with 2002 when disease and hurricane
damage caused a modest contraction in export
production that was more than compensated for by
record high CFZ sales. The substantial decline in
CFZ sales reflected lower fuel sales and the tightening
of Customs controls by Mexican authorities. On
the other hand, gross imports rose to $1.lbn, as an
11.8% increase in imports into the customs territory
outweighed an 18.4% decrease in CFZ imports.


Table VI.1: Balance of Payments Summary and Financing Flows

($mn)
20 66 66


CURRENT ACCOUNT
Merchandise Trade
Services
Income
Current Transfers
CAPITAL ACCOUNT
FINANCIAL ACCOUNT
NET ERRORS & COMMISSIONS
OVERALL BALANCE
FINANCING
Memo Items
Import cover in months
Current AccountlGDP Ratio (%)


-372.2
-425.7
105.0
-149.8
98.4
2.3
355.8
8.6
-5.5
5.5

3.2
(21.5)


-329.1
-376.5
105.1
-150.9
93.3
22.9
291.2
4.2
-10.9
10.9

3.2
(17.8)


-361.9
-418.6
147.3
-179.6
89.1
-96.1
384.1
13.8
-60.1
60.1

2.1
(18.3)







Foreign Trade and Payments



Table VI.2: Balance of Payments MerchandiseTrade
($mn)
201 20 20 C


Goods Exports, f.o.b.
of which: Domestic Exports
CFZ sales
Goods Imports, f.o.b.
of which: Free Circulating Area
CFZ
Merchandise Trade Balance


Higher fuel acquisition costs prompted by the US-
Iraq war and increased consumption of inputs by
companies in EPZs were key factors in the imports
surge. Included in the latter was capital equipment
for a new telephone company.

Domestic Exports

Price improvements, increased sales to CARICOM
and the resurgence of production in banana, shrimp
and papaya pushed domestic exports to $382. mn.
Except for citrus and molasses, all major traditional
exports expanded.


Notwithstanding a fall in the volume of sugar
exports, higher prices in the preferential markets
and expanded sales to CARICOM resulted in
increased sugar revenues. Earnings from molasses
fell marginally as demand stagnated and prices
weakened under pressure from higher supplies out
of Asia. Similarly, the value of citrus juice shipments
into inventory abroad declined because of the fall
in global citrus prices and the higher proportion of
concentrates in the export mix. Extensive
rehabilitation works and investments to enhance
field productivity and production boosted banana
exports to a record high level, driving up export


Table VI.3: Domestic Exports


Traditional Exports 305.6 302.3 367.9
Sugar* 59.4 66.0 71.2
Citrus Juices** 95.1 81.8 79.8
Citrus Concentrate 88.6 67.2 78.6
Not-from-Concentrate 6.5 14.6 1.2
Molasses 1.6 2.7 2.5
Bananas 42.8 33.5 52.6
Marine** 63.7 69.8 110.2
Garments 30.4 30.6 31.4
Sawn Wood 2.3 2.6 3.6
Papayas 10.3 15.3 16.6
Non-traditional Exports 16.9 14.4 14.2
Total Exports 322.5 316.7 382.1
Source Central Statistical Office, Central Bank's Estimates
* Based on estimates and not sales
** Value of export shipment and not sales.


1)


538.1
322.5
199.3
963.8
841.7
122.1
-425.7


619.4
316.7
298.6
995.9
791.2
204.7
-376.5


632.6
382.1
236.8
1,051.2
884.2
167.0
-418.6


2.1%
20.7%
-20.7%
5.6%
11.8%
-18.4%
11.2%







)Annual Report 2003
) Annual Report 2003
Cnr Ban of Beliz-e


revenues by 57.0% despite a $1.92 decline in the
average box price. Meanwhile, the marine sub-
sector forged to the forefront to become the
number one domestic export earner with revenues
of $110.2mn. Garment revenues modestly
increased, while earnings from sawn wood
strengthened, as higher prices per board foot more
than offset a decline in export volume. Export
earnings from papaya also rose, as a larger sales
volume overshadowed a sharp decline in papaya
prices caused by the flood of papayas on world
markets from Mexico and Brazil. The minimal
decline in non-traditional exports was mostly due
to lower sales of fresh oranges and citrus oils.


Sugar and Molasses

Notwithstanding the contraction in sugar
production and consequent 6.6% decline in export
volume to 95,784 long tons, price improvements
and a more than doubling of sales into CARICOM
pushed up sugar export earnings by 5.4% to
$71.0mn.


In line with the gradual reductions in the Special
Preferential Sugar (SPS) quota as the "Everything
But Arms" (EBA) programme is phased in,
shipments to the EU contracted by 5.3% to 46,356
long tons. This contraction will continue until 2006
when the EBA program will be fully implemented
and the SPS quota eliminated. Although EU export
volume fell, revenues rose 6.4% to $46.5mn as a
12.6% appreciation in the euro/US$ exchange rate
caused the average price per pound to rise by
US$0.02 to L '.i 22

The US quota was filled at 10,888 long tons valued
at $10.0mn, a 1.1% decline in volume and 4.4%
increase in value. The revenue gain reflected an
increase in the price per pound (from US$0.20 in
2002 to U -.I 21 in 2003).

The drive to expand sales to CARICOM where
prices (L -1 12 per pound) were more favourable
than on the world market (US$0.07 per pound)
proved highly successful and was facilitated by the
continued contraction in CARICOM sugar


Table VI.4: Exports of Sugar*and Molasses

($mn)


Sugar (long tons) 90,128 60.5 102,545 67.3 95,784 71.0
E.U. (Quota long tons) 44,633 37.7 48,929 43.7 46,356 46.5
USA(Quota long tons) 10,858 8.8 11,014 9.6 10,888 10.0
CARICOM (Quota long tons) 6,004 2.6 5,808 3.4 12,725 6.9
Other (World, long tons) 28,633 11.5 36,794 10.6 25,815 7.6
Molasses 31,228 1.6 36,482 2.8 37,753 2.8
Source: Belize Sugar Industries, CSO
* Reflects actual sales value as reported by the processor and not an estimate of exports value
as reported by the CSO.







Foreign Trade and Payments )


production. Sales to this market amounted to
12,725 long tons valued at $6.9mn compared with
5,808 long tons valued at $3.4mn realized in 2002.
CARICOM purchasers required mostly bagged
sugar, a product that commands a higher price than
bulk sugar. The industry will therefore maintain its
strategy of exploiting the growing regional demand
for sugar while at the same time reducing sales to
the more volatile and less remunerative world
market.

Sales to the world market declined by 29.8% to
25,815 long tons, with revenues down 28.5% to
$7.6mn. World market prices remained depressed
as favourable weather conditions, acreage expansion
and higher yields in major sugar producing countries
boosted production.

Although molasses export volume rose by 3.5%,
earnings fell by 2.2% as higher supplies from major
sugarcane molasses producers in Asia and little or
no growth in imports by the principal buyers the
US and EU- prompted a price decline (from $78.09
to $73.82 per long ton).

Citrus Juices and Pulp

Even with high global inventories and declining
export prices, citrus juice sales increased by 3.8%
and 1.4% in volume and value, respectively, to
26.9mn ps and $58.2mn. The modest revenue
improvement reflected expanded sales to the more
lucrative regional market and strategic decisions to
sell as much stocks as possible to reduce storage
costs and maximise profit margins.


While exports of concentrate juices (including freeze
concentrates) modestly increased in volume and
value, the growth in sales was isolated to grapefruit,
which was up by 50.8% in volume and 42.5% in
value, while sales of orange juices declined overall.

The US received some 62.0% of total orange
concentrate export volume. Although US orange
production was down, high stocks and declining
consumption of orange juice in this market caused
the average price per ps to fall from $1.93 in 2002
to $1.80 in 2003. Some in the industry blame the
worrying decline in US juice consumption on the
perception that citrus juices may not fit into a low-
carbohydrate diet, a fad that has become very
popular in the last few years. A concentrated effort
to increase sales to CARICOM and benefit from
its higher prices (averaging $2.15 per ps versus $1.80
in the US) caused a doubling in export volume and
raised revenues from this market by 77.2%. Sales
of orange freeze concentrate more than doubled
to 1.5mnps ($5.1mn) as demand picked up in Japan.
With more favourable prices in the US and the
Caribbean, no orange concentrate was sold in
Europe.

In contrast to orange, the bulk of grapefruit
concentrate juices went to health conscious
consumers in Europe, while none was sold in the
US. EU sales catapulted by 69.6% to 3.5mn ps,
while revenues increased by 56.2% to $7.9mn, as
the average price declined by $0.20 to $2.28 per ps.
The substantial surge in sales reflected the push to
sell off stocks, albeit at lower prices, to hold down
costs and maximise profits. In line with the
marketing focus on CARICOM, sales to the







4 Annual Report 2003
) Annual Report 2003
Cnr Bk of Blize-


Caribbean virtually doubled and benefited from a
$0.52 price increase to $2.98 per ps. Freeze
concentrate sales were approximately 75.0% lower
than the previous year as taste preferences inJapan
shifted toward the orange product. The market
for grapefruit is much smaller than the one for
orange and the winding down of US international
advertisement efforts over the previous two years
has seen global demand stagnate and prices remain
depressed. Steeper slides in world market prices
have been avoided to date as some producers,
including the US, cut back production in response
to the persistently low prices over the past seven
years.

Sales of NFC remained minimal and were primarily
aimed at maintaining a presence in the market. While
the volume of orange and grapefruit NFC exports
remained unchanged at 0.6mn ps, revenues declined
by 7.7% to $3.1mn because of a 9.4% fall in the
price of grapefruit NFC.


Pulp exports declined by 28.6% to 0.5mn pounds
($0.3mn) as production was held to a minimum to
accommodate the installation of a new pulp wash
system.

Banana

With full recovery from hurricane damage, banana
exports leapfrogged to 74,935 metric tons
($52.6mn) from the 41,737 metric tons ($33.5mn)
achieved in 2002. Production was boosted by
extensive rehabilitation works and investments to
enhance field productivity, reduce costs and even
out harvest yields. Also, some growers deferred
part of their production from the last quarter of
2002 into the first half of 2003 to take advantage
of the higher price prevailing then.

To encourage larger export volume during the first
half of the year when international prices are most
favourable, the 2003 marketing agreement offered


Table VI.5: Export Sales of Citrus Juices and Pulp*


Concentrate ('000 ps) 37,184 25,285 26,267
Orange 32,520 22,194 21,605
Grapefruit 4,664 3,091 4,662
Concentrate value ($mn) 76.0 54.3 55.1
Orange 63.3 46.2 43.5
Grapefruit 12.7 8.1 11.5
Not-from-concentrate Exports ('000 ps) 2,579 641 644
Orange 2,038 263 329
Grapefruit 541 377 315
Not-from-concentrate Value ($mn) 11.0 3.3 3.1
Orange 7.9 1.1 1.4
Grapefruit 3.1 2.2 1.7
Pulp Export ('000 pounds) 2,075 703 481
Pulp Value ($mn) 1.4 0.4 0.3
Source: Citrus Products of Belize Ltd
* Reflects actual sales as reported by the processor and not the valueof export shipments
as reported by the CSO. Export shipments go into inventory for sale at a later point in time.







Foreign Trade and Payments


a two-tier pricing system in which the box price
during the first part of the year was US$7.21 and
US$5.75 for the remainder of the year. The
minimum guaranteed average price per box was
US$6.50 for the year, implyingpayment adjustments
in the event that the average price paid was lower.
As a further incentive to maintain shipment
consistency, a dead freight penalty of US$1.25 per
box was imposed on unused cargo space if the
industry's average weekly shipments fell below
75,000 boxes. At year-end, after deducting for the
cost of licenses and quality penalties, the average
industry price was $12.57 per box, down $1.92 from
the $14.49 netted in 2002. Contributing to this price
decline was the institution of a more rigorous
quality system that raised penalties from an average
of U 'i 1 112 per box in 2002 to US$0.06 in 2003.
To offset these losses, the industry made weekly
exports to the UK of some 5,000 to 6,000 boxes
of second-class bananas at a price of US$2.50 per
box.

The industry remains under a cloud of uncertainty
regarding the expected modification to the EU
banana import regime in 2006 and the expansion
of the EU that would bring ten new members,
none of which has historical ties and sympathies


with African Caribbean Pacific (ACP) countries. It
is generally felt that the EU is leaning toward a tariff
system that may retain some vestiges of quota
management. In the meantime, the industry has
used EU grant assistance to improve field
productivity and reduce production costs by some
20.0% on average as growers prepare for 2006.


Marine Products


Led by a robust resurgence in farmed shrimp
production, annual marine exports increased from
7.6mn pounds to 17.1mn pounds, while revenues
increased by 57.9% to $110.2mn.

The shrimp industry became Belize's number one
export earner in 2003 with revenue rising by 76.3%
to $92.8mn. This was attributed to a 142.9%
increase in export volume since the average price
was pressured downward from $7.94 to $5.76 per
pound due to growing supplies from Asian shrimp
producing countries. Given the increasing
dominance of these producers, it is likely that
shrimp prices will remain at or below 2003 levels
in the coming year.


Table VI.6: Exports of Bananas

2001 200 I 20


Volume (metric tons)

Of which: (metric tons)
Traditional Quota Market
Non-traditional Markets
Other EU Market
Transit Market

Value ($mn)
Source: Central Statistical Office


48,125


48,125




42.8


41,737


38,890
2,847
2,024
822

33.5


74,935


74,935




52.6







Annual Report 2003
SAnnual Report 2003
Ct Bn of Bl -


Following the cyclical pattern of the wild-harvest
catch, exports of lobster were up 1.5% to 0.5mn
pounds, but 1.1. -- h consumer demand in the US
dining-out market caused the average price per
pound to fall by $1.11 to $25.32, hence a 2.8%
decline in export revenue to $13.6mn.

Conch exports also expanded by 7.2% with earnings
up by 22.5% to $3.7mn. A temporary ban imposed
by the U.S. Fish and \\ Id..Ih Service on US imports
of conch from the Dominican Republic, Honduras
and Haiti pushed up the average price per pound
from $7.29 in 2002 to $8.33 in 2003.

With demand for whole and fillet fish bolstered by
growth in the tourist trade, exports of these products
declined substantially, as sales were diverted to the
local market where prices were more favourable.
Since the domestic economy provides a ready
market for the wild-harvest catches, significant
exports of whole and fillet fish are only expected
when the fish farms geared for export production
come on stream in 2004. Exports of other marine
products, namely stone crab, a by-product of the
lobster traps, resumed in 2003 on a very small scale.


Other Major Exports

Garment exports were stable at 3.3mn pounds,
although a small increase in the unit price reflecting
a shift in the export mix towards more high valued
items boosted revenue by 2.6% to $31.4mn.

The placement of mahogany on the CITES list and
government's moratorium on logging in the
northern districts led to an 8.4% decline in sawn
wood export volume. However, an increase in the
average price per board foot pushed up revenue
by 38.5%. This positive price development was
partly due to the premium usually paid on woods
harvested under a "green" approach.

With the industry shift to the higher yielding large
varieties, papaya exports surged by 50.7% to
36.4mn pounds, all of which went to the US.
However, the average price per pound fell sharply
from $0.63 to $0.46, leading to a more moderate
8.5% increase in export revenue. The price decline
occurred as US imports from Mexico and Brazil
increased while demand for fresh papaya has
remained relatively constant over the past two years.


Table VI.7: Exports of Marine Products
200 200 200
Vo I u m e Vau -oIume Vle V au
('00 lbs ($-000 (666 lbs ($-000 6660 ls ($-000


Lobster Tail 433 12,198
Lobster Head 28 241
Shrimp* 6,381 46,665
Conch 622 4,596
Whole/Fillet Fish 11 14
Other 0 0
Total 7,475 63,714
Source: Central Statistical Office
* Reflects value of export shipments, not sales.


486
43
6,631
419
38
0
7,617


13,673
311
52,658
3,054
125
0
69,821


521
16
16,104
449
24
1
17,115


13,511
87
92,831
3,740
30
26
110,225







Foreign Trade and Payments )


Table VI.8: Other Major Exports

i0Til 66I 20


Garments
Volume (mn Ibs)
Value ($mn)
Sawn Wood
Volume ('000 bd ft.)
Value ($mn)
Papayas
Volume ('000 Ibs)
Value ($mn)
Source: Central Statistical Office


Belize has been able to maintain its niche position in
the US by supplying papayas that are of a superior
quality.

Non-traditional Exports

The value of non-traditional exports declined by
2.1% to $14.2mn as increased sales of pepper
sauces, beans, cocoa beans and veneer/plywood
were unable to wholly compensate for a decline in
sales of fresh oranges and citrus oils. The export
of fresh oranges is a relatively recent undertaking
and occurs on a very small scale with a few growers
targeting mostly the 'freshly squeezed juice' market
in the UK and Europe. These growers use available
cargo space on the banana boat. However, with
the resurgence of banana exports this year, space
constraints caused fresh orange shipments to fall
from 16.1mn pounds ($3.0mn) to 10.3mn pounds
($2.5mn). The decline in exports of citrus oils was
due to processing constraints that have since been
rectified for the forthcoming year.

Re-exports

Re-exports fell by 18.1% to $261.2mn as
merchandise sales at the CFZ dropped by 20.7%
to $236.8mn. The latter reflected successful lobbying


of their government by Mexican businessmen to
have taxes on regular gasoline removed. This led to
reduced fuel sales in the CFZ since prices in
Chetumal, the Mexican border town, were lower
than in the zone. The Mexican customs department
also tightened duty free allowances and confiscated
all purchases above these limits, stifling cross border
merchandise sales.

On the other hand, re-exports from the customs
territory increased from $20.4mn to $24.5mn,
mostly due to the resumption of diesel oil sales to
Guatemala and the return of generators rented by
the electricity company during the extended dry
season.

Gross Imports

Gross imports (fo.b.) of goods and electricity rose
by $55.3mn, as a $93.0mn increase in goods for
the customs territory was partly offset by a $37.7mn
reduction in CFZ imports. The most significant
increases were seen in imports ofEPZ companies


3.2
32.2

1,030
2.3

14,153
10.3


3.3
30.6

1,087
2.6

24,133
15.3


3.3
31.4

996
3.6

36,370
16.6







-4
SAnnual Report 2003



Box 3: Corozal Commercial Free Zone


The Commercial Free Zone (CFZ) legislation was enacted in 1994 to encourage cross border trade
as well as to create employment and increase foreign exchange earnings. These free zones were to
cater solely to non-residents, especially those just across the borders. The main fiscal incentives offered
were exemptions from income and other corporate taxes for the first ten years and exemptions from
all customs duties, consumption taxes, excise taxes, export duties and export taxes on all free zone
imports and exports. Notwithstanding the preceding, a social fee of 11/2% and 10% is levied on non-
fuel and fuel products, respectively.

Currently, the Corozal Commercial Free Zone (CCFZ), located at the northern border with Mexico,
is the only active zone. The fast paced, extensive growth that has characterized it since 1998 began
when the Mexican government implemented a tax that drove up the cost of Mexican fuel prices at
the pump above fuel charges in the CCFZ. This significantly boosted CCFZ fuel sales and pushed
up its fuel imports from 2'.i-Yn in 1997 to a record high of $38.3mn in 2001. At the peak of fuel
sales, up to 4,000 Mexican vehicles entered the Zone daily. During this boom, merchants were quick
to capitalize on the large influx of Mexicans by offering a wide variety of duty free merchandise (all
imported) ranging from apparel, footwear, wines, perfumes, gourmet food to electronic consumer
goods. Hence, after rising from a meager 4.8% in 1997 and peaking at 28.6% of CCFZ imports in
1999, the share of fuel in total CCFZ imports has declined steadily and ended 2003 at 8.0%. With
fuel providing the impetus, gross imports into the CCFZ rose from $66.3mn in 1997 to a peak of
$263.1mn in 2002 and ended 2003 at 'i. 21. 2n-in

Chart VI.1: CCFZ Imports



300 35.0%

250 30.0%
200 25.0%
C 20.0%
E 150
m 15.0%
100
10.0%
50 5.0%

0 0.0%
1997 1998 1999 2000 2001 2002 2003
I Fuel & Non-fuel imports Fuel imports -- Fuel as % of imports




A foremost consideration in CCFZ prosperity was its dependence on fuel and merchandise sales that
could readily evaporate in response to changes in Mexico's fuel tax policy, tariff and non-tariff
barriers, especially in view of the vociferous complaints from Mexican businesses who claimed to be







Foreign Trade and Payments )


Box 3: Corozal Commercial Free Zone (Con't)


($50.5mn), 'Miscellaneous Manufactured Goods'
($22.0mn), 'Fuels and Lubricants' ($21.9mn), and
'Food and Live Animals' ($10.9mn).

Accounting for a sizeable part of EPZ demand
was capital equipment for a new telephone
company, expansion of citrus processing facilities
and higher feed imports associated with the
substantial growth in farmed shrimp production.
The aquacultural expansion also contributed to
greater outlays on'Food and Live Animals' as most
of the additional demand was associated with
animal feed, pellets and durum wheat. Imports of
'Fuel and Lubricants' rose mostly because of higher
acquisition costs for petroleum products linked to
the US-Iraq war, and increased purchases of
electricity from Mexico due to a prolonged dry
season during the first half of the year. Large book


shipments to a charitable organization were
responsible for the spike in 'Miscellaneous
Manufactured Goods'.

Direction of Visible Trade

The USA and the UK accounted for 79.9% of
Belize's domestic exports with a drop in citrus juice
sales marginally pushing down the USA's export
share to 55.6%. On the other hand, the proportion
of sales to the UK rose from 21.6% to 24.3% largely
in response to stronger banana and grapefruit
concentrate sales and, to a much lesser extent, the
appreciation of the euro against the US dollar.
Successful efforts to increase sales of sugar and citrus
juices to the Caribbean raised the volume of
CARICOM exports from 6.5% in 2002 to 9.1%,
the highest level recorded to date.


Box 3 continued....

negatively affected by the competition. To address these concerns, efforts were made to entice
Mexican businesses to operate in the zone and so create vested Mexican interests in the zone's welfare.
Furthermore, attempts were made to encourage high-end stores as well as light manufacturing and
activities other than general merchandising. Notwithstanding these efforts, activity in the CCFZ
decelerated markedly in 2003 with total imports falling by 20.9% as Mexico adjusted fuel taxes and
tightened up on Customs controls. As prices for regular gasoline in the Mexican border town
became lower or comparable to CCFZ prices, fuel sales to Mexicans abruptly halved. Sales of non-
fuel products also sufferedwhen Mexicans' duty free allowances were sharply cut back from US$1000
to US$150 for residents of the neighboring Quintana Roo state and to US$50 for all other residents.
To further frustrate shoppers, Mexican customs confiscated all purchases above the allowable limits.

Although the value added from merchandising activities is low, the future of the CCFZ is of material
concern because of its impact on employment. Estimates place employment at approximately 1,500
persons, mostly drawn from the Corozal district, which has been depressed since the closure of its
sugar factory in 1997. The new direction since 2003 appears to be the establishment of casinos
adjacent to the CCFZ to attract Mexicans back into Belize and, hopefully, the zone. One casino is
already operational and another is under construction with a projected opening date inJune 2004.







-4
SAnnual Report 2003


Table VI.9: Direction of Visible Trade

Percentage
,, 'm, 66 66 66 6


United Kingdom
Other EU
United States
Mexico
CARICOM
Other Countries
Total


16.2
7.2
58.3
0.9
6.3
11.1
100.0


Source: Central Statistical Office
* excludes CFZ sales


At 42.2".. of total imports, the US was the country's

major supplier. The share of imports sourced from

the EU also rose from 8.1% in 2002 to 8.5%, partly
reflecting the appreciation in the cost of European

goods. While Mexican imports were relatively

stable at 7.9%, CARICOM's market share slid

downward once again and stood at 2.8%. The
relatively high proportion (38.("." of goods bought

from a medley of other countries includes fuel

purchases from South America and CFZ imports,
a significant part of which comes from low cost
sources such as Asia and Panama.


Services


Increased tourist arrivals caused net service receipts

to expand by 40.2% to $147.3mn, as a 16.3% surge
in inflows outweighed a more modest 6.7% growth

in outflows. The transportation sector, in particular,

benefited from the 57.5% increase in cruise ship

port calls, as shipping agents expanded services to

the cruise lines. These revenue gains more than offset

increased payments for international freight arising
from the expansion in foreign trade, greater overseas

expenditure on non-business travel and higher

reinsurance costs.


Table VI.10: Balance of Payments Services, Income and Current Transfers

($mn)


Services 347.3 242.3 105.0 366.2 261.1 105.1 4259 278.6 147.3
Transportation 23.7 72.2 (48.5) 36.2 75.0 (38.8) 44.3 79.0 (34.7)
Travel 238.5 81.5 157.0 258.2 85.1 173.1 303.1 88.3 214.8
Other Goods and Services 38.9 71.8 (32.9) 41.6 83.2 (41.6) 46.6 92.9 (46.3)
Govt. Goods and Services, N.I.E 46.2 16.9 29.3 30.2 17.8 12.4 320 18.3 13.7
Income 16.6 166.4 (149.8) 7.9 158.8 (150.9) 8.4 188.0 (179.6)
Labour Incore 4.0 25.4 (21.4) 3.8 21.5 (17.7) 50 22.3 (17.3)
Investment Incore 126 141.1 (128.5) 4.1 1373 (133.2) 3.4 165.6 (162.2)
Current Transfers 1021 3.7 98.4 97.4 41 93.3 940 4.9 89.1
Government 18.4 0.5 17.9 21.9 0.4 21.5 55 0.2 5.3
Private 83.6 3.2 80.4 75.4 3.7 71.7 88.4 4.7 83.7


21.6
8.5
56.3
1.6
6.5
5.5
100.0


24.3
5.4
55.6
1.5
9.1
4.1
100.0


3.2
3.9
45.9
8.4
4.2
34.4
100.0


3.1
5.0
42.2
7.8
3.1
38.8
100.0


3.2
5.3
42.2
7.9
2.8
38.6
100.0








Foreign Trade and Payments )




Box 4: Cruise Ship Tourism


Cruise ship tourism has grown exponentially over the past six years, moving from 14,183 arrivals in 1998 to 488,917
visitors in 2003. Over the same period, stay-over visitors grew by a much more modest 18.8% to 196,148.

Large cruise ships first started port calls to Belize in the latter half of the 1990's on a seasonal basis -between October
to May. The terrorist attacks of September 11, 2001, in the USA and the subsequent war on terrorism, while
discouraging Americans from traveling far afield, boosted travel nearer to home and increased the attractiveness of
Belize as a tourist destination. Hence, while tourism in the general Caribbean was depressed during 2002, Belize's
cruise ship market increased more than fivefold, with ships calling year-round for the first time. Not only did existing
lines make more port calls but new cruise lines, including the Carnival ships, started calling. In 2004, a 30.0% increase
in cruise ship arrivals is anticipated.


Cruise Ship Visitor Arrivals

500000-
400000
300000
S200000

100000
0
1998 1999 2000 2001 2002 2003


While providing obvious benefits to the country, the extremely rapid growth in arrivals over the past two years and
prospects for further significant increases have also raised several concerns. A major issue has been the accompanying
development in the country's physical infrastructure, transportation capacity and human resources to competently
cope with the rapid and tremendous surge in tourist numbers. The concerns range from simple matters such as the
adequacy of basic amenities at tourist sites and the availability of comfortable, reliable tour buses to complex
considerations such as the preservation of fragile ecosystems and appropriate management of main tourist sites
such as the Mayan temples to conserve them for posterity. Training has emerged as a key issue to develop and build
the local capacity to deliver a quality service experience. While specific projects, including training and tourist site
enhancements, have been implemented to address some of these concerns, it is not clear whether the pace of
implementation is matching the increase in arrivals.

Another area of disquiet has been the equitable distribution of benefits. From a national perspective, the preoccupation
has been that the benefits from this explosive growth should not be concentrated in the hands of a few. These
concerns were heightened when Royal Caribbean took over ownership of the Belize Tourism Village, the entry port
for cruise ships and has also been manifested in disputes arising between large and small stakeholders. Another issue
has been the potentially negative impact of cruise ship tourists on the stay-over market and the need to ensure that
this influx of mass tourism does not crowd out the more exclusive, high-end market. Cruise ship visitors are
generally low spenders, while the stay-over market has traditionally focused on visitors interested in a more pristine
environment and who are generally bigger spenders.

Responsible regulation of this dynamic sub-sector is key to ensuring its long term viability and will require skilled
management in balancing the interests of all stakeholders in the tourism industry. Further infra-structural works are
needed to improve highways, access roads to tourist attractions as well as the facilities at these sites. The developments
in tourism have already outgrown the Tourism Development Project, which was conceived for a total of 300,000
cruise ship and stay-over arrivals. Training of human resources and availability of low cost financing are fundamental
to encouraging more local participation and maximise socio-economic benefits. In short, the need is for comprehensive
oversight of the industry with enforceable guidelines setting the parameters for the further growth of the industry.







Ap
SAnnual Report 2003
Ct Bn of Be-


Income


Net outflows on the income account rose by 19.0%

to $179.6mn largely due to a 47.1% increase in

interest payments on the external debt and a 30.6%

increase in earnings repatriated by foreign investors.

Further exacerbating the deficit on this account was

a decline in interest earned on the official reserves

due to lower deposit holdings abroad and

depressed international interest rates. On the other

hand, net outflows for employee compensation

declined slightly as an increase in salaries received

by residents employed by embassies and

international organizations narrowly outweighed the

growth in foreign labour costs as the number of

seasonal workers in the banana industry returned

to pre-hurricane levels.


Net inflows from current transfers fell by $4.2mn

to $89.lmn during the year as grant funds received

by the government experienced a four-fold decline

to $5.5mn, largely due to the early receipt of funds

for certain 2003 projects in the last quarter of the

previous year. On the other hand, increased inflows

to international/regional organizations and higher

family remittances from abroad outweighed a fall-

off in proceeds from insurance claims and drove

private sector net receipts upward by 16.7% to

$83.7mn. The higher insurance receipts in 2002

stemmed from claims arising from the hurricane

damage suffered in October 2001.


Table VI.11: Balance of Payments Capital and Financial Accounts
($mn)
2i 2i 0 i


CAPITAL ACCOUNT
General Government
Other Sectors
FINANCIAL ACCOUNT
Direct Investm ent Abroad
Direct Investment in Belize
Portfolio Investment Assets
Portfolio Investment Liabilities
Financial Derivatives Assets
Financial Derivatives Liabilities
Other Investm ent Assets
Monetary Authorities
General Government
Banks
Other Sectors
Other Investment Liabilities
Monetary Authorities
General Government
Banks
Other Sectors
CHANGES IN RESERVES (Minus = Increase)


Current Transfers


2.3
0.6
1.8
355.8
0.0
119.8
0.0
-29.7
0.0
0.0
7.8
0.0
-6.1
5.0
9.0
257.9
-1.2
245.2
23.3
-9.3
5.5


22.9
5.9
17.0
291.2
0.0
49.6
0.0
253.2
1.7
0.0
16.1
0.0
-8.0
20.3
3.8
-29.4
-66.0
-22.2
-2.8
61.6
10.9


-96.1
-97.7
1.6
384.1
-0.7
57.6
-0.3
151.1
1.1
0.0
-17.1
0.0
-6.0
-6.0
-5.1
192.4
-5.2
100.0
60.4
37.2
-60.1







Foreign Trade and Payments )


Capital and Financial Accounts

From its usual surplus position, the capital account
swung to a net outflow of$96. lmn in 2003 mainly
due to the government's partial payment for BTL
shares held by Carlisle Holdings. At $1.6mn, capital
transfers received by the private sector were
substantially below the 2002 level when a $16.0mn
loan to the citrus processors had been written off
by the Commonwealth Development Corporation
during the sale of its controlling interest to the Citrus
Growers Association.

On the other hand, increased foreign borrowings
by the government and commercial banks helped
to boost net inflows from financial transactions
upward by 31.9% to '.'-.4.1mn. This included
$151.1mn in portfolio investment inflows as
proceeds from anew US$100.0mn bond issue were


partly offset by payments to foreign holders of
mortgage securities. An additional $192.4mnwas
received as commercial bank loans to the
government and local commercial banks
outweighed prepayments in furtherance of the
government's debt refinancing programme and
regular amortisation payments.

Private sector external indebtedness continued the
upward trend that started when the International
BankingAct was amended to permit CFZ and EPZ
companies to borrow from offshore banks located
in Belize. From a net negative position in 2001,
private sector foreign loan commitments recorded
net increases of $61.6mn in 2002 and $37.2mn in
2003.

In other developments, foreign direct investment
in Belize rose by 16.1% to $57.6mn, with the


Chart VI.2: Financing for Current Account Deficit


0 50 100 150 200
BZ$rn


* Reserves a Cap/Fin Acct o CA Deficit


250 300 350 400







Annual Report 2003
SAnnual Report 2003
Ct Bn of Bl -


Table VI.12: Official International Reserves


($mn)
I- S I11 = 111
Positon a at Cange


Gross Official International Reserves
Central Bank of Belize
Holdings of SDRs
IMF Reserve Tranche
Other
Central Government
Foreign Liabilities
CARICOM
Other
Net Official International Reserves


240.2
208.4
3.4
10.6
194.4
31.8
2.9
0.6
2.3
235.7


229.3
212.5
4.0
11.4
197.1
16.8
6.0
1.5
4.5
223.3


169.2
152.4
4.6
12.5
135.3
16.8
5.8
0.8
5.0
163.4


-60.1
-60.1
0.6
1.1
-61.8
0.0
-0.2
-0.7
0.5
-59.9


tourism sector (notably casino hotels) attractingmost
of these funds.


Foreign deposits held by commercial banks and the
private sector together with government sinking

funds rose by the combined sum of$17.1mn. The

sinking funds were topped up to meet the cost of

retiring the Salomon Smith Barney Bonds that
become due in 2005.


Official International Reserves


Gross official international reserves declined to
$169.2mn reflecting withdrawals of $60.1mn to

partially finance the current account deficit. The

fall was seen in the foreign holdings of the Central

Bank, while those of the Central Government

remained unchanged. After deducting $5.8mn in
foreign liabilities, net international reserves stood at

$163.4mn.


Chart VI.3: Gross Official International Reserves at December


300

250

200
E
v 150
N
100

50


0 -
2001


2002


2003









1)


Economic Prospects


Building on the production and efficiency gains of
the previous year, economic activity during 2004 is
poised for another year of positive growth as
domestic exports should expand by at least 4.0%
and real GDP between 4.0% and 5.0%.

Output of all major domestic export crops is
forecasted to increase, while livestock and basic
grains should remain stable or expand in line with
demand from the growing tourist trade. Sugarcane
deliveries should be up 2.5% to 1.1mn long tons,
yielding some 110,000 long tons of sugar and 40,650
long tons of molasses. Exports are expected to
grow by 2.7% in volume to 98,400 long tons and
5.4% in value to $74.8mn. The disproportionate
rise in export revenues is predicated on a more than
doubling of sale volume to CARICOM and a
locked-in rate of US$1.03 to the euro. This
compares to a rate of US$0.98 to the euro for
2003. The diversion of sales to CARICOM from
the world market where prices remain under
continuous downward pressure from significant
global surplus production and high stocks is timely.
Exports of molasses should remain fairly steady at
36,632 long tons valued at $2.8mn.

After two years of declining production, the citrus
crop should rebound in 2004 with production rising
by almost a million boxes (or 18. "' .. to 6.4mn
boxes and deliveries to the processing plant
estimated at 6.1mn boxes compared to the 5.1mn
for the 2002/2003 crop. With the increased
throughput at the factory, juice production should
expand by some 15.8% to 32.3mn ps. Boosted by


stocks in inventory, export sales of citrus juices are
expected to reach 35.5mn ps valued at $62.7mn,
increases of 34.0% and 14.0% in volume and value
over 2003. However, with Brazil and Florida
forecasting highly favourable harvests in 2004, prices
for orange citrus juices will start the year at an all
time low, accounting for the lower than
proportionate increase in expected export revenue.
The processor's strategy of boosting sales of by-
products will see revenues from citrus oils, pulp
cells and essences rise from 0.7mn pounds valued
at $0.9mn to 1.5mn pounds valued at $3.0mn.

Further investments to improve field productivity
should boost banana production and expand
exports by 1.7% to 76,200 long tons. However, a
US$0.30 reduction in the average box price to
U"'.. 21) will hold revenues steady at $52.0mn.
Papaya exports is also set for a 2.5% increase to
37.3mn pounds and revenue improvement of 1.2%
to $16.8mn, as price pressures continue with
abundant supplies out of Brazil and Mexico.

Marine products should once again lead export
performance, as farmed shrimp sales increase by
another 5.6% and 4.0% in volume and value,
respectively, to 17.0mn pounds and $96.5mn. Conch
production is expected to grow by 11.1% to 0.5mn
pounds and 20.3% to $4.5mn in view of the
favourable prices that now prevail. On the other
hand, lobster production should be down marginally
to 0.52 mn pounds due to its cyclical reproductive
patterns while export value will remain relatively
stable at $13.6mn. Premiering on the export scene







I) Annual Report 2003


NI


Central~ Ban ofBlz


will be 0.3mn pounds (valued at approximately
$1.68mn) of fish fillet from a large tilapia fish farm
that was recently established.

The secondary sector should contribute to growth
as agro-processing expands to cope with larger
sugar and citrus crops and some major construction
projects such as the Challilo Dam continue or come
on stream.

Even if performance is uneven, growth in services
should be quite respectable with increases of 30.0%
in cruise ship and 4.0% in stay-over tourist arrivals
impacting positively on transportation, hotels,
restaurants and trade. However, CFZ
merchandising activities is likely to be dampened
further because of competitive fuel prices in
Chetumal and the stringent enforcement by Mexican
customs authority of duty free allowances
permitted to their nationals.


Some fiscal tightening is expected in 2004 in view
of the government's stated commitment to keep
the deficit to within 3.0% of GDP. Toward this
end, several new tax measures are expected at the
start of the year. The government has also budgeted
for an 11.4% decline in Capital II and Capital III
expenditures for 2003/2004 relative to the previous
fiscal year.

The institution of a 1.0% increase in the sales tax
and the global shift towards higher rates for
international freight will provide upward pressure
on the cost of goods and services. Inflation should
therefore be at or above the 2003 level. In the
monetary sector, the long anticipated separation of
offshore deposits from onshore deposits should
help to control credit and consumption growth.
The Central Bank will also be maintaining a close
watch on general liquidity developments to forestall
excessive credit expansion that lead to pressures on
the exchange rate.


Economic Prospects









'1)


OPERATIONS


Foreign Exchange Operations

In 2003, the Central Bank's trade in US dollars,
Canadian dollars, and Pound Sterling resulted in net
sales of $62.0 mn. Sales exceeded purchases in eight
out of the twelve months with net outflows
averaging $27.2mn during this period. Net inflows
in the remaining months were highest in June and
November when disbursements were received
from an international bond issue and a commercial
bank loan to the Government. Trade in Caricom
currencies (mostly Barbados and Eastern Caribbean
dollars) resulted in net sales of $1.9mn over the
year.


External Assets Ratio


Under the law, the Central Bank is required to
maintain external asset reserves equivalent to at least
40.0% of the i - N it, amount of notes and coins
in circulation and the Bank's demand and time


deposit liabilities. From a high of 97.2% inJanuary,
the external asset ratio followed a generally declining
trend as increased lending to the government
coincided with higher payments to foreign entities,
a development typical of this type of economy. In
December, the ratio recorded its lowest level in 2003
of 57.8%. The bulk (90. Y' .. of the Bank's external
asset holdings was comprised of foreign currency
notes and deposits with foreign central banks and
correspondent banks abroad. Foreign government
securities and holdings of Special Drawing Rights
at the International Monetary Fund accounted for
1.3% and 8.2%, respectively.


Relations with Commercial

Banks

Cash Balances

Accelerated lending activity by the commercial banks
caused cash reserve balances to fall below required


Table IX.1: Central Bank Dealings in Foreign Exchange 2003
$mn
Mot S&Cnda an UK E CA*I urece


January
February
March
April
May
June
July
August
September
October
November
December
Total


20.6
20.8
18.5
20.5
46.6
211.1
60.5
27.1
27.3
34.1
92.6
114.4
694.0


31.0
50.9
53.0
29.3
33.4
130.3
69.5
62.7
66.3
33.3
31.5
165.0
756.0


(10.4)
(30.1)
(34.5)
(8.7)
13.2
80.8
(8.9)
(35.6)
(39.0)
0.7
61.1
(50.6)
(62.0)


0.01
0.00
0.01
0.01
0.12
0.01
0.08
0.00
0.00
0.00
0.00
0.01
0.26


0.06
0.09
0.12
0.12
0.24
0.12
0.36
0.16
0.09
0.19
0.16
0.42
2.12


(0.05)
(0.08)
(0.11)
(0.11)
(0.12)
(0.11)
(0.28)
(0.15)
(0.08)
(0.18)
(0.16)
(0.41)
(1.86)








SAnnual Report 2003
Cenra BUank of Beliz


Table IX.2: External Assets Ratio 2003

MOT Aset Lible Exera Ase


January
February
March
April
May
June
July
August
September
October
November
December


201.6
171.4
136.9
128.4
142.1
222.6
213.5
177.7
139.5
140.3
201.6
151.7


207.4
214.4
201.1
207.4
211.5
315.9
324.2
279.8
230.4
238.8
310.1
262.6


levels in September and October. With banks

borrowing from abroad to beef up their domestic

position, excess cash reserve balances were able to

bounce back and reached its highest level of the

twelve month period during December..


At the end of the year, currency in circulation stood

at $103.2mn, some $5.0mn below that of the

previous year. Currency holdings by the public and

commercial bank vault cash declined by $3.5mn

and $1.5mn, respectively. As in 2002, currency in


circulation was at its lowest level in October and

peaked in December with a total of $127.6mn

($114.8mn in notes and $12.8mn in coins) being

circulated.


Transactions

Government


with Central


By law, the Central Bank may extend advances to

the Government up to a maximum of 20.0% of

current revenue collected by the Government in the


Table IX.3: Commercial Bank Balances with the Central Bank
$mn
MOT Avrg Depsi Reqire Cash Acua Cas Exes
Lible Reere Hodig Deficit


January
February
March
April
May
June
July
August
September
October
November
December


1,019.9
1,039.9
1,062.4
1,070.6
1,082.4
1,089.3
1,079.5
1,094.3
1,081.1
1,074.6
1,055.4
1,050.9


61.2
62.4
63.7
64.2
64.9
65.4
64.8
65.7
64.9
64.5
63.3
63.1


69.7
77.8
73.9
73.3
65.7
71.4
69.5
67.5
64.0
61.5
71.4
79.9


8.5
15.4
10.1
9.1
0.8
6.1
4.8
1.8
-0.8
-3.0
8.1
16.8


97.20
79.94
68.08
61.91
67.19
70.47
65.85
63.51
60.55
58.75
65.01
57.77








Operations



Table IX.4: Currency in Circulation 2003
$mn


111.4
114.6
113.2
112.7
109.4
112.6
110.5
110.3
107.5
106.3
107.9
114.8


12.0
12.0
12.2
12.3
12.4
12.4
12.5
12.5
12.6
12.5
12.6
12.8


123.4
126.6
125.4
125.0
121.8
125.0
123.0
122.8
120.1
118.8
120.5
127.6


16.0
16.1
20.5
22.3
15.6
19.0
21.7
18.5
21.2
18.2
18.4
24.4


107.4
110.5
104.9
102.7
106.2
106.0
101.3
104.3
98.9
100.6
102.1
103.2


preceding financial year or a sum of $50.0 million,
whichever is greater. A monthly average of $6.7mn

was supplied to the government during 2003 to

cover fiscal shortfalls. After starting the year at a

zero balance that was maintained throughout

January, overdraft lending to the Government surged
upward in the February-March period by some

$58.0mn to facilitate pre-election activity. While

fluctuating somewhat in the following months, the


overdraft balance continued on an upward trend,
finishing the year at $74.1mn, a substantial increase

but still within the legal upper threshold of

$82.3mn.


Treasury Bills


The Central Bank continued to act on the

Government's behalf in conducting Treasury bill

operations. There were no new issues during the


Table IX.5: Central Bank Credit to Central Government


January 42.5 0.0 10.0 0.00 0.00 0.00
February 47.5 0.0 10.0 30.70 3.92 7.58
March 46.0 0.0 10.0 58.05 5.07 14.34
April 51.8 0.0 10.0 67.74 5.76 6.85
May 49.3 0.0 10.0 55.23 5.09 12.96
June 67.4 0.0 10.0 62.12 6.20 15.12
July 74.0 0.0 10.0 70.84 6.88 12.33
August 79.0 0.0 10.0 72.61 7.18 13.86
September 71.0 0.0 10.0 72.05 6.80 15.81
October 71.5 0.0 10.0 79.38 7.15 16.20
November 74.3 0.0 10.0 77.28 7.18 16.08
December 82.0 0.0 10.0 74.12 7.39 17.72
A: Central Bank Holdings of Government Securities as a multiple of Central Bank's paid up Capital and Reserves
B: Advance to Government as a percentage of Government's estimated recurrent revenue fiscal year
Estimates for Fiscal 2002/2003 $404,765,140 (January March)
Estimates for Fiscal 2003/2004 $448,083,286 (April December)


January
February
March
April
May
June
July
August
September
October
November
December








SAnnual Report 2003



Table IX.6: Government of Belize Treasury Bill Issues


1/03
2/03
3/03
4/03
5/03
6/03
7/03
8/03
9/03
10/03
11/03
12/03
13/03
14/03
15/03
16/03


02/01/03
30/01/03
13/02/03
12/03/03
03/04/03
30/04/03
15/05/03
11/06/03
03/07/03
30/07/03
14/08/03
09/09/03
02/11/03
29/10/03
13/11/03
09/12/03


03/04/03
30/04/03
15/05/03
11/06/03
03/07/03
30/07/03
14/08/03
09/09/03
02/10/03
29/10/03
13/11/03
09/12/03
31/12/03
28/01/04
12/02/04
09/03/04


45.4
13.2
5.8
35.6
45.4
13.2
5.8
35.6
45.4
13.2
5.8
35.6
45.4
13.2
5.8
35.6


3.22
3.22
3.22
3.22
3.22
3.22
3.22
3.25
3.22
3.22
3.22
3.22
3.25
3.22
3.22
3.22


3.25
3.25
3.25
3.25
3.25
3.25
3.25
3.28
3.25
3.25
3.25
3.25
3.28
3.25
3.25
3.25


year and at 31 December 2003 the total outstanding
was at its statutory limit of $100.0mn. Since the
government's reinstatement of the bidding process
in December 2001, the average discount rate
generally declined and bottomed out at 2.98% in
October 2002 before rebounding slightly. With the
discount rate holding at 3.22% through the entire
year (a policy decision of the Government), the
market became dominated by the Central Bank as
commercial banks progressively sold off holdings
in order to facilitate an increase in lending, which
was being done at far more lucrative rates. Hence,
the Central Bank's holdings grewby nearly $28.0mn
reaching an annual high of $82.0mn in December.


Treasury Notes


Under the 1993 amendment to the Treasury Bill
Act, the Government of Belize may issue up to
$25.0 mn in treasury notes. These notes have a one-
year maturity period and carry a 9.0% rate of
interest. At the end of 2003 total treasury notes
outstanding amounted to $25.0 mn, all of which
was held by private sector institutions and individuals.




Supervision of the Financial Sector


During 2003, the Financial Sector Supervision
Department (FSSD) performed four full scope on-
site examinations and one specialized inspection







Operations )


Table IX.7: Banks


I Doesi Bak nentoa-ak FnnilIsiuin


Alliance Bank of Belize Ltd.
Atlantic Bank Ltd.
Belize Bank Ltd.
FirstCaribbean International Bank Ltd.
Scotiabank (Belize) Ltd.


Atlantic International Bank Ltd.
Caye International Bank Ltd.
Handels Bank & Trust Company Ltd.
Inter Bank and Trust Ltd.
Investment and Commerce Bank Ltd.
Market Street Bank Ltd.
Provident Bank & Trust of Belize Ltd.
The Oxxy Bank Ltd


Belize Unit Trust Corp. Ltd.


involving two domestic banks and three international
banks. These examinations focused on ensuring that
the Banks and Financial Institutions Act (BFIA) and
the International Banking Act (IBA) were being
adhered to and that the specific banks were
operating in a sound manner. FSSD also continued
to conduct its normal prudential off-site surveillance
of the domestic and international banks licensed in
Belize.

One unrestricted Class A International Banking
license was granted during the year bringing the total
number of international banks operating under
Central Bank license to eight. In addition, one
domestic bank operating as a branch of an
international bank was locally incorporated as a
subsidiary and the first financial business licence was
issued. To date, there are five domestic commercial
banks, eight international banks and one financial
institution operating in Belize under Central Bank
regulation and supervision.

As required under Sections 21(2) of the BFIA and
21b(2) of the IBA, the FSSD continued to monitor
credit facilities that were in excess of 25% of a
bank's capital and reserves and analysed sixteen
applications totalling $173.9mn that were submitted
for the Bank's approval during the year.


In keepingwith international standards, publication
of individual domestic commercial banks' data on
a quarterly basis was commenced. The information
included balance sheets, income statements, indicative
ratios and interest rates on deposits and loans.

In other initiatives to foster the development of
the financial sector in 2003, the Central Bank
collaborated with CARTAC in conducting a
seminar on Corporate Governance for Directors
and Senior Management of banks, insurance
companies, credit unions and other financial
institutions.



Information Systems Developments


Overview


The year was a particularly busy one for the
Information Systems Unit (ISU). While many
projects were undertaken, an area of particularly
high priority was the general upgrading of security
where the Bank's internal network, information
systems, and connections to and from the Internet
were concerned. ISU also put priority on
implementing measures to ensure the availability of
the Bank's critical systems in the event of a disaster.







SAnnual Report 2003
Cenra B.a .f Blize-


After upgrading the Windows NT 4.0 primary
domain network controller to Windows 2000 Active
Directory Services, the process of upgrading the
Bank's security policies to take advantage of the
new security features in Windows 2000 Directory
Services was initiated.


Upgrade ofMajorApplications


Among the major applications of the Bank that
were upgraded during the year were:


a) The operating platform for the Prophecy
Open financial system,
b) The Ingres database,
c) The OpenRoad development platform and
report writer,
d) The financial transfer system -\\ II 1),
e) The Commonwealth Secretariat's Debt Recording
and Management System (CSDRMS), and
d) The Microsoft SQLServer database


A new version of the Intranet was also released,
which enhanced staff access to information about
the departments of the Bank as well as internal
circulation of daily local news, internal newsletter,
staff club events, photo album, and internal
telephone directory.


NewApplica tions


The ISU was also involved in the implementation
of several new systems, chief among which was a
web-based human resources information system


(HRIS). Portions of the HRIS are now running
parallel with existing systems and other modules
are being tested for implementation in 2004.


The Bank's Picture Perfect security and access control
system was also replaced by a completely new
version, which is now hosted on the Linux operating
system and is accessed via windows-based clients.
The system is also web enabled and can be accessed
by administrators using a web browser.


A tourist survey system was developed in-house
for the Research department to capture tourist
related information in a database for further
statistical analysis.


InternetAccess


During the year, the Bank's official website
www.centralbank.org.bz was officially launched. In
addition to providing visitors with options to
download economic, statistical, and financial data,
the site contains a variety of information about the
Central Bank, its operations, currency and
regulations. Contact with the Bank is now facilitated
by e-mail links that are provided on the website.


To further facilitate the Bank's work, ISU launched
a secure internet email service to enable employees
to send and receive Internet electronic mail and also
assisted with the drafting and implementation of
an e-mail policy that governs the use of this service.








'1)


Administration


The Board of Directors

The Board of Directors held 10 meetings in 2003
and considered 82 submissions.

Overseas Meetings

In their capacity as executive officers of the Bank
and advisors to Government, the Governor &
Deputy Governor attended several meetings during
the course of 2003, some of which are shown in
Box 4.


Finance

The Central Bank's financial statements for the year
ended December 31,2003, with comparative figures
for the previous year, are annexed to this report.
During 2003, the Bank's assets declined by 2.2% to
$317.8mn with external assets falling by 28.3% to
$152.4mn, while domestic assets rose by 46.9% to
$165.6mn.

At year-end, the Bank's net operating surplus
amounted to $3.6mn, a slight increase over the 2002
position. Gross earnings totaled $16.3mn with
interest income accounting for $13.9mn and
commissions and other income contributing
$2.4mn. Current expenditure declined by 13.0%
to $12.7mn with staff costs, interest payments and
other operating costs accounting for 42.6 %, 21.7%,
35.7%, respectively.

As required under Section 9(1) of the Central Bank
Act, the sum of $0.4mn or 10% of the net
operating surplus will be paid into the Central


Bank's General Reserve Fund. The balance of
I 2 n', will be transferred to the Accountant
General for the Government of Belize's
Consolidated Revenue Fund.

Internal Audit

In 2003, the Internal Audit Unit was expanded and
its role, functions and procedures updated. The Unit
routinely monitored the pension fund records,
stocktakingprocedures for securities, currency notes
and coins and also observed the currency destruction
process.

Audits were conducted of the Bank's compilation
process in preparing for the annual external audit,
the Central Bank's Financial Rules, its Security Control
and Business Recovery Procedures and the internal
operations of the S.WI.EFT money transfer system.

Assisting in an advisory capacity, the Unit reviewed
the newly formulated Building Services Unit stock
procedures, the criteria used to select the external
auditor and the coordination of alternates for the
vault and S.WI.FT security officers.

The Audit Committee (comprised mainly of
representatives from the Central Bank's Board of
Directors with the Chief Internal Auditor acting as
secretary) reviewed the audited financial statements
and management letter prepared by the external
auditors with the Bank's management with a view
to ensuring the adequacy of the statements and
disclosures. The Committee also participated in the
process of selecting the external auditor and made
recommendations to the Board for the appointment








I Annual Report 2003



Box 5: Meetings Attended by the Governor and Deputy Governors during 2003


Central American & Caribbean Credit Conference

Seventh Meeting of Council for Finance and Planning (COFAP)

Fifth Special Meeting of the Caribbean Development Bank Board
of Directors
Inter-American Development Bank XVII Meeting of Governors of
the Central American Isthmus and the Dominica Republic

Annual Meeting of the Board of Governors of the Inter-American
Development Bank and the Inter-American Investment
Corporation
Meeting of the Central American Finance Ministers

Caribbean Development Bank Board of Governors Meeting

Third Euromoney & Latin Finance Caribbean Investment Forum

Thirty Third Annual Meeting of the Board of Governors of
Caribbean Development Bank
Meeting of CARICOM Central Bank Governors and the Meeting
of the Committee of Central Bank Governors

IMF/OFC Round table discussions

Fourth Meeting of Ministers of Finance & Presidents of Central
Banks

Eighth Meeting of the Council for Finance and Planning
(COFAP)
Two Hundred and Seveth Meeting of the Board of Directors and
Eleventh Budget Committee Meeting of the Caribbean
Development Bank

IMF and World Bank Group Annual Meeting of Board of
Governors
Meeting of Commonwealth Finance Minister

Second Latin Finance/Euromoney Central America Conference

CARICOM Central Bank Governor's Meetings in Barbados

Inter-American Development Bank's Fifth Informal Meeting of
Ministers of Finance and Presidents of Central Banks of Central
America and the Dominican Republic


January Miami


February

February


Trinidad & Tobago

Trinidad & Tobago


February Honduras


March



April


June


June


July


Italy



Washington D.C.

St. Kitts and Nevis

Dominican Republic

St. Kitts and Nevis


Barbados


Washington D.C.


Guatemala


Jamaica


Barbados


September Brunei

September United Arab Emirates


October

November

November


Colombia

Barbados

Nicaragua







Administration


of external auditors for the years 2003 to 2005.


Human Resources

The Bank continued to focus on developing career
central bankers in 2003. Hence, one of its more
important initiatives involved customized training
of management and supervisory personnel aimed
at upgrading the performance appraisal system, a
necessary condition for fostering career
development and retention of trained staff.

InJanuary, the fourth annual Employee Recognition
Ceremony was held under the theme "TEAM-
Together Everyone Achieves More". Long Service
Awards for ten and twenty years of service were
presented to staff that reached these milestones, and
departmental Outstanding Performers were
honored.

Another initiative to improve management-
employee communications involved the
dissemination of a quarterly Newsletter, "The
JabiViews", which is produced under the guidance
of an editorial committee that includes supervisory
and professional staff. The newsletter welcomed
articles contributed by staff on general or specific
issues relevant to the workplace and replaced
" i Scoop" and the "Library and Records Management
News", which were previously produced by the
Human Resources and Records Management Units.

Staffing

As at 31 December 2003, the staff complement
was 129, representing 97.7% of the estimated
staffing requirements. One hundred and twenty five
were permanent employees (of which 32 were


contract staff) and 4 were employed on a temporary
basis.

Several changes occurred at the executive and
managerial levels during the year. In September, Mr
J. Meliton Auil's term as Governor came to an end
and the Governorship was assumed by Mr. Sydney
Campbell who formerly held the position of
Deputy Governor of Economic Intelligence. Mr.
Marion Palacio, Statistical Analyst/Economist, was
subsequently appointed Deputy Governor,
Economic Intelligence. In other developments, the
Deputy Governor of Operations, Mrs. Yvette
Alvarez took up an appointment in the Government
Service and Mr. Dwain Davis, Manager of the
Finance Department, resigned to pursue
opportunities in the private sector after serving the
Bank for twenty-six years.

In line with progression planning and staff
motivation objectives, six promotions took place
at the managerial level. Also, four staff members
were appointed to professional positions to
strengthen the operations of the Financial Sector
Supervision Department.

In comparison with 2002, the staff turnover rate
rose by 4 percentage points to 12% with sixteen
separations occurring and nine persons being hired.

Staff Development & Training

The Bank's training initiative focused on
strengthening both its economic intelligence and
operational arms in 2003. Eighteen staff members
attended a total of fifteen courses/workshops held
regionally and in the United States. Several
employees also attended a series of customized







SAnnual Report 2003
Cenra B.a .f Belize


training seminars conducted at the Bank to improve
grammar, writing and supervisory skills.

Among the training courses/workshops were
Attendance and Security Systems, Report WA iYn-,
Delivery of Professional Customer Care,
Performance Evaluation, Human Resources and
Personnel Issues, Elements of Effective Banking
Supervision, Economic and Operative Aspects of
Central Bardl!:-- I and Banking, Relationship
with Government and Financial Institutions,
Monetary Policy, Records Management,
Information Technology Management, Pension
Administration, and Internal Audit. The Bank also
supported and encouraged staff members who
took the initiative for further self-development to
enhance job performance.

Staff Club

In 2003, an energetic and dedicated Staff Club
executive committee successfully organized a
number of social functions for staff and their
families. Staff mixers and games evenings provided
opportunities for relaxation and socializing. Among
the notable events were the annual Family Day in
May and a highly successful formal Christmas party.
Staff Club efforts were facilitated by the renovation
of the staff lunch room/lounge, which was
inaugurated in August and which quickly became
the venue for informal staff functions.


In the spirit of sharing, the Club organized charitable
events that included a book drive for the Dorothy
Menzies Child Care Center as well as the collection
and distribution of Christmas gifts for the children
admitted to the Children's Ward at the Karl Heusner
Memorial Hospital.

Community Service

In 2003, the Central Bank participated in the
University of Belize's Internship Programme by
permitting four senior students to work in various
departments to meet core requirements for
graduation. Ten students at the senior secondary level
also had the opportunity to do work-study for an
average of three weeks. In addition, the Bank
sponsored a ten-week Summer Employment
Programme for tertiary level students. This
programme not only provided paid employment
and skills development to Belizean youths, but also
facilitated the vacation schedule for auxiliary staff
and assisted in addressing backlogged clerical
functions.

As in previous years, staff members and the Central
Bank as an institution responded generously to the
Salvation Army's Annual Christmas Appeal.







Appendix



STATISTICAL APPENDIX
Table 1: Gross Domestic Product (GDP) by Industrial Origin
$mn

Primary Industries 228.0 256.4 236.4 244.4 289.3
Agriculture & forestry 170.4 185.2 167.2 171.9 181.3
Fishing 50.4 62.2 59.7 63.4 98.1
Mining 7.2 9.0 9.4 9.0 9.8
Secondary Industries 237.6 298.7 298.4 306.0 299.7
Manufacturing 131.8 159.2 155.6 156.5 161.3
Electricity & Water 46.6 56.7 60.8 61.9 60.7
Construction 59.2 82.8 82.1 87.6 77.7
Tertiary Industries 849.2 942.0 1,012.7 1,094.0 1,168.4
Wholesale & retail trade 235.6 270.8 287.7 301.3 316.9
Hotels & restaurants 52.1 58.5 66.8 68.4 79.1
Transport & Communications 127.3 141.1 158.8 186.9 183.1
Finance intermediation 84.9 107.7 106.7 118.0 128.6
Real estate & business services 100.0 98.2 112.1 124.9 137.9
Community, social & other services 96.8 100.7 105.4 108.4 120
General government services 152.5 165.0 175.2 186.1 202.8
Less: Financial Services Indirectly 37.7 42.1 49.6 56.2 53.3
All Industries at basic prices 1,277.1 1,455.0 1,497.9 1,588.2 1,704.2
Taxes less subsidies on products 187.6 208.6 236.9 263.7 272.6
GDP at market prices 1,464.7 1,663.5 1,734.8 1,851.9 1,976.8
Source: Central Statistical Office


Table 2: Percentage Share Of GDP By Industrial Sector at Current Prices *


Primary Industries 15.6 15.4 13.6 13.2 14.6
Agriculture & forestry 11.6 11.1 9.6 9.3 9.2
Fishing 3.4 3.7 3.4 3.4 5.0
Mining 0.5 0.5 0.5 0.5 0.5
Secondary Industries 16.2 18.0 17.2 16.5 15.2
Manufacturing 9.0 9.6 9.0 8.5 8.2
Electricity & W ater 3.2 3.4 3.5 3.3 3.1
Construction 4.0 5.0 4.7 4.7 3.9
Tertiary Industries 58.0 56.6 58.4 59.1 59.1
W wholesale & retail trade 16.1 16.3 16.6 16.3 16.0
Hotels & restaurants 3.6 3.5 3.9 3.7 4.0
Transport & Communications 8.7 8.5 9.2 10.1 9.3
Finance intermediation 5.8 6.5 6.2 6.4 6.5
Real estate & business services 6.8 5.9 6.5 6.7 7.0
Community, social & other services 6.6 6.1 6.1 5.9 6.1
General government services 10.4 9.9 10.1 10.0 10.3
Less: Financial Services Indirectly 2.6 2.5 2.9 3.0 2.7
All Industries at basic prices 87.2 87.5 86.3 85.8 86.2
Taxes less subsidies on products 12.8 12.5 13.7 14.2 13.8
GDP at market prices 100.0 100.0 100.0 100.0 100.0
Source: Central Statistical Office
* Figures in Table 1 may not reflect these percentages due to rounding

59








Annual Report 2003




Table 3: Real Gross Domestic Product by Industrial Origin at Factor Cost (2000=100)
$mn

Primary Industries 229.9 256.4 255.9 257.7 351.9
Agriculture & forestry 172.6 185.2 182.0 188.6 215.3
Fishing 50.0 62.2 64.6 60.3 127.2
Mining 7.3 9.0 9.3 8.8 9.4
Secondary Industries 239.4 298.7 296.4 304.3 299.4
Manufacturing 128.2 159.2 158.1 160.5 165.5
Electricity & Water 51.6 56.7 56.9 58.2 59.4
Construction 59.6 82.8 81.4 85.6 74.5
Tertiary Industries 854.7 942.0 1,015.3 1,081.9 1,141.0
Wholesale & retail trade 241.5 270.8 291.4 303.1 317.6
Hotels & restaurants 52.9 58.5 66.4 68.0 73.5
Transport & Communications 125.3 141.0 157.6 175.3 179.7
Finance intermediation 79.7 107.7 112.1 130.7 143.9
Real estate & business services 101.1 98.2 110.9 121.6 131.4
Community, social & other services 99.1 100.7 102.2 103.9 106.4
General government services 155.0 165.0 174.6 179.3 188.4
Less: Financial Services Indirectly Measured 36.2 42.1 51.4 61.4 60.5
All Industries at basic prices 1,287.7 1,455.0 1,516.2 1,582.4 1,731.8
Taxes less subsidies on products 194.1 208.6 228.7 236.6 257.9
GDP at market prices 1,481.8 1,663.5 1,744.9 1,819.1 1,989.8
Source: Central Statistical Office


Table 4: Annual Percent Change In GDP By Sector at Constant 2000 Prices *



Primary Industries 10.6 11.6 (0.2) 0.7 36.6
Agriculture & forestry 6.3 7.3 (1.7) 3.6 14.2
Fishing 29.3 24.5 3.8 (6.7) 111.0
Mining 6.9 23.7 3.4 (5.7) 6.8
Secondary Industries 9.2 24.8 (0.8) 2.7 (1.6)
Manufacturing 6.5 24.2 (0.7) 1.5 3.1
Electricity & Water 8.1 9.8 0.3 2.3 2.2
Construction 16.6 39.0 (1.7) 5.2 (13.0)
Tertiary Industries 8.0 10.2 7.8 6.6 5.5
Wholesale & retail trade 9.3 12.1 7.6 4.0 4.8
Hotels & restaurants 12.0 10.6 13.5 2.5 8.0
Transport & Communications 11.9 12.5 11.8 11.2 2.6
Finance intermediation 16.6 35.1 4.2 16.5 10.1
Real estate & business services 10.2 (2.9) 12.9 9.7 8.0
Community, social & other services 2.1 1.6 1.5 1.6 2.4
General government services 0.6 6.4 5.8 2.7 5.1
Less: Financial Services Indirectly Measured 7.2 16.3 21.9 19.5 (1.4)
All Industries at basic prices 8.7 13.0 4.2 4.4 9.4
Taxes less subsidies on products 9.4 7.5 9.6 3.5 9.0
GDP at market prices 8.8 12.3 4.9 4.3 9.4
Source: Central Statistical Office
* Figures in Table 3 may not reflectthese percentages due to rounding

60







Appendix



Table 5: GDP by Expenditure in Current Prices


GDP in $mn
GoVt. final consumption expenditure 197.9 215.3 229.3 264.7 284.3
Private final consumption expenditure 1,133.5 1,244.7 1,354.8 1,461.6 1527.1
Gross capital formation 360.4 477.0 436.9 420.6 394.6
Changes in inventories including discrepancy (0.1) 55.9 (6.2) 23.0 10.8
Gross Domestic Expenditure 1,691.8 1,992.8 2,014.9 2,169.9 2,216.9
Exports: goods & services 806.8 869.2 887.0 980.3 1101.2
Imports: goods & services 987.1 1,226.0 1,204.9 1,233.4 1316.9
Net Exports (180.3) (356.8) (317.9) (253.1) (215.7)
Discrepancy (46.8) 27.6 37.8 (64.9) -24.3
GDP market prices 1,464.7 1,663.5 1,734.8 1,851.9 1,976.8

Percent Distribution of GDP
GoVt. final consumption expenditure 13.5 12.9 13.2 14.3 14.4
Private final consumption expenditure 77.4 74.8 78.1 78.9 77.3
Gross capital formation 24.6 28.7 25.2 22.7 20.0
Exports: goods & services 55.1 52.3 51.1 52.9 55.7
Imports: goods & services 67.4 73.7 69.5 66.6 66.6
Net Exports (12.3) (21.4) (18.3) (13.7) (10.9)
GDP market prices 100.0 100.0 100.0 100.0 100.0
Source: Central Statistical Office


Table 6: GDP by Expenditure in Constant 2000 Prices


GDP in $mn
GoVt. final consumption expenditure 200.7 215.3 228.2 255.4 265.5
Private final consumption expenditure 1,154.5 1,244.7 1,371.1 1,458.2 1511.3
Gross capital formation 364.4 477.0 439.7 419.1 389.7
Changes in inventories including discrepancy (0.7) 55.9 (5.3) 25.2 11.1
Gross Domestic Expenditure 1,718.9 1,992.8 2,033.6 2,157.9 2,177.6
Exports: goods & services 811.0 869.2 929.0 1,017.5 1225.5
Imports: goods & services 1,020.9 1,226.0 1,228.6 1,275.2 1319.6
Net Exports (209.9) (356.8) (299.6) (257.7) (94.1)
Discrepancy (27.2) 27.6 10.9 (81.1) -93.7
GDP market prices 1,481.8 1,663.5 1,744.9 1,819.1 1,989.8

Percent Distribution of GDP
GoVt. final consumption expenditure 13.5 12.9 13.1 14.0 13.3
Private final consumption expenditure 77.9 74.8 78.6 80.2 76.0
Gross capital formation 24.6 28.7 25.2 23.0 19.6
Exports: goods & services 54.7 52.3 53.2 55.9 61.6
Imports: goods & services 68.9 73.7 70.4 70.1 66.3
Net Exports (14.2) (21.4) (17.2) (14.2) (4.7)
GDP market prices 100.0 100.0 100.0 100.0 100.0
Source: Central Statistical Office







Annual Report 2003
Ceta Ban ofBlz


Table 7: Sectoral Composition of Commercial Banks' Loans and Advances
$mn



Primary Sector 96.2 116.7 135.7 19.0
Agriculture 73.8 77.5 87.7 10.2
Marine Products 16.4 25.6 26.5 0.9
Forestry 1.3 1.7 3.7 2.0
Mining & Exploration 4.7 11.9 17.8 5.9

Secondary Sector 226.5 253.6 277.7 24.1
Manufacturing 44.3 23.0 12.6 -10.4
Building & Construction 177.7 201.7 232.5 30.8
Utilities 4.5 28.9 32.6 3.7

Tertiary Sector 292.8 342.7 419.9 77.2
Transport 40.1 27.2 38.4 11.2
Tourism 44.0 51.8 73.1 21.3
Distribution 136.3 150.5 162.4 11.9
Other* 72.4 113.2 146.0 32.8

Personal Loans 173.0 191.5 208.4 16.9
TOTAL 788.5 904.5 1041.7 137.2
Includes government services, real estate, financial institutions, professional services & entertainment.


Table 8: Commercial Banks' Weighted Average Interest Rates

Percentages




Weighted Lending Rates
Personal Loans 16.8 15.9 15.8 -0.1
Commercial Loans 14.8 14.3 13.9 -0.4
Residential Construction 14.0 13.3 12.4 -0.9
Other 12.6 10.1 10.6 0.5
Weighted Average 15.4 14.5 14.2 -0.3
Weighted Deposit Rates
Demand 0.2 0.4 0.4 0.0
Savings/ Cheque n.a. 5.2 5.1 -0.1
Savings 5.4 5.1 5.1 0.0
Time 6.1 6.5 7.2 0.7
Weighted Average 4.3 4.5 4.9 0.4
Weighted Average Spread 11.1 10.0 9.3 -0.7
n.a. not available


'1)







Appendix



Table 9: Balance Of Payments Summary

$mn

CURRENT ACCOUNT -372.2 -329.1 -361.9
Goods: Exports f.o.b. 538.1 619.4 632.6
Goods: Imports f.o.b. -963.8 -995.9 -1,051.2
Trade Balance -425.7 -376.5 -418.6
Services: Credit 347.3 366.2 425.9
Transportation 23.7 36.2 44.3
Travel 238.5 258.2 303.1
Other Goods & Services 38.9 41.6 46.6
GoVt Goods & Services 46.2 30.2 32.0
Services: Debit -242.3 -261.1 -278.6
Transportation -72.2 -75.0 -79.0
Travel -81.5 -85.1 -88.3
Other Goods & Services -71.8 -83.2 -92.9
GoVt Goods & Services -16.9 -17.8 -18.3
Balance on Goods & Services -320.7 -271.3 -271.3
Income: Credit 16.6 7.9 8.4
Compensation of Employees 4.0 3.8 5.0
Investment Income 12.6 4.1 3.4
Income: Debit -166.4 -158.8 -188.0
Compensation of Employees -25.4 -21.5 -22.3
Investment Income -141.1 -137.3 -165.6
Balances on Goods, Services & -470.6 -422.3 -450.9
Current Transfers, n.i.e.: Credit 102.1 97.4 94.0
Current Transfers: Debit -3.7 -4.1 -4.9
CAPITAL ACCOUNT, n.i.e. 2.3 22.9 -96.1
Capital Account, n.i.e.: Credit 4.9 25.1 9.7
Capital Account: Debit -2.5 -2.2 -105.8
FINANCIAL ACCOUNT, n.i.e. 355.8 291.2 384.1
Direct Investment Abroad 0.0 0.0 -0.7
Direct Investment in Belize, n.i.e. 119.8 49.6 57.6
Portfolio Investment Assets 0.0 0.0 -0.3
Portfolio Investment Liabilities, n.i.e. -29.7 253.2 151.1
Financial Derivatives Assets 0.0 1.7 1.1
Financial Derivatives Liabilities 0.0 0.0 0.0
Other Investment Assets 7.8 16.1 -17.1
Other Investment Liabilities 257.9 -29.4 192.4
NET ERRORS & OMISSIONS 8.6 4.2 13.8
OVERALL BALANCE -5.5 -10.9 -60.1
RESERVE ASSETS (Minus = increase) 5.5 10.9 60.1










'1)


Annual Report 2003
Ceta Ban ofBlz


Table 10: Gross Imports (CIF) by SITC Categories


$mn

Food and Live Animals 107.1 106.3 118.8 107.8 118.7
Beverages and Tobacco 11.0 7.5 7.7 8.3 8.9
Crude Materials 5.4 8.0 11.6 7.5 6.7
Fuels and Lubricants 125.9 170.1 159.7 139.3 161.2
Ofwhich electricity 7.2 15.0 16.9 23.8 28.4
Animal and Vegetable Oils 3.8 4.0 3.2 3.1 3.3
Chemicals 73.1 84.8 71.7 85.0 82.5
Manufactured Goods 113.1 143.8 136.2 128.2 128.7
Machinery and Transport Equipment 200.4 237.1 230.5 208.5 203.5
Miscellaneous Manufactured Goods 86.5 64.5 75.9 80.5 102.5
Commodities not classified elsewhere 20.2 104.1 91.7 83.4 135.2
Total 746.5 930.2 906.8 851.6 951.2
CFZ Direct Imports 73.8 114.5 132.0 221.3 180.5
Grand Total 819.5 1,044.7 1038.8 1,072.8 1,131.7
Sources: Central Statistical Office; Central Bank



Table 11: Central Government's Domestic Debt

$'000




Overdraft 1,590 5,062 75,347 76,937
Central Bank 5,062 74,121 74,121
Commercial Banks 1,590 1,226 2,816

Treasury Bills 100,000 2,724 100,000
Central Bank 53,795 1,688 27,618 81,413
Commercial Banks 33,124 892 (19,228) 13,896
Other 13,081 144 (8,390) 4,691

Treasury Notes 24,000 2,159 -24,000
Commercial Banks 23,269 2,094 -23,269
Other 731 65 731

Defence Bonds 15,000 15,000
Central Bank 10,000 10,000
Commercial Banks 100 100
Other 4,900 -4,900

Loans 33,630 10,000 1,803 1,948 -41,827
DFC (Debt Restructuring) 8,893 462 654 8,431
BSSB (Housing) 708 17 55 -691
BBL (Cohune Walk) 3,181 -223 463 -2,958
GOB/US Debt Swap 15,848 1,101 358 -14,747
BBL (Infrastructure dev.) 5,000 10,000 418 15,000

TOTAL 174,220 10,000 1,803 11,893 75,347 257,764
R = Revised
P = Provisional
* Since October of 1998 Treasury Notes are being subscribed to in $US.
They are now, therefore, considered part of Foreign Liabilities. How ever interest is still paid in local currency.

64








Appendix



Table 12: Government of Belize Revenue and Expenditure

2 0 2 0 20 20 $'000


TOTAL REVENUE & GRANTS (1+2+
1).Current revenue
Tax revenue
Income and profits
Taxes on property
Taxes on goods and services
Int'l trade and transactions

Non-Tax Revenue
Property income
Contributions to pension fund
Transfers from NFPE's
Repayment ofold loans
Other

2). Capital revenue
3). Grants

TOTAL EXPENDITURE (1+2)
1). Current Expenditure
Wages and Salaries
Pensions
Goods and Services
Interest Payments on Public Deb
Subsidies & current transfers

2). Capital Expenditure
Capital II (local sources)
Capital III (foreign sources)
ofwhich Hurricane ERF
Capital Transfer & Net Lending
Unidentified Expenditure

CURRENT BALANCE
OVERALL BALANCE
balance excluding Hurricane ERF

FINANCING
Domestic Financing
Central Bank
Net Borrowing
Change in Deposits
Commercial Banks
Net Borrowing
Change in Deposits
Other Domestic Financing
Transaction with DFC (debt)
Financing Abroad
Disbursements
Amortization
Interest & Penanties prepaymt
Partial payment for BTL shares
Sinking Fund & JCF
Other
Sources Ministry of Finance


498,083
411,669
359,961
78,947
2,531
113,526
164,957

51,707
3,323
9043
500
14,496
24,345

67,431
18,983

629,023
352,235
172,856
26,287
63,350
63,916
25,826

276,789
92,343
167,746
16662
16,700


59,434
(130,941)
(114,279)

130,941
(111,306)
53,328
50,028
3,300
(16,890)
(8,251)
(8,639)
(2,744)
(145,000)
242,574
440,468
(145,754)
(3,654)
0
(48,486)
(327)


480,512
433,305
391,357
91,017
5,645
122,995
171,700

41,948
4,800
522
0
3,331
33,295


458,653
372,057
322,253
77,626
2,641
107,397
134,589

49,804
1,777
0
500
11,409
36,118


524,933
425,759
354,036
78,025
2,724
111,447
161,840


71,723
3,323
0
500
31,927
35,973


453,406
422,190
370,231
86,282
2,423
118,657
162,869

51,959
2,274
0
0
18,541
31,144


38,650 73,833 67,523 24,829
8,557 12,763 31,651 6,387


512,119
370,130
187,542
23,534
65,603
64,362
29,089


601,071
333,669
162,196
22,594
66,839
53,875
28,165


141,989 267,402
60,980 81,640
77,328 148,745
57,776
3,681 37,017


63,175
(31,607)
(31,607)


38,388
(142,418)
(84,642)


31,607 142,418
(80,624) 72,691
61,868
15,470
46,398
8,927
756
8,171
1,896


66,616
66,616
(36,503)


69,789
139,132
(55,543)


0
9,113 (13,800)
(62)


593,756
333,445
167,519
25,115
61,597
51,758
27,456

260,311
108,771
134,840
26,021
16,700


92,314
(68,823)
(42,802)

68,823
(220,877)
(52,728)
(14,360)
(38,368)
(29,195)
(24,891)
(4,304)
6,046
(145,000)
278,328
472,991
(153,808)
(3,654)
0
(37,201)
11,372


666,992
393,048
186,672
26,682
74,406
77,403
27,885

273,944
89,627
99,142
2,454
49,175
36,000

29,142
(213,586)
(211,132)

213,586
(62,396)
76,290
101,739
(25,449)
(1,599)
(8,002)
6,403
(9,089)
(127,998)
276,712
499,488
(100,876)
0
(104,000)
(17,900)
(730)








Annual Report 2003



Table 13: Public Sector External Debt by Creditors

($'000)


^^^^^^^^^^^Debt & Other ValuajitriTnT^^^^^^^^^^^^BiMM^^^^^Kjio Det ^^31112102 Disbursement Amortization Charg^^^ es Adjustments 31112103


CENTRAL GOVERNMENT
Caribbean Development Bank*
European Economic Community
Inter-American Development Bank
Int'l Bank for Reconstruction Dev.
Int'l Fund for Agricultural Dev.
OPEC Fund for International Dev.
Banco Nacional De Comercio
Fondo de Inversiones de Venezuela
Government of China
Government of Kuwait
Government of Spain
Gov't of Trinidad and Tobago
Gov't of United Kingdom
Gov't of United States of America**
Republic of China
All First Bank of Maryland
Bear, Stearns & Co. Inc
Citibank of Trinidad
Citicorp Merchant Bank Ltd.
Deutsche Bank of Germany
International Bank Of Miami
KBC Bank
Provident Bank & Trust
Royal Merchant Bank
Salomon Smith Barney***
Suppliers Credit
REST OF NON-FINANCIAL
PUBLIC SECTOR
CIBC Bank & Trust Co.
Government of Kuwait

FINANCIAL PUBLIC SECTOR
Caribbean Development Bank
European Economic Community
Gov't of United States of America
Citibank Trinidad & Tobago
Citicorp Merchant Bank Ltd.
Deutsche Bank of Germany
Paine Webber Real Estate Securities Inc
Provident Bank & Trust
Commerz Bank of Belgium
CSSL/New Holland of Brazil
Private Export Funding Corporation
TOTAL


1,009,291
45,248
17,546
97,201
73,355
1,958
6,971

2,560
232
18,314
328
32
19,644
10,490
183,667
4,200
250,000
18,858
14,286
3,915
68,034
9,346
4,472
83,705
52,030
22,899


499,517
17,081

30,597
4,080
446
1,428
8,116


1,056





300

200,000

40,000

192,506





3,907


16,164
6,766
9,398


123,553
46,850
7,092
2,911
12,250
6,250
25,006
2,200
541
5,085
3,327
12,041
1,149,008


3,724
1,604
2,120











503,241


100,879
1,410
608
970
6,361
394
533

1,362
58
1,131
375
4
4,849
1,326
7,355
420

3,429
2,857
3,915
32,034
1,869
1,674
5,955

21,990

1,996
1,312
684

58,605
2,529
607
380
8,500
2,500
26,850
200
541
1,130
3,327
12,041
161,480


77,696
1,339
127
3,500
3,140
173
375
469
207

810
3
1

370
8,182
242
33,170
1,779
1,342
87
3,967
502
225
11,400
5,384
902

1,099
723
376

4,746
1,817
213
84
752
214
948
34
28
333
106
217
83,541


5

3


,689 1,413,618
11 60,930
,492 20,430
126,828
71,074
170 2,180
7,866
8,116
1,198
-174
206 18,445


47

1,763

















106

106


28
16,558
9,164
176,612
3,780
450,000
15,429
51,429

228,506
7,477
2,798
77,750
52,030
4,816

14,274
5,454
8,820


2,808 71,480
33 45,958
931 9,536
2,531
3,750
3,750
1,844
2,000

3,955


8,603 1,499,372


*Effective 31st March 2001, WASA loans were re-classified as private sector debt as a result of its full privatization.
** USAID Debt for Nature Swap Agreement as at 2nd August, 2001 was implemented on 30th November, 2001 for BZ $17,168
*** Salomon Smith Barney Bond of US$29.1mn payable in 2005 was net of US$20.0mn sinking fund established in 2002
Effective 31st December, 2002 BPA Loans of Bz $23.8 mn were re-classified as private sector debt as a result of its full privatization.
Outstanding external debt of privatized enterprises and Securitization proceeds remained as contingent liability of Central Government.

66






Appendix


AUDITOR'S REPORT























CENTRAL BANK OF BELIZE

2003 Financial Statements





















CENTRAL BANK OF BELIZE
2003 Financial Statements
Contents



PAGE


Auditors' report 1
Balance sheet 2-3
Statement of income 4
Statement of cash flows 5 6
Notes to the financial statements 7 16











Chartered Accountants


PO Box 756
Belize City
Belize
www.kpmgbelize.com


Jasmine Court
35A Regent Street
Suite 201
Belize City, Belize


Telephone 501-227-6860
501-227-6861
501-227-6629
Fax 501-227-6072
E-mail marwick@btl.net


Page 1


AUDITORS' REPORT
TO THE BOARD OF DIRECTORS OF
CENTRAL BANK OF BELIZE


We have audited the accompanying balance sheet of Central Bank of Belize as of 31
December 2003 and the related statements of income, and cash flows for the year then
ended. These financial statements are the responsibility of management. Our
responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with International Standards on Auditing as
promulgated by the International Federation of Accountants. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements give a true and fair view of the financial position
of Central Bank of Belize as of 31 December 2003, and of the results of its operations
and its cash flows for the year then ended in accordance with International Financial
Reporting Standards adopted by the International Accounting Standards Board.




20 February 2004


KPMG KPMG afirm established under
SBelize law, is member of KPMG international,


5JP Ermeav FCA
Fellow of hie Insikuw of
Chartered Accounltal m


P'M








CENTRAL BANK OF BELIZE
BALANCE SHEET
At 31 December 2003

In Belize dollars.

ASSETS

APPROVED EXTERNAL ASSETS


Balances and deposits with foreign bankers
and Crown Agents
Reserve Tranche and balances with the
International Monetary Fund
Other foreign credit instruments
Accrued interest and cash intransit
Marketable securities issued or guaranteed by foreign
government and international financial institutions.




BELIZE GOVERNMENT SECURITIES

BELIZE GOVERNMENT CURRENT ACCOUNT

LOANS TO PUBLIC SECTOR

LOANS TO COMMERCIAL BANKS

BALANCES WITH LOCAL BANKERS AND CASH
ON HAND

OTHER ASSETS

PROPERTY AND EQUIPMENT

TOTAL ASSETS


5

6, 2e

7

4b


8

9

10

11





12

2a, 13


119,873,204

17,164,707
10,000,000
2,665,371

2,000,000

151,703,282


91,412,770

72,444,782

10,000,000

5,124,086


177,421

5,252,510

32,373,445

368,488,296


95,399,943

15,431,305
70,260,000
30,600,564



211,691,812


63,794,873



15,000,000





36,548

3,896,148

30,839,608

325,258,989


The accompanying notes form an integral part of these financial statements.


Page 2


Note


2003


2002










CENTRAL BANK OF BELIZE
BALANCE SHEET
At 31 December 2003 (Continued)

In Belize dollars.

LIABILITIES, CAPITAL AND RESERVES

DEMAND LIABILITIES
Notes and coins in circulation
Deposits by licensed financial institutions
Deposits by and balances due to Government and public
sector entities in Belize
Deposits by international agencies


BALANCES DUE TO CARICOM CENTRAL BANKS

OTHER LIABILITIES

COMMERCIAL BANK DISCOUNT FUND

GOVERNMENT SINKING FUND

BELIZE CREDIT FACILITY

LOANS PAYABLE TO FOREIGN INSTITUTIONS

CONSTRUCTION BONDS

TOTAL LIABILITIES
REVALUATION ACCOUNT

CAPITAL ACCOUNT
Paid up capital (Authorized capital $10,000,000)

GENERAL RESERVE FUND

TOTAL LIABILITIES, CAPITAL AND RESERVES



) GOVERNOR

) DIRECTOR
)DEUTYGOVERNO
) DEPUTY GOVERNOR


Note


2003 2002


127,626,959
14 75,071,727

55,553,007
15 4,969,109

263,220,802
820,132

16 7,241,963

17 1,815,643

18 54,210,070

19 7,961,159

20 7,500,000

21

342,769,769
2c, 22 2,872,621


10,000,000

23 12,845,906

368,488,296


R


The accompanying notes form an integral part of these financial statements.


Page 3


132,673,605
57,007,542

34,944,093
4,464,131

229,089,371
1,499,704

3,131,614

1,959,445

40,170,058

7,227,477

12,500,000

6,000,000

301,577,669
1,188,317


10,000,000

12,493,003

325,258,989






Page 4


CENTRAL BANK OF BELIZE
STATEMENT OF INCOME
For the year ended 31 December 2003

In Belize dollars.

INCOME
Interest
Approved external assets
Advances to government
Local securities
Loans to statutory bodies



Discounts on local securities
Commission and other income


TOTAL INCOME

LESS: Interest expense


Income from operations
EXPENDITURE
Printing of notes and minting of coins
Salaries and wages, including superannuation
contributions and gratuities
Depreciation
Administrative and general


Note


2003


3,432,725
6,316,883
800,000
1,407,996

11,957,604
1,919,806
2,445,846

16,323,256

(2,753,468)

13,569,788


2b (1,107,715)

(5,406,102)
(849,185)
(2,677,755)


Total expenditure


NET PROFIT
NET PROFIT TRANSFERABLE TO THE GENERAL
RESERVE FUND AND CONSOLIDATED FUND

Transfer to general reserve fund in accordance with
Section 9(1) of the Act
Balance credited to the accountant general for the
consolidated revenue fund


(10,040,757)

3,529,031


3,529,031


(352,903)


3,176,128


2002


4,104,824
5,667,937
801,527
4,408,738

14,983,026
350,654
2,329,141

17,662,821

(5,826,802)

11,836,019


(1,017,542)

(4,315,727)
(813,121)
(2,607,913)

(8,754,303)

3,081,716


3,081,716


(308,172)

2,773,544


The accompanying notes form an integral part of these financial statements.






Page 5


CENTRAL BANK OF BELIZE
STATEMENT OF CASH FLOWS
For the year ended 31 December 2003


In Belize dollars.

CASH FLOWS FROM OPERATING ACTIVITIES:
Net profit transferred to the general reserve fund

Adjustment to reconcile net profit to net cash provided by
operating activities:
Depreciation
Loss on disposal
Changes in assets and liabilities that provided (used) cash:
Other assets
Other liabilities
Revaluation account


Net cash provided by operating activities


CASH FLOWS FROM INVESTING ACTIVITIES:
Belize Government current account
Loans to public sector/commercial bank
Acquisition of property and equipment
Reserve tranche in the IMF
Construction bonds
Belize Government securities

Net cash (used in) provided by investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Notes and coins in circulation
Deposits by licensed financial institutions
Deposits by and balances due to Government and public sector
entities
Government sinking fund
Deposits by international agencies
Balances due to Caricom central banks
Commercial Bank Discount Fund
Belize credit facility
Loan repayment made to foreign institutions

Net cash provided by (used in) financing activities


2003


352,903


849,185
30,852

(1,356,361)
4,110,349
1,684,303

5,671,231


(72,444,782)
(124,086)
(2,413,874)
(1,106,444)
(6,000,000)


(82,089,186)


(5,046,646)
18,064,185

20,608,916
14,040,012
504,978
(679,572)
(143,803)
733,682
(5,000,000)

43,081,752


2002


308,172


813,121


1,405,517
(857,491)
1,188,317

2,857,636


61,274,654
69,000,000
(518,262)
(836,606)
(6,000,000)
2,188,000

125,107,786


7,393,231
(23,710,584)

(29,998,385)
40,170,058
2,148,399
877,507
13,497
799,757
(69,000,000)

(71,306,520)


The accompanying notes form an integral part of these financial statements.






Page 6


CENTRAL BANK OF BELIZE
STATEMENT OF CASH FLOWS
For the year ended 31 December 2003 (Continued)

In Belize dollars.


NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF
YEAR

CASH AND CASH EQUIVALENTS, END OF YEAR


CASH AND CASH EQUIVALENTS COMPRISE THE
FOLLOWING:

EXTERNAL ASSETS:
Balance and deposits with foreign bankers and Crown Agents
Other foreign credit instruments
Accrued interest and cash intransit
Balance with the International Monetary Fund


LOCAL ASSETS:
Cash and bank balances
Government of Belize Treasury Bills


2003


(33,336,203)

254,095,222

220,759,019


121,873,204
10,000,000
2,665,371
4,630,253

139,168,828

177,421
81,412,770

220,759,019


2002


56,658,902

197,436,320

254,095,222


95,399,943
70,260,000
30,600,564
4,003,295

200,263,802

36,548
53,794,872

254,095,222


The accompanying notes form an integral part of these financial statements.






Page 7
CENTRAL BANK OF BELIZE
NOTES TO THE FINANCIAL STATEMENTS

In Belize dollars.


1. ORGANIZATION

The Central Bank of Belize, (the "Bank"), was established by the Central Bank of Belize Act
1982 (the Act).

The principal activity of the Bank is to foster monetary stability especially in regard to the
exchange rate, and to promote banking, credit and exchange conditions conducive to the
growth of the economy of Belize.


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Following is a summary of the more significant accounting policies adopted by the Bank in
preparing its financial statements which accord with International Financial Reporting
Standards adopted by the International Accounting Standards Board and with the Central Bank
of Belize Act.

a. Property, plant and equipment depreciation and amortization -

Fixed assets are carried at cost, and are depreciated on a straight line basis over their estimated
useful lives. Land is not depreciated.

Depreciation is charged at the following rates:

Building and improvements 1%, 5%
Office furniture 10%
Equipment 10%, 20%
Vehicles 20%

b. Sale of special coins -

Special coins, which are minted or packaged as collector items, are legal tender. However, no
liability is recorded in respect of these coins since they are not expected to be placed in
circulation as currency. Minting cost is charged against income in the year incurred. Income is
recognized when sales are made.

c. Foreign currency translation and exchange gains and losses -

i. Assets and liabilities

Foreign currency balances at the balance sheet date are translated at the rates of
exchange ruling at the date.






Page 8
CENTRAL BANK OF BELIZE
NOTES TO THE FINANCIAL STATEMENTS

In Belize dollars.


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

c. Foreign currency translation and exchange gains and losses -

ii. Income and expenses

Income and expenses in foreign currencies are translated at the rate of exchange ruling
on the transaction date.

iii. Revaluation

Section 49 of the Act stipulates that gains and losses from any revaluation of the Bank's
net assets or liabilities in gold, special drawings rights (SDR), foreign exchange or
foreign securities as a result of any change in the par value of the Belize dollar or any
change in the currency unit of any other country shall be excluded from the computation
of the annual profits and losses of the Bank. All such gains or losses shall be credited in
a special account called Revaluation Account. However, no profits shall first be carried
to the General Reserve Fund or paid to the Government under Section 9 (see Note 22)
whenever the Revaluation Account shows a net loss. Such profits shall first be credited
to the Revaluation Account in an amount sufficient to cover the loss.

d. Valuation of securities -

Securities are stated at the lower of cost or market value. Unrealized losses arising from
changes in the market value of securities are charged against income while unrealized gains are
deferred. Realized gains and losses are included in income.

e. Accrued interest and cash intransit -

Accrued interest and cash intransit in respect of foreign assets are shown as part of external
assets.

f. Pension -

The pension scheme, a defined benefit plan, is funded by contributions from the Bank and
employees. It is financially separate from the Bank and is managed by a Board of Trustees.

g. Taxation -

In accordance with Article 51 of the Act, the Bank is exempt from the provisions of any law
relating to income tax or customs duties and from the payment of stamp duty.






Page 9
CENTRAL BANK OF BELIZE
NOTES TO THE FINANCIAL STATEMENTS

In Belize dollars.


3. INTEREST ON CENTRAL BANK BUILDING CONSTRUCTION BONDS

Interest is payable semi-annually on the Bank's Construction Bonds, and is charged against the
annual earnings of the Bank (See Note 21).


4. CENTRAL BANK OF BELIZE ACT SECTION 5 COMPLIANCE

Section 25 of the Act stipulates that:

a. The Bank shall at all times hold assets of an amount in value sufficient to cover fully
the value of the total amount of its notes and coins for the time being in circulation; and

b. The Bank shall maintain at all times a reserve of external assets of not less than 40
percent of the aggregate amount of notes and coins in circulation and of the Bank's
liabilities to customers in respect of its sight and time deposits.

At 31 December 2003 and 2002 total approved external assets approximated 58 percent and 92
percent of such liabilities respectively.


5. INTERNATIONAL MONETARY FUND RESERVE TRANCHE

Belize became a member of the International Monetary Fund in 1982 with a subscription of
SDR 7,200,000 of which SDR 1,320,000 was paid in foreign currency (The Reserve Tranche)
and the remainder in Belize dollars made up of currency and non-interest bearing promissory
notes.

In 1982, this Reserve Tranche was purchased by the Bank from the Government of Belize.

At 31 December 2003, Belize's subscriptions to the International Monetary Fund amounted to
SDR 18,800,000 and the Bank's Reserve Tranche amounted to SDR 4,238,690. The Reserve
Tranche which earns interest is included in approved external assets in the financial statements
at the exchange rate of Bz$2.9719 to SDR 1.0 at 31 December 2003 (2002 Bz$2.7096 to SDR
1.0).






Page 10


CENTRAL BANK OF BELIZE
NOTES TO THE FINANCIAL STATEMENTS

In Belize dollars.


6. ACCRUED INTEREST AND CASH INTRANSIT

Accrued interest and cash intransit consist of:


2003


Accrued interest
Cash intransit


1,265,538
1,399,833


2002


263,414
30,337,150


2,665,371 30,600,564


7. MARKETABLE SECURITIES ISSUED OR GUARANTEED BY
GOVERNMENTS AND FOREIGN FINANCIAL INSTITUTIONS


FOREIGN


These securities consist of 3% debentures issued by the Government of Dominica and maturing
in 2006.


8. BELIZE GOVERNMENT SECURITIES

Belize Government securities consist of:


2003


Treasury Bills
Belize Defense Bonds


81,412,770
10,000,000

91,412,770


2002


53,794,873
10,000,000

63,794,873


Section 35(2) of the Act stipulates that the Bank shall not at any time hold Belize Government
securities in an aggregate amount exceeding five times the aggregate amount at the time of the
paid up capital and general reserves of the Bank. At 31 December 2003 and 2002 the Bank's
aggregate holding of Belize Government securities approximated 4 times and 2.84 times,
respectively, of the amount of paid up capital and general reserves of the Bank.


9. BELIZE GOVERNMENT CURRENT ACCOUNT

In accordance with Section 34 of the Act, the Bank may make direct advances to the
Government provided that at any one time the total outstanding amount of direct advances shall
not exceed twenty percent of the current revenues of the Government collected during the
preceding financial year or the sum of fifty million dollars, whichever is greater. At 31
December 2003 and 2002, advances to Government represent approximately 90 percent and
zero percent of the authorized limit respectively.








CENTRAL BANK OF BELIZE
NOTES TO THE FINANCIAL STATEMENTS

In Belize dollars.


10. LOANS TO THE PUBLIC SECTOR

11% p.a. loan with semi-annual payment of interest, and
payment of first installment of principal 18 months after 16
August 2000 and every 6 months thereafter until maturity on
1 November 2005. The loan is guaranteed by the
Government of Belize.


11. LOANS TO COMMERCIAL BANK


11.5% p.a. short-term loan due from a commercial bank
maturing on 25 February 2004. The loan is secured by the
assignment of a DFC Bond maturing in 2007 for the same
amount.

11.5% p.a. short-term loan due from a commercial bank
maturing on 12 March 2004. The loan is secured by a
promissory note signed by the Government of Belize.


Other assets consist of:

Inventory of notes and coins
Prepayments and accrued interest
Accounts receivable
Other


5,252,510 3,896,148


Page 11


2003


2002


10,000,000

10,000,000


15,000,000

15,000,000


2003


2002


2,500,000



2,624,086

5,124,086


12. OTHER ASSETS


2003


2002


3,210,169
941,221
1,017,114
84,006


1,245,158
1,451,780
1,116,236
82,974






Page 12


CENTRAL BANK OF BELIZE
NOTES TO THE FINANCIAL STATEMENTS

In Belize dollars.


13. PROPERTY AND EQUIPMENT

Property and equipment consist of:


Property
Furniture
Equipment
Vehicles
Work in progress


2003


31,019,704
1,024,817
4,439,120
390,071
135,237

37,008,949
4,635,504

32,373,445


Less: accumulated depreciation


2002


29,170,058
1,022,669
4,210,684
365,924


34,769,335
3,929,727

30,839,608


14. DEPOSITS BY LICENSED FINANCIAL INSTITUTIONS

Under the revised provisions of Section 13 of the Banks Financial Institutions Act 1995,
licensed financial institutions are required to keep on deposit with the Bank an amount
equivalent to at least 6% of their average deposit liabilities.

Under Section 21 A (1) of the International Banking Act, licensed financial offshore
institutions are required to maintain an account of a minimum balance of $200,000 with the
Bank. These deposits are interest free.


15. DEPOSITS BY INTERNATIONAL AGENCIES

The Bank acts as agent for and accepts deposits from international financial institutions. At 31
December, deposits consist of:


2003


Commission of the European Communities
International Monetary Fund
Caribbean Development Bank
Inter-American Development Bank
International Bank of Reconstruction and Development
European Union


2,001,572
142,451
99,538
317,035
716,450
1,682,063


2002


75,148
129,877
67,041
294,199
716,450
3,181,416


4,969,109 4,464,131






Page 13
CENTRAL BANK OF BELIZE
NOTES TO THE FINANCIAL STATEMENTS

In Belize dollars.


16. OTHER LIABILITIES
2003 2002

Interest payable (including construction bonds) 1,093,033 545,760
Severance and gratuities 622,002 586,955
Abandoned property 1,174,068 929,651
Retention payable 24,730
Other 4,352,860 1,044,518

7,241,963 3,131,614



17. COMMERCIAL BANK DISCOUNT FUND

Commercial Bank Discount Fund is a facility which was established by an agreement signed in
March 1983 by the Government of Belize and the United States of America, providing for a
discount fund to be operated through the Bank. The United States Government acting through
United States Agency for International Development (USAID) earmarked US$5 million in loan
funds up to 30 June 1987, to finance this facility. The facility enabled commercial banks in
Belize to discount with the Bank and USAID. In 1993, USAID and the Bank agreed that $2
million and Bz $1.5 million from the reflows to the Discount Fund could be used as a line of
credit to National Development Foundation of Belize (the Foundation) and Development
Finance Corporation (DFC), respectively.

The USAID loan has the following terms:

Interest rate of 2% for the first ten years and 3% thereafter. The loan is repayable in 25 years
with a grace period of 912 years and 31 equal semi-annual principal payments for 151/ years.

At 31 December 2003, outstanding loans discounted by commercial banks through the facility
amounted to $.3 million (2002 $.4 million) net of repayments, against a total drawdown of
$5.7 million from USAID. On that date the amount drawn down by the Foundation was $1.5
million (2002 $1.5 million) net of repayments and the amount drawn down by DFC was
$743,095 (2002 $1.0 million) net of repayments.


18. GOVERNMENT SINKING FUND

Government Sinking Fund consists of US$20,449,036 and US$6,656,000 invested by the Bank
on behalf of the Government for a bond issue maturing in 2005.






Page 14
CENTRAL BANK OF BELIZE
NOTES TO THE FINANCIAL STATEMENTS

In Belize dollars.


19. BELIZE CREDIT FACILITY

Under a World Bank Agricultural Credit and Export Development Project Loan Agreement
signed between the Government of Belize and the International Bank for Reconstruction and
Development on 19 July 1988, the Bank acting as agent for the Government of Belize assists
the Government in operating the Belize Credit Facility through which loans are made available
to the Development Finance Corporation for specific development projects.

The Bank's responsibility to assist is set out in an agreement signed between the Government
and the Bank on 13 March 1989.


20. LOANS PAYABLE TO FOREIGN INSTITUTIONS
2003 2002
Loans payable to foreign institutions consist of:

Due to a foreign institution repayable in 8 installments
commencing 4 November 2001 and every 6 months
thereafter. Interest accrues at 2.82% per annum above
LIBOR for the first 2 years and thereafter at 2% per
annum above LIBOR. The loan was negotiated for
US$5,000,000 for project financing and is secured by a
first-priority charge lien or security interest on a
deposit of US$3,750,000 placed by the borrower with
the foreign institution. 3,750,000 6,250,000

Due to a foreign institution repayable in 8 installments
commencing 4 November 2001 and every 6 months
thereafter. Interest accrues at 2.82% per annum above
LIBOR for the first 2 years and thereafter at 2% per
annum above LIBOR. The loan was negotiated for
project financing and is secured by the first-priority
charge, lien or security interest on a deposit of
US$3,750,000 placed by the borrower with the foreign
institution. 3,750,000 6,250,000

7,500,000 12,500,000


These loans are guaranteed by the Government of Belize






Page 15


CENTRAL BANK OF BELIZE
NOTES TO THE FINANCIAL STATEMENTS

In Belize dollars.


21. CONSTRUCTION BONDS

$24,000,000 construction bonds secured by a guarantee
from the Belize Government. Interest at 11.75% per
annum is payable semi-annually. Principal repayable
by 8 semi annual installments of US$1,500,000
beginning 15 January 2001.


2003


2002


- 6,000,000


6,000,000



22. REVALUATION ACCOUNT

Under Section 49 of the Act, no profits shall be credited to the General Reserve Fund or paid to
the consolidated Revenue Fund whenever the Revaluation Account shows a net loss. Such
profits shall be credited to the Revaluation Account in an amount sufficient to cover the loss.


2003


Net gain on revaluation of Reserve Tranche in the
International Monetary Fund
Net gain on revaluations during the year
Transfer (to)/from profits


Balance at end of year (Note 2c. iii)


1,509,227
1,363,394


2,872,621


2002


836,603
351,714


1,188,317


23. GENERAL RESERVE FUND

Section 9(1) of the Act provides for the establishment of a General Reserve Fund into which is
paid 20 Percent of the net profit of the Bank in each financial year until the Fund is equal to the
amount of the Bank's paid up capital. Thereafter, 10 percent of net profit is paid into the Fund.


2003


Balance at beginning of year

Transfer from profits at 10%


12,493,003


352,903


2002


12,184,831


308,172


12,845,906 12,493,003


Balance at end of year






Page 16
CENTRAL BANK OF BELIZE
NOTES TO THE FINANCIAL STATEMENTS

In Belize dollars.


24. PENSION SCHEME

The Bank operates a defined pension scheme which receives contributions from the Bank and
its eligible employees. During the year under review, the Bank contributed $144,302 (2002 -
$135,000) to the scheme. The scheme is financially separate from the Bank and is managed by
a Board of Trustees. The cost of plan benefits is determined using an accrued benefit valuation
method.

The last actuarial valuation at 31 December 2002 reported the present value of past service
liabilities and plan assets at assessed value to be $2,916,000 and $4,599,000, respectively.

Significant actuarial assumptions used in the valuation were:

I. A valuation rate of interest of 7% p.a.

II. A rate of escalation of pensionable salaries of 5% p.a.

III. Allowance for pensions is not to be increased in the course of payments.


25. FINANCIAL INSTRUMENTS

The carrying amounts of cash and cash equivalents, and other short-term instruments and
obligations at the balance sheet date represent best estimates of fair value because of the
relative short-term maturities of these assets and liabilities. Long-term obligations have been
contracted at market terms and their carrying amounts approximate fair value to the extent it is
practicable to estimate.


26. COMMITMENTS AND CONTINGENCIES

a. The Bank is guarantor to the Government of Belize in a USD/Yen currency swap agreement
with Citicorp. This agreement will terminate in June 2005. Periodically, the swap agreement is
valued and potential margin calls can be made.

b. The Bank is contingently liable as cosigner with the Government of Belize on promissory notes
to International Bank of Miami totaling US$114 million.




University of Florida Home Page
© 2004 - 2010 University of Florida George A. Smathers Libraries.
All rights reserved.

Acceptable Use, Copyright, and Disclaimer Statement
Last updated October 10, 2010 - - mvs