Front Cover
 Title Page
 Front Matter
 Directors and principals
 Table of Contents
 Overview of the bank
 Economic review
 Financial statements
 Back Cover

Title: Central Bank of Belize Annual Report
Full Citation
Permanent Link: http://ufdc.ufl.edu/UF00098955/00008
 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: 2007
Copyright Date: 2010
 Record Information
Bibliographic ID: UF00098955
Volume ID: VID00008
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved by the source institution and holding location.


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Table of Contents
    Front Cover
        Front Cover 1
        Front Cover 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
        Page xii
        Page xiii
        Page xiv
        Page xv
        Page xvi
    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
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        Page 49
        Page 50
        Page 51
        Page 52
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        Page 55
        Page 56
        Page 57
        Page 58
        Page 59
        Page 60
        Page 61
        Page 62
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        Page 64
        Page 65
        Page 66
        Page 67
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        Page 69
        Page 70
        Page 71
        Page 72
        Page 73
        Page 74
        Page 75
        Page 76
        Page 77
        Page 78
        Page 79
        Page 80
        Page 81
        Page 82
        Page 83
    Financial statements
        Page 84
        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
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        Page A-13
        Page A-14
        Page A-15
        Page A-16
        Page A-17
        Page A-18
        Page A-19
        Page A-20
        Page A-21
        Page A-22
        Page A-23
        Page A-24
        Page A-25
    Back Cover
        Page A-26
        Page A-27
Full Text

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Cover and Layout Design: Rasiel Vellos CBB Research Department

Prepared by: CBB Research Department

Printed by: CBB Reprographic Centre


Twenty-sixth Annual Report
Statement of Accounts

For the Year Ending 31 December 2007

Abbreviations and Conventions

used in this Report

ACP African, Caribbean and Pacific
AML/CFT Anti-Money Laundering/ Countering
the Financing of Terrorism
APR Annual Percentage Rate
BEL Belize Electricity Limited
BFIA Banks and Financial Institutions
Acts, 1995
BGA Banana Growers Association
BMC Belize Mortgage Company
BNE Belize Natural Energy Ltd.
BPM Balance of Paym ents Manual
BSI Belize Sugar Industries Limited
BSSB Belize Social Security Board
BTB Belize Tourism Board
BTIA Belize Tourism Industry Association
BTL Belize Telem edia Ltd.
BWSL Belize Water Services Limited
CARICOM Caribbean Community and Common
CABEI Central Am erican Bank for Economic
CARTAC Caribbean Regional Technical
Assistance Centre
CAFTA-DR Central American Free Trade Agreem ent
and Dominican Republic
CBB Central Bank ofBelize
CBI Caribbean Basin Initiative
CDB Caribbean Development Bank
CEMLA Center of Monetary Studies for Latin
Am erica
CFZ Corozal Free Zone
CGA Citrus Growers Association
CIF Cost Insurance and Freight
CPI Consumer Price Index
CPBL Citrus Products of Belize Ltd.
CQ Com plimetary Quota
DFC Development Finance Corporation
ECCB Eastern Caribbean Central Bank
ECLAC Economic Commission for Latin
Am erica and the Caribbean
EDF European Development Fund
EIB European Investment Bank
EPZ Export Processing Zone
ERM Enterprise Risk Management
EU/EEC European Union
FAO Food and Agriculture Organization

FOB Free on Board
FSTV Fort Street Tourism Village
FY Fiscal Year
GDP Gross Dom estic Product
GOB Government of Belize
GST General Sales Tax
HIPC Heavily Indebted Poor Countries
IBA International Banking Act
IBRD International Bank for Reconstruction
and Development
IDB/IADB Inter-American Development Bank
INTELCO International Telecom m unication
IMF International Monetary Fund
ITD Inform action Technology Department
LDC Less Developed Countries
NICH National Institute of Culture and
NHI National Health Insurance
NFC Not from concentrate
OECD Organisation for Economic
Cooperation and Development
OECS Organisation ofEastern Caribbean
OPEC Organisation of the Petroleum
Exporting Countries
PACT Protected Area Conservation Trust
PGIA Phillip Goldson International Airport
ps Pound solid
pps Per pound solid
RECONDEV Reconstruction and Development
Corp o ration
ROC Republic of China (Taiwan)
SDR Special Drawing Rights
SIB Statistical Institute of Belize
SIF Social Investm ent Fund
SITC System o f International Trade
TIBoM The International Bank of Miami
UHS Univeral Health Services
UK United Kingdom
US/USA United States ofAmerica
VAT Value Added Tax
VEMS Visitor Expenditure Motivation Survey
WTI West Texas Intermediate
WTO World Trade Organisation

Notes and Conventions:

- $ refers to the Belize dollar unless otherwise stated
- mn denotes million
- bn denotes billion
- The figures for 2007 in this report are provisional, and the figures for 2006 have been revised.
- Since May of 1976 the Belize dollar has been fixed to the US dollar at the rate of US$1.00 = BZ$2.00.
- Totals in tables do not always equal the sum of their components due to rounding.





April 30, 2008

Hon. Dean Barrow
Prime Minister and Minister of Finance
New Administration Building

Dear Prime Minister:

In accordance with Section 58 of the Central Bank of Belize Act, 1982, Ihave the honour
of submitting to you, in your capacity as Minister of Finance, the Report on the Central
Bank ofBelize's operations for the period January 1 to December 31, 2007, together with
a copy of the Bank's Statement ofAccounts, as certified by the External Auditors.

Yours sincerely,

Sydney J. Campbell

At December 31, 2007


Vice Chairman





Financial Secretary



Deputy Governor

Chief of Security

Rabey Cruz
Director, Information Technology

Director, Banking & Currency

Director, Internal Audit

Director, Human Resources & Administration

Director, Financial Sector Supervision

Director, Finance

Director, Research

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

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

Economic Review ........................................................ ............................... 1
E conom ic O overview ....................................................... .................................. 1
International and Regional Developments.............................................................. 4
Domestic Production, Prices and Employment .................................................. 13
Foreign Trade and Payments ...................... ...................................... ...... ........... 26
Central Government Operations and Public Debt ...................................40
Monetary and Financial Developments ..............................................................47
E con om ic P rosp ects ........................ ........................................... ................. ... ........ 5 2

O operations ................................................................................................... 54
Foreign Exchange Operations......... .............................................. 54
Relations with Commercial Banks .................... ........................... 55
Transactions with Central Government....................................... 57
Supervision of Banks & Financial Inltitti/lns ....................................... 59
Inform action System s ................................................................................... 61

A dm inistration ............................................................................................ 63
B oard of D directors ...................... .. .................... ...................... ................. 63
Overseas M eetings...................... ............. ........................... 63
Finance .............. ..................... .......... .. ...................... 63
In tern al A ud it ......... ............................................................. ................ . .... 6 4
H um an Resources.......................... ......... ............................. 65

A ppendices .................................................................................................. 67
Monetary Policy Developments...................... ...... ......................... 67
Statistical App endix ...................... .. ............. ....................... ................. 69

Financial Statements ................................................................................ 84


Table I.1: M major Econom ic Indicators ........................ ...................................................... .......... ................. ...... vi

International and Regional Developments ..................................... ......... 4
Table II.1: Selected Indicators for Some OECD and Newly Industrialized Countries .......................................... 5
Table II.2: Selected Indicators for Some Caribbean Countries .......................... ..... ............................ 6
Table II.3: Selected Indicators for Mexico and Central America .............................................. ................ 11

Domestic Production, Prices and Employment ..........................................13
Table III. 1: Annual Percent Change in Selected Indicators ......................... ............................................ 13
Table III.2: Sugarcane D deliveries ...................................................................... ......................... .......... ...... 14
Table III.3: C itrus Fruit D deliveries ........................ ................................................................ ......... ................. ...... 15
Table III.4: Sugar and M olasses Production .................................................. ................................................. 17
Table III.5: Production of Citrus Juices and Pulp ................................................... .................. ................ .. 19
Table III.6: Employed Labour Force by Industrial Group .....................................................................................24

Foreign Trade and Payments ......................................................................26
Table IV 1: Balance of Payments Summary and Financing Flows ........................................ ................ 26
Table IV.2: Percentage Distribution of Visible Trade by Country/Area .................................................. 35

Central Government Operations and Public Debt.................................... 40
Table V 1: Government of Belize-Summary of Revenue and Expenditure ................................................. 40
Table V 2: Central Governm went's Dom estic Debt .................................................. ................................... ..44
Table V 3: Public Sector External D ebt by Source ................................................................... ........................ 45
Table V 4: Public Sector and Publicly G guaranteed D ebt........................................... .............................................46

Operations ................................................................................................... 54
Table VII.1: Commercial Bank Balances with the Central Bank........................................ ........................ 55
Table V II.2: C currency in C circulation ................... .................................................................................................. 56
Table V II.3: List of B anks and Financial Institutions.......................................... .............................................. 59
T able V II.4: L ist of C credit U onions ............................................................................... ............ ................. ....... 60

Appendices .................................................................................................. 67
Table 1: GDP by Activity at Current and Constant 2000 Prices .......................................... .................... 69
Table 2: Annual Percentage Changes in GDP by Activity at Current and Constant 2000 Prices .......................69
Table 3: Bona fide Tourist Arrivals & Expenditure ........................................................................ ......... 70
Table 4: Quarterly Percentage Change in CPI Components by Major Commodity Group .................................70
Table 5: Balance of Paym ents M merchandise Trade ................................................ .............................. 70
T ab le 6 : D om estic E x ports ......................................................................................... ................................... 71
Table 7: Exports of Sugar and M olasses ..................................................... ................................................. 71
Table 8: Exports of Bananas ..... ............................................................................................................ 71
Table 9: Exports Sales of Citrus Juices and Pulp ................................................ ................................... .. 72
Table 10: E exports of M marine Products ............................................................................ ................................ 72
Table 11: Other Major Exports .............................................................................................................. 72
Table 12: Gross Imports (CIF) by SITC Categories ............................................... ................................... 73
Table 13: Balance of Payments Services, Income and Current Transfers ................................ .............. 73
Table 14: Balance of Payments Capital and Financial Account ................ ........................................... 74
Table 15: O official International R deserves ......................................................................... ............................... 74
Table 16: B balance of Paym ents Sum m ary ...................................................... ................................................. 75


Table 17: Government of Belize Revenue and Expenditure ........................................ ..............................76
Table 18: Central Governm went's Dom estic Debt .................................................... .................................... 77
Table 19: Public Sector External Debt by Creditors .................................................. ................................. 78
Table 20: Factors Responsible for Money Supply Movements ..................................................... .................79
Table 21: Money Supply ................................................................................................. ....................... 79
Table 22: N et Foreign Assets of Banking System ................................................... .................................. .. 79
T able 23: N et D om estic C credit ........................................ ................................................................................ 80
Table 24: Sectoral Composition of Commercial Bank's Loans and Advances ....................................... 80
Table 25: Commercial Banks' Holdings of Approved Liquid Assets ............................................................ 81
Table 26: Commerical Bank's Weighted Average Interest Rates............................................... ................. 81
Table 27: Central Bank Dealings in Foreign Exchange .............................................. ................................ 82
T able 28 : E xternalA sset R atio ................ ............................................................................................................... 82
Table 29: Inter bank M arketA activity ..................................................................................... ............................ 82
Table 30: Central B ank Credit to Central G overnm ent ............................................................. ........................ 83
Table 31: G overnm ent of B elize Treasury B ill Issues ................................................................ ....................... 83


Chart II.1: Real GDP Growth for Selected Caribbean Countries ................................................ ...................... 7
C hart III.1: B an an a A creag e ...................................................................................................... ................ ...... 15
Chart III.2: Stay-over and Cruise Ship Visitor Arrivals ............................................... ............................... 22
C hart III.3: C onsum er Price Index and Inflation Rate ............................................. ............................................ 23
Chart IV. 1: Current A account D deficit and Trade Balance .............................. .................................................... 27
Chart IV.2: Dom estic Exports by Com m oddities ..................................................... ..................................... 27
C hart IV 3: Sugar Exports by M market ....................................................................... ........................................ 28
Chart IV.4: Exports of Shrimp and Total Marine Products ............................................................................... 30
Chart IV.5: Net Balances for Service, Income and Current Transfers................. .......................... ............. 36
Chart IV.6: Main Components of the Financial Account ....................................................................................37
Chart IV.7: Gross Official International Reserves and Months of Imports .................................... ........... 37
ChartV.1: Central Government's Development Expenditure ........................................ ............................ 41
Chart V2: Sources of Central Government's Domestic Debt........................................ ...........................44
C hart V I. : R atio of M 2 to G D P .............................................................................. ................... ................ ... 47
Chart VI.2: Growth in Com m ercial Banks Deposits.................................................. .................................. 48
ChartVI.3: Annual Change in Net Foreign Assets of the Banking System.............................................................. 48
Chart V I.4 : Private Sector Loan Disbursem ents ................................................... .................................... 49
Chart VI.5: Quarterly Change in Excess Liquidity ..................................................................................... 50
Chart VI.6: Commercial Bank's Weighted Average Interest Rate Spread ................................................... 51
Chart V II. 1: Central Bank D dealings in Foreign Exchange.............................................. ........................................ 54
C hart V II.2: E xternalA sset R atio ................ .................................................................. ........... ................ ...... 55
C hart V II.3: Inter bank M arketA activity .................................................................. ......................................... 57
Chart VII.4: Central Bank Holdings of Government Securities ........................................ .......................... 57
Chart VII.5: Central Bank Overdraft Financing to Central Government ....................................................... 58


Box 1: Cobia Fish Farm ............ ................................................................................................ ................ 18
Box 2: Tourism D evelopm ents and Prospects ...................................................... ..................................... 21
Box 3: W illiamson Industries Ltd. ShortTerm Prospects .......................................... ................................ 25
Box 4: CARIFORUM-EC Economic Partnership Agreement ........................................ ............................31
Box 5: Prospects for Sugar and Banana Exports ................................................... .................................... 38
B ox 6: M major Fiscal Initiatives in 2007 ........................ .......................................................................................... 42
Box 7: Meetings Attended by the Governor and Deputy Governor ............................................................. 63


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 regulate and encourage the development of the fiancialsystem and to
formulate economic policies that foster monetary and financial stability,
confidence and economic growth. The Bank is committed to serving the
interest of the people of Belize through highly motivated and skilled
professionals who operate under the ethos of integrity, efficiency and

In the pursuit of its mission, the Bank sets a number of goals and operating objectives. These are
listed below:

4 Provide prompt and well-considered macroeconomic advice to the Government, the business
sector and the general public.
4 Provide 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.
4 Provide guidelines to the banking community on matters such as money supply, interest rates,
credit and exchange rates.
V Set high standards of efficiency and organisation so as to encourage higher levels of
attainment in the Bank.

4 Promote monetary stability.
4 Regulate the issue and availability of money and its international exchange.
4 Regulate and monitor the financial environment.




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.

* 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.


* 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

Human Resources

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

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



* 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
and registration of credit unions.
* Supervising and regulating banks, financial
institutions and credit unions 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 (BFIA) and
21 b (2) of the International Banking Act
* Promoting and conducting anti money-
laundering surveillance of financial insti-
tutions licensed under the BFIA, IBA and
the Credit Unions Act.


* 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

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

Other Support Operations

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

* Maintaining the Bank's plant and
* Maintaining security operations within the



I 33




Nt 8

rr15 (Dt


L to R: Ruth Perez, Noelly Pariente

Governor, Sydney J. Campbell

L to R: Effie Ferrera, Suad Holder

L to R: Rolando Castellanos, Rene Montero, Rabey Cruz,
Marcos Marin

L to R: Front: Claudine Gordon, Diedra Moses, Shanelle Moreira, Karlynn Lopez
Middle: Diana Pott, Cynthia Brooks, Sheree Smiling-Craig, Tanya Williams
Back: Tiffany Plunkett, Carol Hyde, Noela Gillett-Watler - Missing: Kesha Young

L to R: Michelle Estell, Thilda Weller, Shanelle Kingston, Jeanette Neal, Hollis Parham, Therese Dawson,
Sheree Andwerin, Angela Wagner, John Hertular - Missing: Candice Anderson, Shannon Noralez

L to R: Front: Marilyn Gardiner, Jodie Myvette, Theodora Andrews, Teresa Busch
Middle: Edward Baptist, Luisa Marin, Primrose Nunez, Michelle Bennett, Ervin Matthews
Back: Ivy Whiskey, Rafiah Flowers, Alice Williams, Maxine Campbell, Jeffery Ali
Missing: Patricia Waight


New n~

L to R: Front: Florita Baizar, Nadia Usher, Ethel Arnold, Arlene Gladden, Shelmadine Skyers - Middle: Cheryl Cardinez, Ramon
Hernandez, Carol Hyde, Carmita Gabb, Sherie Gonzales - Back: Jacinto Luna, Marcia Reneau, Clayton Ogaldez, Basil Brannon,
Marlon Garnett, Arturo Domingues - Missing: Thelma Palacio, Ulanee Pasos

L to R: Front: Shauvina Henry, Braulio Contreras, Neri Matus - Middle: Caroline Joseph, Adrian Arana, Jolene Castillo-
Vargas, Curlette Johnson, Elston Pollard, Diane Gongora, Wendy Gillett, Leon Palacio - Back: Angela Reneau, Barrington
Sutherland, Kendra Dyer, Sharette Bradley, Carolyn Morris, Leonard Linares, Javier Navarro, Marlowe Neal

L to R: Herman Flowers, Juan Mejia, Armando Novelo, Stephen Michael

Kenner Pascascio

L to R: Front: Theola Casimero, Christine Vellos, Azucena Quan-Novelo, Nadine Kerr. Genevieve Peters
Middle: Lylia Roberts, Julia Perrera, Patricia Perez, Brenda McCoon, Dapheen Bowen, Marlett Gomez, Emory Ford
Back: Luis Teck, Deborah Tun, Andrea Coye, Marion Palacio (Deputy Governor Economic Intelligence),
Geraldine Spencer, Kareem Michael, Karen Carbis, Sanji Cumberbatch, Nicole Sealy, Rasiel Vellos
Missing: Dapheen Bowen, Linsford Coleman, Loren Evrette, Gloria Garcia, Janelle Lord, Christopher McGann,
Paula Perez, Jair Santoya, Maria Torresz, Barbara Young

L to R: Front: Michael Berry, Patrick Alvarez, Andrew Kelly, Ornel Brooks, Denise Williams, Aston Williams, Theodore Parchue
Second Row: Lloyd Robinson, Glenford Smith, Orlando Tut, Francis Casimiro, Orlando Williams, Robert Chavarria,
Clive Austin, Slyvan Swift, Vicente Vargas
Thrid Row: Alex Ferguson, Francis Aldana, Moses Hernandez, Winston Anthony, Leslie Edwards, Ellis Flowers
Back: Christopher Tillett, Wallace Slusher, Robert Lanza, Kevin Morro, Phillip McKay


Table I.1: Major Economic Indicators

2000g 20 g gIo gI] 0o g00o2o0 20o06 o00

Population (Thousands)
Employed Labour Force (Thousands)
Unemployment Rate (%)
GDP at Current Market Prices ($mn)
Per Capita GDP ($, Current Mkt. Prices)
Real GDP Growth (%)
Sectoral Distribution of Constant 2000 GDP (%)
Inflation (Annual average percentage change)
Currencyand Demand deposits (M1)
Quasi-MIoney (Savings and Time deposits)
Money Supply (M2)
Ratio of M2 to GDP (%)
CREDIT ($mn)
Commercial Bank Loans and Advances
Public Sector
Private Sector
Weighted Average Lending Rate
Weighted Average Deposit Rate
Weighted Average Interest Rate Spread
Current Revenue
Current Expenditure
Current Account Surplus(+)/Deficit(-)
Capital Expenditure
Overall Surplus(+)/Deficit(-)
Ratio of Budget Deficit to GDP at mkt. Prices (%)
Domestic Financing (Net)
External Financing (Net)1
Merchandise Exports (f.o.b.)2
Merchandise Imports (f.o.b.)
Trade Balance
Remittances (Inflows)
Tourism (inflows)
Services (Net)
Current Account Balance
Capital and Financial Flows
Gross Change in Official International Reserves
Gross Official International Reserves
Import Cover of Reserves (in months)

249.8 255.3 262.7 271.1 281.1 289.9 299.8 309.8
83.7 85.9 84.7 89.2 95.9 98.6 102.2 111.8
11.1 9.1 10.0 12.9 11.6 11.0 9.4 8.5

1,663.5 1,742.7 1,864.3 1,975.2 2,110.4 2,229.6 2,427.3 2,534.0
6,659.3 6,826.1 7,096.7 7,285.9 7,507.2 7,691.6 8,097.3 8,180.5
13.0 5.0 5.1 9.3 4.6 3.0 5.3 1.6

15.2 14.4 13.3 16.9 17.7 17.7 15.8 13.0
18.0 17.2 17.2 15.2 15.6 14.6 17.5 18.7
56.4 57.6 55.2 53.7 53.0 54.2 52.5 53.9

0.6 1.1 2.2 2.6 3.1 3.7 4.2 2.3
310.2 364.8 358.1 442.6 492.2 516.1 617.8 704.4
655.7 676.0 705.3 659.7 756.1 815.8 887.1 1,031.7
965.9 1,040.8 1,063.4 1,102.3 1,248.3 1,331.9 1,504.9 1,736.1
58.1 59.7 57.0 55.8 59.1 59.7 62.0 68.5

695.4 788.5 904.6 1,056.6 1,176.5 1,254.7 1,390.5 1,599.6
11.1 12.9 16.0 30.0 46.3 62.4 48.6 40.8
684.3 775.6 888.6 1,026.6 1,130.2 1,192.3 1,341.9 1,558.8

15.8 15.4 14.5 14.2 14.0 14.3 14.2 14.3
5.0 4.3 4.5 4.9 5.2 5.5 5.8 6.0
10.8 11.1 10.0 9.3 8.8 8.8 8.5 8.3

349.8 372.1 425.8 422.2 451.9 511.5 566.0 649.9
308.4 333.7 333.4 393.0 474.1 561.2 550.8 635.7
41.4 38.4 92.3 29.1 -22.2 -49.7 15.2 14.2
247.5 267.4 260.3 276.4 173.2 127.1 97.7 159.0
-139.9 -196.5 -108.8 -216.0 -133.6 -156.3 -47.3 -29.3
-8.4 -11.3 -5.8 -8.9 -6.3 -7.0 -1.9 -1.2
-74.0 72.7 -180.9 -62.4 -36.2 -19.0 -8.9 20.4
213.5 123.9 278.3 380.7 179.9 127.6 56.0 -2.0

281.8 269.1 309.7 315.5 307.5 325.3 427.2 428.5
478.4 477.7 496.9 522.4 480.7 556.2 612.0 642.0
-196.6 -208.7 -187.2 -206.9 -173.3 -231.0 -184.8 -213.5
52.6 26.4 24.3 29.3 30.9 40.9 57.8 70.8
116.2 110.5 121.5 149.7 168.1 213.6 271.0 290.6
33.7 44.0 43.6 69.7 88.2 143.0 223.6 231.6
-156.0 -182.3 -165.6 -176.4 -155.9 -151.2 -16.2 -42.6
202.9 173.5 151.6 174.5 127.3 147.3 78.3 74.6
-51.7 2.7 5.4 30.1 31.4 -12.2 49.8 22.9
122.8 120.1 114.7 84.6 53.3 35.8 85.7 108.5
3.2 3.2 3.2 2.1 1.4 0.8 1.8 2.3

Disbursed Outstanding External Debt (US $mn) 532.8 494.9 630.4 801.6 893.1 969.7 985.0 971.8
RatioofOutstanding DebttoGDPat kt. Prices (%) 64.1 56.8 67.6 81.2 84.6 87.0 81.2 76.7
External Debt Service Payments (US $mn) 52.8 79.2 77.4 83.0 96.9 89.0 134.5 134.8
External Debt Service Ratio (%)4 11.9 17.9 15.7 15.7 17.9 14.2 17.2 16.4
Disbursed Outstanding Domestic Debt ($ mn) 176.0 208.7 171.9 256.5 278.5 279.4 299.9 321.9
Domestic Debt Service Payments ($ mn)5 22.6 17.7 19.2 13.7 18.8 23.1 27.5 30.5
Sources: Mnistry of Finance, Statistical Institute of Belize, & the Central Bank of Belize
(1) Includes Rivatization Proceeds
(2) Includes CFZ gross sales
(3) Starting in 2005 these numbers have been revised to reflect only usuable reserves as defined by BFM5.
(4) Excludes refinancing of US$99.2mn (2002), US$50.2mn (2003), US$95.4mn (2004), US$136.7mn (2005) and the restructuring amount of US$541.0rm in 2007.
(5) The 2007 DS excludes $6.7mn that was owed to DFCand now taken over by BSSB.


Belize experienced an economic downturn in
2007 with GDP growth falling from 5.3% to
1.6% partly due to the negative impact of
inclement weather, crop disease and cash
flow difficulties on several key export
producers. Output of papaya, sugarcane,
banana, citrus and farmed shrimp were all
lower, resulting in a substantial 16.5%
shrinkage in the primary sector's contribution
to the economy. To some extent, this was
offset by a 9.5% expansion in the secondary
sector, which notably included value added
from petroleum extraction. The decision by
the Statistical Institute of Belize (SIB) to
include the latter in the manufacturing sector
caused a sharp production cutback by the
largest garment manufacturer and modest
decline in domestic production of electricity
to be somewhat overshadowed. The services
sector held up its end with a 4.2% increase
that largely reflected increased trade in the
Corozal Free Zone (CFZ), the continued
expansion of telecommunication services
and moderate growth in hotels and
restaurants attributable to a small increase in
stay-over tourist visitors.

Notwithstanding the deceleration, there was
some buoyancy in the job market in the early
months with the April unemployment rate
falling from 9.4% in 2006 to 8.5% and most
of the new jobs being concentrated in
services and agriculture. Unlike previous
years when a single labour force survey was
conducted annually in April (the peak labour
period), the SIB also conducted a second

survey in the month of September and found
that employment had contracted with the
unemployment rate rising to 12.1% due to a
seasonal downturn in labour demand.
Meanwhile, the average annual Consumer
Price Index (CPI) yielded to upward
international price pressures and rose by
2.3%, with food prices registering the largest
increase at 5.3%.

A 7.6% downturn in domestic exports
caused growth in total export receipts to be
held to a meagre 0.3% while imports surged
ahead by 4.9%. The subsequent widening of
the trade deficit was largely responsible for a
more than doubling of the external current
account deficit from 1.3% of GDP in 2006
to 3.4% of GDP in 2007. A financial surplus,
derived in large part from foreign direct
investment in tourism, real estate, aquaculture
and electricity covered the deficit and further
shored up gross international reserves by
$45.8mn to $217.0mn, the equivalent of 2.3
months of merchandise imports.

Fiscal highlights in 2007 included Central
Government's successful restructuring of
some $1.lbn in external commercial debt
during the first quarter. While this made
external debt servicing more manageable by
lowering interest payments and deferring
principal repayments to the 2019-2029
period, the situation remained one in which
continued fiscal and monetary restraint was
required. The government would need to
maintain a primary surplus in excess of 4.0%
of GDP for the foreseeable future in order to
generate the savings necessary to meet debt



servicing costs given the progressive
increases in interest rate on the restructured
debt. In 2007, notwithstanding a 22.5%
ramping up of expenditure, the target was
exceeded primarily due to a considerable
increase in revenues from the general sales
tax (GST), petroleum royalties and taxes, the
sale of prime crown lands on Ambergris
Caye, all of which were topped off by
unusually large receipts from foreign grants.
If the revenue stream had followed a normal
growth path, the primary surplus would have
been considerably lower than the 4.2% of
GDP that was recorded.

In addition to a higher primary surplus, there
was a further decline in the overall deficit from
1.9% to 1.2% of GDP during the calendar
year. This was financed from domestic
sources and resulted in a 7.3% rise in the
government's domestic debt to $321.9mn
(12.7% of GDP). The new financing included
$23.4mn in overdraft funds (the bulk of
which was provided by the Central Bank) and
$3.4mn from a commercial bank for
upgrading of the San Estevan -Progresso
Road. Concurrently, the public sector's
external debt fell by 1.3% to $1,943.6mn
(76.7% of GDP), as government paid down
a small portion of its external commercial
debt, exchanged the remainder for a new
super bond and scaled down its borrowing
to project oriented and budget support loans
from bilateral and multilateral sources.

In terms of the policy framework, while there
was some loosening on the fiscal side, the

Central Bank did not alter its stance during
the year. Bank liquidity conformed to the
expected seasonal pattern and when the pace
of credit began to pick up simultaneously
with signs of downward pressure on the
system's net foreign assets, some
consideration was given to the need for a
tightening of reserve requirements as a
preemptive measure. Action was however
held in abeyance due to the expectations of
increased inflows to the public sector that
would replenish reserves.

With respect to monetary expansion, the
annual growth in all components of the
money supply was observed to be notably
above expectations and reflected strong
growth in credit and foreign inflows. In
addition to a 15.2% increase in net credit to
the government, private sector loans were up
by 15.4% with approximately 75.0% of
commercial bank lending increases being
directed to personal loans, tourism and
construction. Distributive trade was also a
notable target of lending that accounted for
nearly 10.0% of new loans. Meanwhile,
although there was more than adequate excess
secondary liquidity in the system, it was
unequally shared and the disparity led to
heightened competition among the banks for
the business of large depositors such as the
Belize Social Security Board (BSSB). This
competition led to an increase of 30 basis
points in the weighted average deposit rate
while the weighted average lending rate edged
upward by 10 basis points. The resulting


decline in the interest rate spread of the banks
made it, at 8.3%, the lowest of the last sixteen

Looking ahead, a conservative fiscal and
monetary policy framework would need to
be maintained to keep external debt servicing
under control, re-establish credibility with
international creditors and safeguard the
fixed exchange rate. In addition to the
challenges presented by a further slowing in
the global economy, domestic economic
management could be complicated by
increased strain on the fiscal accounts since
the bulk of petroleum taxes and royalties that
went into the government's coffers in 2007
would now be slated for transfer to the
recently created petroleum management
fund. Unusually large receipts from land sales
are also not expected, hence, if the present
arrangements for the petroleum fund are not
altered, measures would need to be taken to
raise revenues from other sources. The
important point to note is that excessive

reliance on Central Bank financing is not a
viable option for the government due to its
negative effect on the official foreign reserves.

In other developments, GDP is currently
projected to grow by about 2.4% due to a
rebound in export production, buoyancy in
construction and the spurt in government
spending prior to the general elections.
However, the external accounts should
deteriorate somewhat as strong growth in
imports spurred by rising fuel acquisition
costs and inputs for large construction
projects overshadows the expected rally in
export earnings. As a result, import coverage
provided by the official reserves is likely to
edge down from 2.3 to 2.2 months of
merchandise imports. Meanwhile, a
continuation of the upward trend in fuel
acquisition costs and food prices will exert
further pressure on the domestic price level
and push the CPI up by at least 2.5% during
the year.

Growth in the world economy decelerated
slightly but was still a robust 3.7% with
strong domestic demand and buoyant
commodity prices sustaining many
developing and emerging economies. China
and India were major contributors with GDP
increases of 11.5% and 8.9%, respectively.
However, these contributions were somewhat
counteracted by a slowdown in the United
States (US) economy, which stemmed from
a housing downturn that further escalated into
a meltdown of the sub-prime mortgage
market. With investor losses extending to
Europe, Japan and other developed countries,
the sub-prime mortgage crisis triggered an
international credit contraction as earnings
from securities backed by these mortgages
evaporated. Central banks in the developed
countries sought to mitigate the situation by
altering interest rates and injecting liquidity
in the hope of preserving the soundness of
their financial systems.

Meanwhile, whereas rising prices for
petroleum and food generated average
inflation of 5.6% in developing countries,
favourable currency appreciations in
developed countries somewhat offset these
pressures and resulted in a lower 1.9%
average inflation rate. Economic growth in
most developed and some developing
countries also led to a general increase in
employment with Japan, China, United
Kingdom (UK) and the Euro Area all
experiencing falling unemployment rates.

Impacted by the credit crunch emanating
from the housing market crisis and rising
energy costs, the US economy decelerated
with GDP growth falling from 2.9% in 2006
to 2.2%. Even with interest rate cuts by the
Federal Reserve Board, the losses suffered
by financial institutions affected by the sub-
prime mortgage crisis were initially estimated
at US$60.Obn and continued to rise.
Notwithstanding this and the sharp fall in
residential investment, growth was supported
by strong personal consumption, exports,
non-residential construction and government
spending. While the labour markets were
initially tight, job growth decelerated in the
second half of the year causing the
unemployment rate to edge up to 5.0% by
year end. Inflation rose by 4.1% driven
primarily by higher oil prices that boosted
heating oil, petrol and other energy costs.
With the dollar weakening against the Euro
and Yen, exports rose by 0.4% to
US$142.3bn and the external current account
deficit fell from 6.6% to 5.4% of GDP.

Notwithstanding tighter credit conditions
due to contagion from the US sub-prime
crisis, the UK's economy grew by 3.1% as a
3.7% expansion in services (particularly
transportation, storage and communication)
overshadowed weaker performance of the
productive sector that featured marginal
improvements in agriculture, manufacturing
and the utilities while mining and quarrying
declined slightly. A resurgence in non-bank
corporate profits underpinned an expansion
in business services and finance, while


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

r I

United States
United Kingdom
Euro Area
Republic of China




Sources: OECD, World Economic Outlook, United States Department of
UK Government Statistics, IMF International Financial Statistics


Commerce, The Economist,

government services grew more slowly.
Annual inflation measured 2.1% (slightly
above the 2.0% target rate) with the Bank of
England raising interest rates by 50 basis
points during the year to keep inflationary
pressures from higher food and energy costs
under control. Even with the financial sector
fall-out, the economic upturn was able to
generate increased employment resulting in
a 0.1% decline in the unemployment rate to
5.3%. A strong pound favoured import
consumption and made exports more
expensive. The current account deficit
consequently deteriorated further to 4.0% of
GDP largely due to a widening trade deficit
in goods, excluding oil.

In the Euro area, tighter credit conditions,
higher interest rates and a stronger Euro led
to a marginal deceleration in GDP growth
from 2.8% in 2006 to 2.7% in 2007. The main
growth drivers were investment and exports,
as consumption remained somewhat
subdued during the year. Spurred by higher
oil and non-energy commodity prices, annual
inflation measured 3.1%, exceeding the 2.0%
target even though the European Central

Bank increased interest rates mid-year to
dampen inflationary pressures. The economic
expansion was sufficient to reduce
unemployment from 8.0% to 7.2%, even as
the labour market participation rate increased
especially among women and older workers.
On the external front, the current account
balance improved slightly to 0.2% of GDP.

Reductions in consumer spending and
investment contributed to a deceleration in
Japan's economic growth from 2.2% in 2006
to 1.9%. The economy was principally driven
by exports with the Japanese trade surplus
up by a record 37.0% as a relatively weak
Yen, higher exports of automobiles and steel
and increased trade with China and the
European Union (EU) boosted the current
account surplus from 3.9% to 5.0% of GDP
Improvements in Japan's energy efficiency
mitigated the impact of higher energy prices
and inflation consequently fell from 0.2% in
2006 to 0.1%. The unemployment rate also
declined slightly from 4.1% to 3.8%,
notwithstanding the slowing in economic



China's economy continued on a boisterous
growth path with exports, domestic
consumption and high levels of investment
fuelling an 11.5% increase in GDP. Inflation
was up significantly from 1.5% in 2006 to
6.9% as a general shift away from agricultural
production led to an increase in food
imports, higher prices for which provided
the main impetus for the inflation surge. The
rapid economic expansion led to a marginal
tightening in the labour market and a modest
decline in the unemployment rate from 9.8%
to 9.5%. Notwithstanding the appreciation
of the Chinese renminbi against the US dollar
and concerns about product safety, China's
trade surplus surged by 48.0%, pushing up
the external current account surplus to 9.7%
of GDP.

Also led by exports, growth in the Republic
of China/Taiwan accelerated to 5.4% as
compared to 4.7% in the previous year.
Notwithstanding the appreciation of the
Taiwanese dollar against the US dollar,
Taiwanese exports soared to US$246.7 bn
and the external current account surplus was
driven up from 6.8% of GDP in 2006 to

7.7% of GDP in 2007. With production
being highly capital intensive, unemployment
up to November remained unchanged at
3.9% while the consumer price index
registered a slight increase from 0.6% to 1.1%
due to higher food and energy costs.


In the Caribbean, a slowing in tourism
underpinned a deceleration in GDP growth
from 6.9% in 2006 to 3.9% in 2007. Tourism
was negatively impacted by the US Western
Hemisphere Travel Initiative (WHTI) that
required its citizens to travel with passports
as well as by intra-regional travel declines. In
addition to a fall in impulsive travel by day-
trip visitors from the US Virgin Islands and
Puerto Rico that may be partly due to the
WHTI, the expected benefits from the
Cricket World Cup were also not fully
realized by several participating countries. Of
critical concern were hikes in petroleum and
food prices that drove up inflation
substantially, with some countries
experiencing double digit growth. Debt

Table 11.2: Selected Indicators for Some Caribbean Countries

Country GDP Growth Rate% Inflation Rate 50/5. Rate550/.) ResereTTmn
i^^fiff2006 2007 2006 2007 2006 2007 2006 2007^^BtcBffiHS^^

Trinidad & Tobaqo



Jamaica and central


sources: ECLAC, Central BanK of Barbados, central BanK or Belize, BanK or (uyana, BanK or
Bank of Trinidad & Tobago
n.a. = not available


management remained a key issue as several
countries struggled with high debt to GDP
ratios. Improving fiscal management and
performance was therefore a priority, and
several countries stepped up tax collection
and administration measures.

In Barbados, the economy grew by 4.3% led
by activity in wholesale/retail commerce,
transportation, storage, communication,
construction, business and other services,
and supported by more modest growth in
the export sector. A 12.3% upturn in cruise
ship arrivals and 2.6% increase in long stay
visitors were the basis for a 3.3% growth in
tourism value added. While the increase in
economic activity led to a decline in the
unemployment rate from 9.8% to 7.1% (up
to September), average inflation also fell to
4.2% compared to 7.6% in the previous year
in response to a slowing in the rate of increase
for fuel, electricity, transportation and
housing. There was a slight increase in the ratio
of the fiscal deficit to GDP, and the size of
central government's debt (73.0% of GDP)
remained a source of concern. On the

external front, higher tourism receipts
underpinned a decline in the current account
deficit from 8.1% to 6.6% of GDP. The
latter was largely financed by inflows from
foreign investment and loan disbursements
that were instrumental in boosting net
international reserves to US$0.7bn at the end
of September.

Guyana experienced a 4.5% expansion
fuelled by a strong upturn in agricultural
exports (particularly rice and sugarcane) and
a mining expansion stimulated by higher
international prices. Due to the one-off effect
of a new valued added tax (VAT) and higher
prices for energy and food, inflation jumped
from 4.2% to 10.4%. Notwithstanding new
revenue flows from the VAT, the fiscal deficit
worsened from 11.9% to 12.1% of GDP
because of higher capital spending in
connection with the Cricket World Cup
tournament and the modernization of the
state-owned sugar corporation. The external
current account deficit also deteriorated
from 20.1% to 27.9% of GDP in 2007
largely due to a decline in travel receipts and

Chart II.1: Real GDP Growth for Selected Caribbean Countries


Guyana Jamaica


Trinidad &

U 2006 p2007



U 2007



a surge in imports that reflected rising costs
as well as significant capital and intermediate
inputs for private and public investment
projects. Capital inflows were however
sufficient to finance the deficit and push
reserves up by US$32.5mn. In a positive
development, the country received the
benefit of considerable debt relief granted
under the Heavily Indebted Poor Countries
and Multilateral Debt Relief Initiatives that
resulted in the almost halving of the public
sector external debt to US$655.0mn (70.0%
of GDP).

Economic activity in Jamaica was dampened
by a contraction in the hurricane affected
agricultural sector and post elections fiscal
deceleration. From 2.5% in 2006, GDP
growth fell to 1.5% while annual inflation
increased from 5.8% to 8.5% influenced in
part by post hurricane hikes in food prices.
An aggressive drive to enforce tax
compliance led to an increase in fiscal
revenues during the year and the government
recorded a fiscal deficit and primary surplus
measuring 4.3% of GDP and 10.0% of
GDP, respectively. At 135.0% of GDP, the
public debt burden continued to be
exceedingly heavy and constituted one of the
principal inhibitors to growth. In the external
sector, a higher trade deficit mostly reflecting
increased agricultural imports and a
reduction in earnings from tourism
contributed to a widening of the current
account deficit from 10.7% to 13.5% of
GDP. Capital inflows were insufficient to
bridge this financing gap and reserves were

consequently drawn down by some
USS440.0mn, a reversal of the previous year's
overall balance of payments surplus of

Growth in the Organisation of Eastern
Caribbean States (OECS) region also
decelerated significantly from 7.1% to 4.3%
as the number of stay-over tourists declined
in all economies apart from Anguilla and
Grenada. As in the rest of the Caribbean,
the declines were partly due to the new US
citizen passport requirement. In the OECS
this was exacerbated by a decrease in inter-
island flights due to the merger of two
regional airlines that resulted in higher air fare
costs and inconvenient route schedules that
did not facilitate easy link-up with larger
carriers that serviced overseas routes.
Notwithstanding this, tourism and tourist-
related construction activities continued to
generate growth, though at a more moderate
pace, in the high and medium growth
countries while the two worst performing
economies suffered from hurricane and
volcanic damage. Public debt levels in the
region remained high, with four countries
having debt/GDP ratios in excess of
100.0%. Since the scope for cutting costs was
not extensive, fiscal adjustments were focused
on increasing revenues with the aim of
gradually reducing the level of government
debt. These were ongoing and included the
implementation of a VAT in Antigua and
Barbuda. Higher costs for food and fuel
acquisition caused a more than doubling in
the region's inflation rate to 3.5%.


Meanwhile, although higher imports and a fall
in tourism receipts increased the external
current account deficit, capital and financial
inflows covered the shortfall and contributed
to a slight increase in reserves.

In Trinidad & Tobago, a slackening in
investment activities in the energy sector
combined with slower growth in oil refining
and petrochemical production caused the
growth rate to fall from 12.0% to 5.5%.
Notwithstanding inflationary pressures from
the combination of higher prices for
imported food and expansionary fiscal
policies, average inflation (up to September
2007) fell to 7.3% as the Central Bank
tightened monetary policy to keep inflation
under control. Meanwhile, with outlays for
ongoing public infrastructure projects
ratcheting up, the government's surplus for
the fiscal year fell significantly from 6.9% to
2.5% of GDP. The external sector remained
robust as buoyant export earnings from the
energy sector overshadowed an increase in
repatriated profits of multinational
corporations in the oil sector and delivered
an external current account surplus
equivalent to 20.1% of GDP. Net
international reserves consequently increased
by US$0.3bn to US$7.0bn.

Mexico and Central America

The slow down of the US economy somewhat
dampened Mexico's performance leading
to a deceleration in its GDP growth from
4.8% to 3.3% and an increase in the

unemployment rate (up to September) from
3.6% to 3.8%. The sectors that contributed
to growth were communications/
transportation, financial services and
manufacturing (particularly of vehicles).
Inflation was estimated at around 4.0% due
to higher international and domestic prices
for grains, milk products and energy. On the
fiscal front, government expenditures
outpaced revenues resulting in a slight
increase in the deficit from 2.0% to 2.2%
of GDP During the first three quarters of
the year, higher imports of consumer and
capital goods pushed the trade deficit up to
4.3% of GDP. This was offset by other
inflows and so the balance of payments
yielded an overall surplus that drove up net
international reserves by 15.1% to

In the Central American countries, average
growth was slightly above 6.0%, spurred by
exports and domestic consumption that was
supported by significant inflows of family
remittances. Even though exports from the
"Maquilas" (assembly line factories) and free
zones grew at a slower rate, intraregional
trade and garment exports to the US surged
as a result of the free trade agreement
between Central America, the Dominican
Republic and the US (CAFTA-DR).
Although increasing more slowly due to the
deceleration in the US economy, remittances
still played a prominent role in these
economies. There were improvements in
employment across the board while higher
prices for petroleum, energy and food



pushed inflation up. Fiscal revenues for all
countries increased in response to
improvements in tax administration regimes
and economic buoyancy with the result that
from an average of 3.4% of GDP, the fiscal
deficit of central governments fell to 1.0%
of GDP Financial resources were therefore
freed up to enable a healthy expansion in
private sector credit during the year.

In Guatemala, GDP growth accelerated
slightly to 5.7%, spurred by private sector
investment and consumption. The latter was
strongly supported by family remittances that
totalled some US$4.2bn (12.5% of GDP).
Construction activity was vibrant with
increases in public and private sector projects,
while communications/transportation
expanded due to major investments in
telecommunications. Agriculture was also up
with a recovery in traditional crops such as
coffee and sugar that was stimulated by a rally
in international coffee prices as well as an
increase in the US sugar export quota under
the CAFTA-DR free trade agreement.
Notwithstanding several interest rate
increases by the central bank, inflation
remained high at 9.1% due to the upsurge in
food and petroleum prices. While
government expenditures outpaced a 9.0%
rise in revenues, the fiscal deficit remained
modest at 1.4% of GDP. Meanwhile,
notwithstanding substantial inflows from
exports and family remittances, the external
current account deficit rose to 5.0% of GDP
due to heightened imports of goods and
services. This was financed by inflows from

foreign investment and government
borrowing that drove up the external public
debt by some US$300.0mn while increasing
net international reserves by US$170.0mn.

The Honduran economy was also vibrant
with GDP up by 6.0%. Growth drivers
included private consumption that was
underpinned by family remittances,
transportation/communications and a surge
in construction that was fostered by easier
access to bank credit and mostly focused on
residential units and buildings for agro-
industrial use. Agriculture grew only
minimally due to adverse weather systems
such as Hurricane Felix. Inflation rose to
9.6%, boosted by higher prices for
petroleum, corn and wheat, while urban
unemployment fell from 4.9% at the end of
2006 to 4.1% in May 2007. A hike in
government wages contributed to a slight
deterioration in the government's fiscal deficit
from 1.4% of GDP in 2006 to 2.9% of GDP
even as the external public sector debt
declined, aided by US$233.0mn in debt
forgiveness under the Multilateral Debt
Relief Initiative. While exports expanded by
9.8%, fuelled by strong growth in traditional
exports like banana and coffee as well by
higher "maquila" exports, imports outpaced
this with a 22.0% increase that was partly due
to the appreciation of the Honduran
Lempira. The wider trade deficit was only
partially offset by family remittances that
amounted to some 12.0% of GDP and the
external current account deficit consequently
rose from 0.2% to 7.0% of GDP


Table 11.3: Selected Indicators for Mexico and Central America

C tR e S0. 0/ Ra. 0/ Rs. 55
2006 2007 2006 2007 2006 2007 2006 2007^^^^^^^^^

El Salvador
Costa Rica

0o .

Sources: ECLAC, Bank of Mexico, Central Bank of Nicaragua, Central Reserve Bank of El Salvador,
Central Bank of Honduras, Bank of Guatemala, Ministry of Economy and Finance of Panama

Activity in El Salvador picked up pace and
the economy grew by 4.5%, the highest level
achieved in the last 12 years. Agriculture,
construction, tourism, financial services,
electricity, transportation & communications
and industrial manufacturing all expanded.
While agriculture benefitted from favorable
prices for major commodities, construction
was boosted by infrastructural works such
as the Union Port and housing construction.
Family remittances, which amounted to
US$3.8bn, boosted private consumption and
alleviated the effect of higher petroleum
prices on the external current account deficit
which stood at 4.6% of GDP. A large
surplus on the capital and financial account
produced by the sale of various banking
institutions covered the deficit and raised net
international reserves by US$0.2bn to
US$2.lbn, the equivalent of 2.6 months of
imports of goods and services. Improved tax
administration boosted government
revenues and even with US$140.Omn
extended in electricity and gas subsidies, the
fiscal deficit declined from 1.1% of GDP in
2006 to 0.5% of GDP in 2007. The inflation

rate rose to 6.2% due to the continuous rise
in international prices for food items and

As a result of setbacks caused by Hurricane
Felix, Nicaragua experienced a further
deceleration with GDP growth falling from
3.7% to 3.0%. While the hurricane's impact
was felt, the economy was supported by an
upturn in export activities resulting from
improved prices for the country's main export
products and the implementation of the
CAFTA-DR trade agreement.
Unemployment rose to 5.9% and inflation
was up from 9.4% to 13.8% as food prices
surged in the wake of hurricane destruction
to agricultural production and higher fuel,
electricity and transport costs. Central
government's operations yielded a slightly
higher fiscal deficit of 0.9% of GDP as
current and capital expenditure outpaced
increased revenues resulting from
improvements in tax collections. Nicaragua
was one of the countries that benefitted from
debt relief initiatives and its external public
debt was significantly reduced from around



US$4.5bn to slightly more than US$2.0bn
during the year. Its external current account
deficit was unchanged at 16.0% of GDP, as
a worsening trade deficit was offset by higher
inflows from family remittances.

Even with damages sustained from heavy
rainfalls that battered the country's northern
region and Caribbean coast during the last
quarter of the year, preliminary figures
indicate that Costa Rica continued to
experience vigorous growth of 7.0%. The
most dynamic sectors were construction,
transport, storage, telecommunications,
financial intermediation, manufacturing and
agriculture. The economic buoyancy
underpinned a fall in unemployment from
6.0% to 4.6%, while annual inflation rose to
around 10.1%, which was in excess of the
central bank's 8.0% target. The government's
fiscal deficit edged up to 1.3% in 2007 and
on the external side, an increase in repatriated
profits outweighed a strong export
performance, so the current account deficit
on the balance of payments rose to 5.2% of
GDP. This deficit was fully covered by a
substantial surplus on the capital and
financial account that was generated mainly
by sizeable foreign direct investments into the
real estate and tourism sectors. The net
international reserves consequently increased

by 32.3% to US$4.lbn.

Panama's growth accelerated to 9.5% led
by transport and communications that
included a surge in activity at the ports,
railways and airports. Rising re-exports from
the Colon Free Zone and higher domestic
exports of fruits, coffee and sugar spurred
trade, while an increase in tourist arrivals led
to greater dynamism of the hotel and
restaurant sub-sector. Inflation rose to 5.8%,
pressured upwards by higher petroleum and
food prices, while unemployment contracted
from 8.7% in 2006 to 6.3%. The fiscal deficit
stood at 0.8% of GDP, with the government
in the beginning stages of a project to expand
the Panama Canal. This project is slated for
the period 2007 to 2012 and is expected to
cost approximately 25.0% of GDP
(measured in 2007). In the external sector, a
significant rise in imports contributed to an
external current account deficit of
US$743.0mn, while foreign direct investment
into Panama at US$1.Obn was less than half
of what was recorded in 2006 when the
largest local banks were sold. In other
developments, trade agreements were
completed with Nicaragua and the US, while
significant advances were made with respect
to negotiations with Chile and Guatemala.


Lower output by several of the major export
producers caused a deceleration in GDP
growth from 5.3% in 2006 to 1.6% in 2007.
However, while the traditional export sector
struggled somewhat, the services sector
performed well and this helped to shield the
job market particularly in the first half of the
year. In April (the month in which labour
demand is usually at its peak), the
unemployment rate was measured at 8.5%
as compared to 9.4% twelve months earlier.
The SIB also reported an average annual
increase of 2.3% in the CPI that was largely
due to higher prices for imported and locally
produced food.

The 'Agriculture, Hunting & Forestry'
component of GDP registered a 7.7%
contraction that was due to the lower output
of key export commodities such as
sugarcane, citrus, banana and papaya. There
was also a 33.5% reduction in fisheries as
disease losses and the closure of a major farm
led to a drop in farmed shrimp production.

The most substantial growth was in the
secondary sector but this was notably due to
the SIB's practice of including petroleum
extraction in its measurement of
manufacturing. The steep cutbacks in garment
output during the year were therefore
masked. Construction rose slightly
notwithstanding delays in the start up of
several major projects. On the other hand,
the utilities experienced a slight contraction
of 0.5% as dry weather caused a reduction

Table III.1: Annual Percent Change in Selected Indicators

GDP at Current Market Prices 5.6 8.9 4.4

Real GDP (2000 prices)

Primary Activities
of which: Agriculture, Hunting & Forestry

Secondary Activities
of which: Construction
Electricity and Water

of which: Restaurant & Hotel
Public Administration
Transport and Communication

Consumer Price Index
End of period
Source: Statistical Institute of Belize


















in electricity produced by the Chalillo Dam.

Faster growth was seen in the services sector
as a surge in CFZ distributive trade
contributed to a 5.1% expansion in wholesale
and retail transactions while the continued
upgrading and expansion of
telecommunication infrastructure for cellular
and internet services resulted in a 5.4%
growth in transport and communications.
Hotel and restaurant activity also rose
moderately as a modest increase in stay-over
visitor arrivals eclipsed a reduction in cruise
ship visitors. After contracting in 2006,
government services expanded slightly with
spending increasing in the latter months of
the year.



In an effort to meet a temporary increase in
the EU sugar quotas, the harvest was
extended by eighteen days and sugarcane
deliveries consequently grew by 2.3% to
1,200,429 long tons. Farmer deliveries were
up by 2.7% to 1,154,139 long tons, while
those from the company's cane growing
project contracted by 5.9%. The increase in
deliveries was offset by poor crop quality as
heavy rainfall during the critical growing
period caused a severe froghopper outbreak

which contributed to a 9.5% reduction in the
concentration of sugars in the sugarcane and
a consequent worsening of the cane to sugar
ratio from 10.54 in the previous crop year
to 12.36.

The average final price paid to farmers fell
by 10.7% to S54.22 per long ton, reflecting
the 17.3% fall in the out-turn of sugar per
ton of sugarcane, an increase in freight
charges (sugar is sold on a cost, insurance and
freight (c.i.f). basis) and lower export prices
in markets influenced by the rebound in
global sugarcane production led by large
producers such as Brazil and India.


After the cyclical decline in the previous crop
year, output for the 2006/2007 crop year
edged up by 1.1% to 7.0mn boxes.
Approximately 96.3% (6.7mn boxes) of the
citrus crop was factory processed, 2.8% was
rejected and 0.9% was exported as fresh fruit.
Orange deliveries to the factory were up by
5.9% to 5.2mn boxes while grapefruit
deliveries contracted by 10.8% to 1.5mn
boxes. While the decline in grapefruit was in
line with the cyclical trend following a season
of high output, the modest boost in the
orange crop was the result of sustained
annual efforts to replace dead trees and

Table III.2: Sugarcane Deliveries

1 2 I04 5 2 .0011.0

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

929,393 1,173,469 1,200,429


Table III.3: Citrus Fruit Deliveries
0 25/I6 2006/0 g

Deliveries ('000 boxes)
Source: Citrus Growers Association

improved grove management practices as the
Citrus Growers Association stepped up its
extension services to several communities.

With international prices for orange juices in
Belize's key markets rising due to the
continued decline in US production, the final
price paid to farmers for the 2006/2007
orange crop was up by 30.4% to $2.19 per
pound solid (pps). Conversely, grapefruit
prices were pressured downward by 39.8%
to $1.44 per pps as a rebound in US
grapefruit production was coupled with
lower US per capital consumption of
grapefruit juices.


A sluggish start due to unfavourable weather,

the temporary abandonment of some fields
and farmer uncertainty caused by the negative
impact of the EU's import regime on prices
led to a 11.0% fall in production to 3.4mn

The trend in banana cultivation over the past
three years indicates that acreage has
stabilized at around 6,000 for the year with
any increases in production expected to come
from improvements in field productivity
rather than acreage expansion. At the start
of the year, 6,089 acres had harvestable trees
and 297 acres were under plantilla (young,
non-yielding trees). By September, the
acreage under cultivation had temporarily
declined by 8.0% to 5,604 acres, while the
area under plantilla increased to 437 acres.

Chart III.1: Banana Acreage

January 2007
Plantilla To be Planted
297 acres 55 acres

September 2007

Rantilla To be Planted
437 a 305 acres

_ Producing Producing
6,089 acres 5,604 acres








During the first eight months, papaya
production volume was up by a robust
31.5% year-on-year, with output being
ratcheted up in response to increasing per
capital consumption of fresh papaya in the
US, which is Belize's sole export market.
However, extensive hurricane damage
sustained in the second half of August
abruptly halted this, causing a 72.1% decline
in the last four months relative to the
comparable period of 2006.

Pre-hurricane estimates placed the total area
under production at around 1,910 acres,
virtually all of which were in the northern
districts. With Hurricane Dean slashing the
total harvestable acreage by almost two-
thirds, the post-hurricane producing areas of
the Corozal and Orange Walk districts fell
to as low as 350 and 300 acres, respectively.
By the end of the year, grove replanting and
rehabilitation efforts had almost doubled the
total area under cultivation to 1,216 acres,
of which 1,054 acres were devoted to large
papayas and 162 acres were under the smaller
solo variety. Cultivation remained
concentrated in the Corozal district with 754
acres of large papayas and 102 acres of the
solo variety. While the total harvestable
acreage inched up to 720 acres by year-end,
producers in the Corozal district expect to
return to pre-hurricane levels of production
by mid 2008. Total acreage in the Orange
Walk and Belize districts stood at 300 and
60 acres, respectively, while Cayo did not

engage in production during the year.

Other Agricultural Production

Notwithstanding some hurricane damage in
August, output of most grains was higher
with improvements in harvested acreage and
yields. The notable exception was soybean,
which fell by 38.4% to 0.8mn pounds as
harvested acreage plummeted from 750 to
486 acres, and delays pushed the start up of
the soybean processing plant into 2008. A
corn shortage at the start of the year led to
the need for corn and corn seed imports,
however annual corn production eventually
rose by 20.1% to 97.9mn pounds. Output
of sorghum (a soybean substitute in animal
feed) jumped by 49.7% to 15.1mn pounds
and rice production surged by 50.0% to
39.2mn pounds with yields and harvested
acreage rising by 17.6% and 27.5%,
respectively. Output of beans also increased
by 7.8% to 15.5mn pounds as higher yields
eclipsed a small decline in harvested acreage.

Vegetables, root crops and plantains were
among the hardest hit by the hurricane. While
output of hot pepper, squash, sweet pepper,
carrots, celery and cassava increased,
decreases were recorded for cabbage,
cucumber, okra, pumpkin, tomatoes, Irish
potato and onions. Plantain output plunged
by more than fivefold to 0. 1mn bunches with
the loss of about half of the acreage under

Livestock production was generally on the


downside with declines in cattle and pig
dressed weights of 4.2% (to 3.2mn pounds)
and 4.3% (to 2.1mn pounds), respectively.
Poultry was also down by 1.4% to 29.5mn
pounds and output of milk declined by
10.2% to 6.0mn pounds. Egg production
climbed by 11.7% but there was a 1.4% fall
in the amount of honey produced to 0.1mn

Marine Products

Declines in farmed shrimp and tilapia
combined with reductions in the wild capture
of conch and marine shrimp resulted in an
overall decrease in output of 31.3%.

The resurgence of viral diseases on some
farms and the closure of one of the largest
farms (which went into receivership at the
end of 2006) caused a 32.6% drop in farmed
shrimp production to 15.4mn pounds.
Meanwhile, with rising fuel costs contributing
to a significant decline in trawler activities,
the wild capture of marine shrimp was almost
halved to 0.03mn pounds. Conch
experienced a cyclical reproductive downturn
that was exacerbated by hurricane disturbance
to its habitat, and the result was a 16.7%
decline in the wild capture of conch to 0.6mn

pounds. In contrast, lobster production
increased by 10.0% to 0.5mn pounds while
that of whole fish grew by 4.6%,
notwithstanding production problems that
affected a large fish farm.

The advent of the first cobia ( a fish known
locally as 'cabio') cage farming facility at
Robinson Point Caye was an important
development during the year. Harvesting at
very modest quantities began towards the end
of 2007 and is expected to gradually build
up in volume throughout 2008. Indications
are that the new technology has spurred the
interest of the two major fishing cooperatives,
which have been exploring the possibility of
establishing a joint pilot project for cobia
farming in 2008.


Sugar and Molasses

Notwithstanding the extension of factory
operations into mid July and a modest growth
in sugarcane deliveries, sugar production
declined by 12.7% to 97,161 long tons due
to the lower sugar content of the crop and
an increase in the level of impurities.

Table III.4: Sugar and Molasses Production
2004/0 20/III. 20r6 .

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

100,328 111,323
37,181 41,250






Box 1: Cobia Fish Farm

In August 2006, Marine Farms Belize Ltd., a subsidiary of the Norwegian based Marine Farms ASA,
began the process of establishing Belize's first marine fish farm to produce cobia for the export market.

Cobia is a little known, eco-friendly species that is well adapted to farming with a low feed conversion
ratio, good flesh quality and nutritional value and rapid growth rate that enables it to reach harvest
maturity in about a year. China is currently the world's largest cobia producer with Food and Agriculture
Organization (FAO) estimates placing its 2007 production at just under 44.1mn pounds. Other producers
such as Taiwan, Vietnam, Philippines, Brazil, Puerto Rico and others have emerged and are rapidly
expanding their export production capacity. FAO records indicate that world cobiaproduction of 50.2mn
pounds in 2005 was more than twenty times what it was in 1998. As world demand and consumption
of fish rises, there is an increased potential for growth in demand for cobia as it gains greater international

Belize was considered highly suitable for this marine fish farming project because it had warm water
temperatures, deep water with high oxygen levels and strong currents, and the reef provided some
protection from hurricanes. Using production techniques originally developed in Florida and fingerlings
imported from a Florida hatchery, the company set up its first cage site at Robinson's Point a few miles
off the coast of Belize City. Harvesting from this trial commercial venture began in July and yielded
some 70,000 pounds by year end. Assuming all goes smoothly, the company expects to raise production
to around 1.0 million pounds by 2008. Approximately US$10.0 mn has been invested to date and there
are plans to inject a further US$20.0mn over the next five years to develop a fully integrated operation
that would include a state-of-the-art hatchery, processingplant (processingis currently outsourced), an ice
plant, a feeding system and three more cage sites. As production capacity expands, the level of employment
should grow from the current staff of just under 30 persons.

Expected Cobia Production




2008 2009 2010 2011 2012

While this new industry could potentially generate much needed foreign exchange and provide new
employment opportunities, the development of the cobia industry in Belize faces many challenges. The
establishment of a local hatchery is a key priority since the importation of fingerlings is proving to be



Box 1: Cobia Fish Farm (cont'd)

inefficient due to costly, logistical problems. The current arrangement of contracting out its fish processing,
further increases costs and is only practical at low volumes. In addition, one of the major constraints is the
lack of reliable and economically priced transportation for fresh fish to the US market. Another key
challenge is market development, since cobia, despite its many desirable traits for farming and consumption,
is still relatively unknown. To address this issue, Marine Farms Belize is currently working with Florida
based marketing consultants to target the high-end restaurant chain segment in the US.

Factory efficiency declined by 0.2% as the
battle with high mud levels continued while
the drop in the sucrose content of the crop
meant that 17.3% more sugarcane was
required to produce one ton of sugar.
Reflecting its inverse relationship to sugar
output, molasses production rose by 14.2%
to 47,118 long tons.

Citrus Juices and Pulp

While fruit deliveries for the 2006/2007 crop
year were up by 1.6%, citrus juice production
rose by only 0.8% to 36.1mn pound solids
(ps) with the less than proportional increase
in juice out-turn being attributable to a 2.0%
fall in the average ps yield per box of orange

that outweighed a 1.0% rise in that of
grapefruit. Concentrates remained the
industry mainstay but there was also a notable
increase in output of the not-from-
concentrates (NFC) in 2007. Production of
the latter rebounded with a more than ten
fold expansion to 1.2mn ps (0.5mn ps of
orange and 0.7mn ps of grapefruit).
Meanwhile, the output of orange concentrate
stood at 29.4mn ps, a 0.3% increase, while
that of grapefruit declined by 14.8% to
5.4mn ps in line with the cyclical downturn
in fruit deliveries. At 1.7% of total
concentrate juice output, freeze concentrate
production was minimal due to its less
attractive profit margin and sluggish market

Table III.5: Production of Citrus Juices and Pulp
2004/0 2005/0 2 /ii

Production ('000 ps)
Orange Concentrate
Grapefruit Concentrate
Not-from-concentrate (NFC)
Production (pounds)





Source: Citrus Products of Belize Ltd.





Pulp production amounted to 2.1mn pounds.
This was mostly of orange since sales of
grapefruit pulp were temporarily scaled back
in order to effect quality enhancements.

Other Manufacturing Production

The performance of the rest of the
manufacturing sector was generally mixed.
Beverage production increased by 10.2%,
largely due to higher production of beer and,
to a lesser extent, soft drinks, which may be
indicative of some measure of success in the
crackdown on contraband trade in these
products during the year. A 7.9% expansion
in the output of other miscellaneous food
items was mostly attributable to flour
production. Lower usage by key crops such
as banana, citrus, sugarcane, papaya and some
grains in the latter part of the year caused a
drop in fertilizer demand and contributed to
the 18.4% fall in fertilizer output.


Notwithstanding factors such as volatility in
aviation fuel prices, exchange rate fluctuations,
the economic slowdown in some key markets,
continued health/security concerns and the
credit crunch in the last few months,
preliminary figures for 2007 from the World
Tourism Organization indicate that world
tourism expanded for the fourth consecutive
year with an estimated increase of 6.1% to
898.0mn arrivals. Within the region,
performance was mixed with North and
Central America having respective growth in

arrivals of 4.7% and 11.1%, while the number
of visitors to the Caribbean contracted by

In Belize, stay-over arrivals increased by
1.6% to 241,575 as marketing efforts in the
US, Canada and Europe continued. The
number that entered the country through the
Phillip Goldson International Airport
(PGIA) and through the sea-ports increased
by 2.5% and 16.8%, respectively. On the
other hand, arrivals through the land borders
declined by 4.3%. Visitors from the US were
up by 1.3% and accounted for 63.8% of all
stay-over arrivals. In response to an
intensification of marketing efforts that
included increased attendance at trade shows
and more advertisements in that market,
Canadian visitors almost tripled, accounting
for 16.4% of visitors to the country and also
overtaking Europe as Belize's second largest
tourism market. Visitor arrivals from Europe
declined by 1.9%, driving down its share of
total stay-over tourists from 14.0% in 2006
to 13.5%. On a similar downward trend,
arrivals from other countries plummeted by

After peaking in 2004, cruise
disembarkations declined for the third
consecutive year, influenced in part by the
active hurricane season that prompted the
cancellation of several port calls to the
country during the third quarter and in part
by the continued redeployment of ships from
the Caribbean to the Mediterranean.
Consequently with the decline in cruise ship


Box 2: Tourism Developments and Prospects

The performance of the tourism sector was mixed with a 1 (6" rise in stay-over visitors occurring while
the number of cruise ship arrivals declined by 5.1% as the number of port calls fell for the third consecutive

The Belize Tourism Board (BTB) maintained its marketing focus on Europe and North America by
increasing its attendance at trade shows as well as purchases of magazine advertisements in Canada. As a
result of these efforts and the appreciation of the Canadian currency, Canada surpassed Europe as the
second largest source of arrivals during the year.

The first phase of the international airport's expansion was completed with the runway being extended to
some 9,900 feet and the floor area of the terminal building expanding by some 14,000 feet. The air lift
capacity to Belize was increased with the launching by Delta airlines of a weekly direct flight from Los
Angeles to Belize City. To further spur the growth in air arrivals, the BTB engaged Inter-vistas Consultants,
an international consulting firm, to develop and negotiate new air routes to the country. The stalemate
between investor groups competing for the right to build a cruise ship docking terminal by 2009 was
resolved when it was agreed that the financier of the project at the Port of Belize would buy over the
Stake Bank project.

In other developments of note, the Government created the Belize City Tourism Development Fund in
January, administered by the Ministry of Local Government and funded by deducting L I 1 ) each
from the Fort Street Tourism Village (FSTV), BTB and Protected Areas Conservation Trust (PACT)
portion of the cruise head tax. Unlike the prior arrangement where the BTB provided funds to the Belize
City Council (BCC) for special cruise tourism projects, the monies in this fund were to be transferred on
a monthly basis to the BCC which would account for the manner in which the funds were used. The
consultation phase of a project to increase the competitiveness of micro, small and community based
organizations that service the cruise ship tourism sector was also completed during the year.

Major developments during 2008 should include:

a) Paving of the Placencia Road

b) Construction of an additional terminal building at the international airport

c) Continuation of the construction of the cruise ship docking facility at the Port of Belize

d) Start of the trainingphase of the competitiveness project administered by Belize Tourism Industry

e) Further negotiations by the BTB and Intervistas Consultants with international airlines in the
effort to get them to expand their travel routes to Belize.

f) The hiring of a public relations agency for the European market.

g) Start of the consultancy phase of a : 'I ni project financed by the Multilateral Investment
Fund that is aimed at improving public infrastructure in Belize City, Ambergris Caye and Caye
Caulker as well as the elaboration of a tourism master plan.

Chart III.2: Stay-over and Cruise Ship Visitor Arrivals


1998 1999 2000

2001 2002 2003 2004

2005 2006 2007

Stay-ove r

disembarkations during the second half of
the year eclipsing the modest increase during
the first part of the year, cruise visitors
declined by 5.1% to 560,478, and the number
of port calls fell from 295 in 2006 to 278 in


Given Belize's small size and openness, its
inflation rate is heavily influenced by trading
partners such as the US that accounts for
approximately one-third of annual imports.
In 2007, the SIB reported an estimated
average rise in the CPI of 2.3%. The largest
increase was in the cost of food, beverage
and tobacco which rose by 5.3%. A key
factor was the substantial rise in the world
price for corn caused by the increased use
of this grain for ethanol production,
particularly in the US and China. Globally,
this had a domino effect on the price of other
staple crops such as wheat, as land was
shifted to corn cultivation to the detriment
of these other crops. Domestically, a

*Cruise Ship

shortage in the early part of the year and
higher world prices drove the price of corn
to record high levels. The cost of corn based
products (like masa and tortillas) and
products that utilize corn as an input such as
chicken rose sharply as a result. Other items
that contributed to the surge in food prices
included onions, milk, cheese, beans and

Goods in the CPI basket that have a high
import content such as 'Household Goods
& Maintenance', 'Personal Care' and 'Clothing
& footwear' were up by 2.3%, 2.2%, and
0.8%, respectively, which was in line with the
rise in import prices as indicated by the 4.9%
increase in the US export price index. 'Rent,
Water, Fuel & Power' rose by 1.4% mostly
in response to a sharp rise in butane costs
since rent and water rates were only
marginally higher. The cost of 'Medical Care'
and 'Recreation, Education & Culture' went
up by 1.6% and 0.9%, respectively.

The upward trend was to some extent offset




Chart III.3: Consumer Price Index and Inflation Rate

- 0o 0) 0 CN C 'I- Ln C0 1-
0) C0 F0 0 0 0 0 0 0 0 0
0) 0) 0) 0 0 0 0 0 0 0 0
i- i- i-r~ oi ro ri o rl "\ (\

SConsumer Price Index --Inflation Rate

by a 0.6% decline in average prices for
'Transport and Communication', as fuel prices
at the pump trailed behind those of the
previous year for the first three quarters of
the year and only surged ahead in the last


In addition to its labour force survey in April,
the SIB also initiated a September survey in
2007. While April is generally representative
of the peak labour period, September would
be the period of lowest labour demand when
tourism is in its low season and harvesting
of sugarcane and citrus has not yet begun.

The April survey indicated that the rate of
unemployment had fallen for the fourth
consecutive year (from 9.4% in 2006 to 8.5%
in 2007) as the number of employed persons
grew by 9.4% to 111,835 while the labour
force grew by 8.4% to 122,258 persons.
Although most of the new jobs were in
services, employment in the primary sector

also grew robustly by 17.1%. The secondary
sector trailed with a more modest 3.9%
increase. By September, the number
employed had contracted by 3.7% to
107,657, driving up the rate of unemployment
from 8.5% to 12.1%. The latter reflected the
seasonal nature of some jobs and, to some
extent, the loss of jobs resulting from
hurricane damage to farms in the northern
districts in August.

Comparing April 2007 to April 2006,
agriculture retained its position as the largest
employer accounting for 19.8% of total
employment and 38.9% of the increase in
jobs, most of which were in the sugarcane
and citrus industries. Distribution (wholesale,
retail and repair trade) was the next largest
provider of employment with 18.3% of the
employed labour force and 39.1% of the job
expansion. Other significant growth areas
were tourism, general government services
and manufacturing (mostly of food), with
respective year on year increases of 12.1%,
13.0% and 13.6%.

A w
i -
o U
0 &



Table III.6: Employed Labour Force by Industrial Group

usti Gu 25 26 I07

Forestry, logging, sawmilling
Fishing and fish processing
Mining and Quarrying
Electricity, gas & water
Wholesale, retail, repair
Tourism (Hotels & Restaurants)
Transport and Comm u nication
Financial intermediation
Real Estate, renting
General Government Services
Community, Social & Personal Services
Work Abroad
Activities not classified elsewhere
Total, All Sectors
Source: Statistical Institute of Belize

Contrasting with this was a 30.1% contraction
in persons engaged in fishing that was due to
the fall in production and the sale of more
head-on, shell-on shrimps that require less
processing. Construction jobs also declined
by 8.4% in view of the delays in major
construction projects such as the Belize Sugar

Industries Limited (BSI) co-generation plant,
Ara Macao and the Stake Bank developments.
Other categories with lower employment
were 'Transport and Communication','Real
Estate and Renting', 'Financial
Intermediation', and 'Community, Social and
Personal Services'.






Box 3: Williamson Industries Limited Short-Term Prospects

Williamson Industries Limited, a branch of Dickie's International, has been conducting operations in
Belize under various tax concessions since 1961 (initially under the Development Incentives Act and later
under the Expotr Processing Zone (EPZ) Act). The company imports pre-cut fabric from the US, sews
the garments in Belize and then exports the finished garments back to the US. In 1983, the US Caribbean
Basin Initiative (CBI), which consists of the Caribbean Basin Economic Recovery Act (CBERA) and the
Caribbean Basin Trade Partnership Act (CBTPA) was implemented and this enabled Williamson to
export its garments to the US market duty free. This arrangement significantly improved Belize's
competitive position vis-a-vis garment producers in non CBI countries in Asia and Central America.

It now appears however that the CBI is unlikely to be renewed once the CBTPA expires on 30 September
2008. Even though the CBERA is permanently enshrined in US legislation, it requires a waiver from the
WTO that has not been obtained subsequent to a formal challenge by Paraguay in 2005. The CBI has
therefore been operatingwithout formal World Trade Organization (WTO) sanction since then. The
US has indicated that any future free trade agreement to be negotiated with CARICOM should follow
the pattern of the CAFTA-DR, which is one of reciprocity, whereas Belize's trade negotiators have
usually insisted that as a small developing economy, it should benefit from asymmetric special and
differential treatment. To date there has been no clear progress in resolving the issue of the type of
agreement that should be negotiated as a replacement to the CBI, which had provided non-reciprocal
duty free benefits.

Williamson's Production
4.5 40
4.0 35
3.5 30
"- 25 n
2 2.5
0 20 .2
a. 2.0 -
515 E
E 1.5
1.0 10
0.5 5
0.0 t0
2002 2003 2004 2005 2006 2007
volume value

With the end of the CBI looming, Williamson downsized its local operations substantially in 2007. In
addition to the future loss of CBI benefits, the company cited the high costs of doing business in Belize
(port charges, utility rates and telecommunication costs, among others) as a factor in its decision. It
claimed that the high level of these charges makes Belize a less attractive place to do business and that
these contributed to the loss of production contracts to lower cost producers in Asia and Central
America. Consequently, its domestic production during 2007 was 52.7% below the output of 2006 and
staff had been reduced to 340 persons by the month of May.

The company's General Manager indicated early in the year that its headquarters had to do strategic
planning in view of the expiry of the CBTPA in September of 2008. While the company issued no
further formal statement, the company's stance of gradually scaling down its local activities is indicative
of a shutdown early in 2008.

After a substantial improvement in the
previous year, the external current account
deficit more than doubled to $85.2mn (3.4%
of GDP). A larger trade deficit was the key
determinant as increased outflows in the form
of repatriated profits was offset by higher
inflows from tourism, remittances and grants.
The capital and financial account yielded a
surplus of $149.2mn that was derived mostly
from foreign investment into tourism, real
estate, electricity and mariculture projects. In
addition to covering the current account
deficit, these funds contributed to a $45.8mn
rise in gross official reserves which stood at
$217.0mn at the end of the year (equivalent
to 2.3 months of merchandise imports).

Merchandise Trade

Growth in imports slackened somewhat with
a 4.9% increase that was largely propelled by
an 18.3% rise in CFZ trade activity. In
comparison, imports for domestic
consumption rose by a modest 2.3%
(compared to 8.8% in the previous year) with
the more notable increases being for milk and
milk products, wheat, agricultural chemicals,
construction equipment, vehicles, fuels and
electricity. Notwithstanding higher CFZ sales
and other re-exports, total exports for the
year were only 0.3% higher due to a 7.6%
downturn in domestic exports. As a result, the
merchandise trade deficit widened by 15.6%
to $427.1mn (16.9% of GDP).

Table IV.l: Balance of Payments Summary and Financing Flows

CURRENT ACCOUNT -302A -32.4 -85.2
Merchandise Trade -462.0 -369.6 -427.1
Services(1) 286.0 447.3 463.3
Income") -228.9 -258.1 -3082
Current Transfers 1024 147.9 186.8
FINANCIAL ACCOUNT 288.7 138.2 141.0
NET ERRORS & COMMISSIONS -16.6 -24.5 -18.1
OVERALL BALANCE -24.4 99.6 45.8
FINANCING 24.4 -99.6 -45.8
Memo Items:
Import covering months 0.8 1.8 23
Current Account/GDP Ratio (%) 13.6 1.3 3A
(1) Tourism earnings for 2005 were based on actual inflows into the banking system,
while estimates for 2006 and 2007 were based on Visitor Expenditure Surveys.
(2) 2006 and 2007 data include an estimate for profit remittances from the tourism industry.

Chart IV.1: Current Account Deficit and Trade Balance
1999 2000 2001 2002 2003 2004 2005 2006


- A- - Current Account Deficit -- Trade Deficit

Domestic Exports

Petroleum was the sole exception to across
the board declines in the major domestic
exports in 2007. Weaker prices in some
export markets contributed to the
contraction but for the most part the principal
cause was volume declines that ranged from
4.0% to over 50.0%.

Sugar and Molasses

The hurricane had no effect on the level of
sugar exports since the sugarcane harvest had
already been closed. Production was

nevertheless lower due to a froghopper
infestation and exports consequently declined
by 13.7% to 83,132 long tons, while earnings
fell by 11.9% to $88.1mn. The slightly lower
percentage decline in revenue was due to a
temporary hike in volume sold to the
preferential European Union (EU) market
and price improvements in regional markets.
Sales to the EU (which accounted for 80.8%
of Belize's sugar exports) were up by 20.9%
to 67,187 long tons, as tonnage sold under
the EU Protocol sugar quota was boosted
by a further 31,620 long tons under the new
three year EU Complimentary Quota (CQ)

Chart IV.2: Domestic Exports by Commodities




S2006 2007

".A -.



d o"` 9"

Chart IV.3: Sugar Exports by Market





program. The latter replaced the Special
Preferential Sugar quota, which ended in June
2006. In addition to its annual CQ allocation
of approximately 12,000 long tons, Belize
sold sugar to meet the temporary CQ
shortfalls of other Caribbean countries
during the year. While EU prices were
unchanged during the second of the four-year
programme of scheduled price cuts, earnings
did not rise proportionately with volume due
to higher freight costs since sugar is sold to
the EU on a c.i.f. basis.

The US market accounted for 15.8% of
Belize's sugar exports in 2007. Since domestic
production in that market was on the rebound
and there was no temporary increase in quota,
exports reverted to normal levels of 13,143
long tons, down 30.1% from the previous
year. Earnings fell by 41.1% to $10.3mn as
the average price per pound dipped from
US$0.21 to US$0.17, influenced in part by
declining world raw sugar prices following a
larger than expected output in most
sugarcane-producing countries, particularly
Brazil and India.

The diversion of sugar to the more profitable
EU market reduced the quantity available for
sale to CARICOM and other regional
markets. Sales of bagged sugar (a premium
product) to CARICOM plummeted by
88.7% to 2,215 long tons, while exports of
the same to Canada and Curacao shrank by
74.3% to 587 long tons.

Although exports of molasses increased by
17.1% to 41,097 long tons, earnings fell by
7.3% to $5.8mn due to a decline in the
average price from $178.46 to $141.25 per
long ton in response to higher Asian supplies
and freight charges.

Citrus Juices and Pulp

With less abundant domestic supplies of
orange juice and international demand for
grapefruit juices weakening, exports of citrus
concentrates fell by 24.3% to 32.4mn ps.
Receipts suffered a smaller decline (of 11.6%
to $106.1mn) as stronger orange concentrate
prices mitigated the revenue loss. Sales were
largely restricted to concentrates because of




nw I

* E.U.



its wider profit margins, the high freight
charges associated with the shipping of NFC
and delays in launching the export of value
added products.

Notwithstanding a 20.3% fall in the export
volume of orange concentrate, earnings from
this product were down by only 0.6% to
$94.3mn as prices rallied across all markets.
Part of this was due to the greater than
anticipated decline in US citrus production
resulting from cold temperatures during the
bloom period and lingering stress from
hurricanes and diseases. With their juice
inventories falling to the lowest level in
almost a decade, the US remained Belize's
lead market for orange concentrate,
accounting for 48.7% of export volume and
half of export earnings. Because of the
tighter state of its own inventory, Belize was
unable to capitalize fully on the situation and
its sales of orange concentrate to the US were
down by 34.9% to 14.0mn ps with the
revenue decline being moderated to 22.9%
due to the $0.52 improvement in the average
price per ps. With a $0.62 improvement, the
average pound solid price was even higher
in the Caribbean and sales to this smaller
regional market rose by 56.7% with earnings
being doubled. As in the case of sales to the
US, the fall in the level of orange juice
inventory was partly responsible for a 40.9%
fall in export volume to the EU, while a 64.7%
price improvement held the revenue decline
to 3.1%.

In contrast to developments in the orange

juice market, international prices for
grapefruit juices were pressured downward
by the nearly 30.0% rebound in US domestic
grapefruit production and continued
weakening in US domestic consumption.
These bearish market conditions led to a
46.1% drop in grapefruit concentrate sales
to 3.6mn ps and the more than halving of
earnings to $11.9mn. The largest decline was
in the US market where sales virtually
disappeared, falling from $7.1mn in 2006 to
a mere $0.1mn in 2007. Export volume to
Europe, the major market that accounted for
66.8% of total grapefruit concentrate sales,
contracted by 34.7%, and receipts were down
by 44.2% as the average unit price weakened
by 14.5%. Sales to the Caribbean fell by
17.3% in volume and 6.3% in value. The
market for grapefruit freeze concentrate also
weakened with volume and earnings down
by 12.6% (to 0.6mn ps) and 14.7% (to
$2.6mn), respectively. An increase in aseptic
pulp production capacity boosted pulp
exports by 14.2% to 2.3mn pounds valued
at $1.5mn.


A sluggish start to the harvest stemming from
the incidence of Sigatoka disease during the
last half of 2006 combined with production
cut backs on some farms due to uncertainties
arising from the EU's first come, first served,
tariff-only, import regime caused a 16.8%
decline in banana export volume to 59,018
metric tons. The revenue decline (by 21.3%
to $39.8mn) was even larger because of a




6.6% fall in the average box price and the
industry's payment in 2007 of its 50.0% share
of the out of quota tariffs incurred on the
2006 exports. The latter was paid by way of
the deduction of approximately US$0.24 per
401b box of fruit sold during 2007. No
second class bananas were exported during
the year and quality penalties on a per box
basis were down by 37.1%. Growers
consequently netted a final box price of
$11.93 compared to $12.84 in 2006.

Marine Products

Across the board declines in all products
except lobster caused a contraction in annual
marine exports for the third consecutive year.
Export volume and earnings were down by
31.5% to 13.2mn pounds and 29.9% to
$64.2mn, respectively. The downward trend
largely reflected reductions in farmed shrimp
as the wild capture of lobster and conch
fluctuated cyclically in accordance with their
reproductive patterns.

With two farms being taken out of
production (including the largest which went

into receivership in late 2006), disease
problems and the cost cutting strategy of
shifting to one harvest cycle during the year,
shrimp export volume shrank by 32.7% to
11.9mn pounds and earnings were down by
38.6% to $41.7mn. The Mexican market
became more important due to its proximity
and also because of the heightened
competition being faced from low cost Asian
producers for the US market. Since a higher
share of export volume went to Mexican
importers who buy whole shrimp at a farm
gate price, this contributed significantly to the
8.8% fall in the average price to $3.51 per

Lobster export volume rose by 15.0% to
0.4mn pounds and with the price rising by
0.5% to $35.14 per pound, revenues were up
by 15.6% to $16.1mn. However, in addition
to the adverse impact of bad weather on its
marine habitat, there were concerns about the
long term sustainability of the industry due
to over-harvesting. It was proposed that this
be addressed through new regulations that
would raise the minimum harvest size from

Chart IV.4: Exports of Shrimp and Total Marine Products

1999 2000 2001 2002 2003 2004 2005 2006 2007

-- -- - Shrimp Exports Total Marine Product Exports

-, ...


Box 4: CARIFORUM-EC Economic Partnership Agreement

On December 16, 2007, the European Commission (EC) and CARIFORUM (CARICOM and the
Dominican Republic) countries initialled a comprehensive Economic Partnership Agreement (EPA) in
Bridgetown, Barbados that replaces the Lome IV trade arrangement. Its signing establishes a free
trade area between the EU and African Caribbean Pacific (ACP) countries that conforms to World
Trade Organisation (WTO) rules and therefore circumvents the increasingly hostile pressure being
exerted by non-ACP countries against the non-reciprocal, preferential, market access provided under
the Lome Convention.

The key elements of the CARIFORUM-EC EPA are the asymmetrical approach to trade in goods
and its inclusion of services and investment. CARIFORUM is permitted to exclude specific goods
considered to be sensitive and is allowed a longer transition period for the removal of tariffs on
products that are being liberalized. The liberalization of services is also asymmetrical, with the EU
opening up more sectors than CARIFORUM, while the latter made special provisions to protect small
and medium enterprises in certain sectors and maintains the right to regulate any sector or economic
activity in accordance with national policy objectives.

Some of the highlights of the Economic Partnership Agreement are:

* Duty-free-quota-free (DFQF) market access for all goods other than rice and sugar that meet the
qualifying rules of origin with effect from January 1, 2008. Sugar will be DFQF from end September
2009 and rice from 2010.

* Exclusions and a long phase-in period of up to 25 years for sensitive products.

* CARIFORUM received an additional 60,000 tonnes in sugar quota that is split equally between the
Dominican Republic and CARICOM, while the rice quota becomes duty free.

* The EU made a commitment to eliminate export subsidies on all agricultural products that
CARIFORUM agreed to eliminate tariffs on.

* In the liberalization of services, the Dominican Republic opened more than 90.0% of its service
sector, CARICOM 's coverage ranged from 65.0% to 75.0%, and the EU liberalized more than
90.0%. The agreement also contains regulatory principles governing some services and provides for
greater cooperation.

* Investment issues focused on transparency, predictability, non-discriminatory treatment and the
safeguard of environmental and social standards.

* A protocol on culture that provides for the easier movement of CARIFORUM artists and co-
production of audio-visual material.




Box 4: CARIFORUM-EC Economic Partnership Agreement (cont'd)

* In the area of development cooperation, EU commitments were made to promote private sector
and enterprise development, enhance international competitiveness of CARIFORUM firms and boost
the diversification of its economies. Other provisions were made with the aim stimulating innovation
and enhancing the technological and research capabilities of the CARIFORUM states.

* The establishment of a regional development fund within two years of the date the EPA is signed.
Funding under the 10th European Development Fund (EDF) (which is now considered as a complement
to the EPA) is estimated at 165mn, with 132mn to be applied to the Regional Indicative Programme
(of which 85% would go to the Focal Area of Regional Cooperation/Integration and EPA Capacity
Building and 15% would be devoted to the non-focal area of vulnerabilities and social issues) and
* 33mn would be earmarked to assist countries in meeting their EPA commitments.

In addition, the Agreement included all other elements necessary for a Free Trade Area (FTA)
agreement, such as non-tariff measures, trade defence instruments (anti-dumping and countervailing
measures, multilateral and bilateral safeguards), special provisions for administrative cooperation in
customs matters, and protocols of rules of origin. The EU agreed to provide technical assistance in
several areas, including capacity development to meet sanitary, phytosanitary standards, regulatory
and market requirements.

Sources: www.europa.eu; www.crnm.org; http://trade.ec.europa.eu

4 ounces to 5 ounces with the new
requirements to be gradually phased in
starting June 2008. Full compliance would be
required by June 2010 in order to maintain
access to the US market.

After hitting a cyclical peak in 2006, the conch
catch declined by 25.5% to 0.5mn pounds.
Earnings were further depressed (by 33.5%
to $5.4mn) due to a 10.7% price fall that was
the result of increased regional export
volumes in the period after the lifting of the
moratorium on conch exports from Haiti,
Dominican Republic and Honduras.

Exports of fillet/whole fish also suffered
volume and value reductions of 32.8% and
23.3%, respectively, with the decline being
mostly attributable to a fall in fresh tilapia
exports as the production problems of a
large tilapia farm led to a 30.0% cut in its
output. Exports of other marine products,
namely stone crab, were minimal.

Other Major Exports

After exceeding 3.0mn pounds and $30.0mn
in each of the previous six years, garment
exports sank to 1.7mn pounds valued at
$18.8mn. The sharp decline reflected

production cut backs by Williamson
Industries, a major garment factory, as its US
head office shifted contracts to lower cost
producers in Asia and Mexico. The re-
location was largely influenced by the
looming expiration of duty-free access to the
US market in September 2008. By year-end,
virtually all activities at the factory had ceased.

Papaya started brightly with a 31.5% surge
in export volume up to August, but this was
interrupted by hurricane destruction of the
majority of groves in the north of the country.
With subsequent monthly export volumes
trailing far below those of the previous year,
the volume and value of annual exports
declined by 4.0% to 72.9mn pounds and by
15.9% to $26.1mn, respectively. The revenue
loss was exacerbated by a 12.2% fall in the
average price per pound that was largely due
to increased production from Mexico, the
lead supplier to the US.

With so many of the major export
commodities experiencing declines,
petroleum became the lead export earner in
only its second year of production with
volume up by 34.1% to 956,476 barrels and
earnings rising by an estimated 66.1% to
$127.9mn. The average price per barrel used
in calculating the free on board (fo.b). value
was US$66.85, a 24.0% increase that was
partly due to a reduction in the quality
differential with the Cushing West Texas
Intermediate (WTI) price and higher
international prices caused by cutbacks in
Organization of Petroleum Exporting

Countries' (OPEC) crude oil production,
falling global inventories, growing worldwide
demand and rising geopolitical tensions in
Iran, Latin America and elsewhere.

Non-traditional Exports

Lower earnings from veneer sheets/
plywood, fresh oranges, orange/grapefruit
oils and a medley of other non-traditional
products overshadowed higher revenues
from beans, pepper sauces and sawn wood
resulting in an overall decline of 15.5% to
$25.6mn in the value of non-traditional
exports. While earnings from both orange and
grapefruit oils were down, the largest decline
was in grapefruit oil which experienced a
52.1% decrease in export volume as well as
a 50.2% reduction in the average unit price.
In contrast, the out-turn for fresh oranges was
shielded by a sharp price increase so that even
with a 71.0% reduction in export volume,
earnings from this commodity were only 6.8%
lower. Also, while earnings from veneer
sheet/plywood were down by 69.0% to
$0.6mn due to lower volume, income from
sawn wood rose to $1.9mn as higher prices
more than offset a reduction in volume sold.
In other developments, a modest volume
increase and a 7.8% price improvement
pushed receipts from red kidney and black
eye peas up by 22.6%, while a volume increase
accounted for a 5.0% rise in pepper revenue.


Re-exports expanded by 14.1% to S, .6mn,




reflecting a 29.9% increase in re-exports from
the customs area as well as a 12.1% rise in
CFZ sales. Notwithstanding hurricane
damage, fire losses and flooding in the
Mexican state of Tabasco that deterred
regular and potential customers, CFZ cross
border sales were brisk. Competitive pricing
in the zone helped to boost sales as more
merchants sourced goods directly from
lower cost suppliers in Asia and elsewhere.
Another key factor was the agreement of the
Mexican customs to raise the ceiling on
import allowances for Mexicans shopping in
the CFZ during peak periods of the year.
Other re-exports grew primarily as a result
of transactions by EPZ companies and
increased sales of vehicles and batteries.

Gross Imports

Import growth decelerated slightly with an
overall increase of $60.2mn that included
increases of $23.2mn for the custom's
territory and $37.0mn for the CFZ. While
CFZ imports were 18.3% higher, those for
the custom's territory were up by only 2.3%
principally due to a 37.6% contraction in
imports by EPZ companies. The latter
reflected lower demand due to production
declines as well as a return to normalcy after
one-off capital investments that occurred in

Aside from this, there were general increases
in most import categories. The largest was in
'Machinery and Transportation Equipment'
which was up by $29.2mn due to higher

purchases of motor vehicles, aircraft engines,
heavy construction equipment, electric
generators and tractors. 'Minerals, Fuels and
Lubricants, including electricity' followed
with an $18.9mn increase that was mostly due
to a $13.2mn rise in imports of Mexican
electricity and, to a lesser extent, an average
2.7% increase in the acquisition cost of fuel.
Higher outlays on corn seed, milk, cheese,
other milk products, wheat and feed largely
accounted for a $15.8mn increase in 'Food
and Live Animals' purchased from abroad
and additional outlays on fertilizers,
insecticides, and herbicides explained a
$7.7mn increase in 'Chemical Products'.
Minimal increases in 'Crude Materials' and
'Manufactured Goods' of $1.8mn and
$1.1mn, respectively, were recorded.

Direction of Visible Trade

During the year, there was a dramatic shift in
trade direction with the EU overtaking the
US to become Belize's primary export
market (accounting for 32.4% of total
exports). The shift reflected higher sugar sales
to the UK that outweighed the fall in banana,
shrimp and grapefruit concentrate exports
to other EU countries. Boosted by petroleum
sales that were mostly to Costa Rica, Central
America became the second largest export
market with 28.4% of total exports. After
many years of dominance, the US became
the third largest export market with its share
falling from 41.8% to 26.6% due to reduced
purchases of sugar, citrus concentrate,


Table IV.2: Percentage Distribution of Visible Trade by Country/Area
Ep rs. l Imp rs (2
200 2006 200 205 2006 200

United States ot America
United Kingdom
Other EU
Central America



Sources: Statistical Institute of Belize, Central Bank
(1) exclude CFZ sales
(2) include electricity imports from Mexico
shrimp and garments. The diversion of sugar
to the preferential EU market caused a slight
reduction in CARICOM's export share from
8.3% to 7.0%, while the drop in Mexico's
export share was linked to a fall in the
reported value of its shrimp purchases.

Although the US remained the principal
source of imports, its market share declined
from 37.7% to 32.7% as imports of jewelry,
cut fabric and jet fuel fell. Meanwhile, efforts
by CFZ importers to obtain goods more
cheaply by purchasing directly from Asian
countries rather than from regional
intermediaries caused the share of goods
from other countries to rise (from 21.7% to
27.1%) and a marginal decline in that of
Central America to 19.3%. Mexico's share
rose slightly due to higher imports of
electricity, other liquefied petroleum gases,
construction materials, food, beverage and
animal feed. While CARICOM's import share
was unchanged, that of Canada and other EU
countries declined for the third consecutive
year as exchange rate movements made their
goods less attractive.






Net income from services grew by 3.6% to
4(. Timn, as a $48.7mn increase in earnings
outstripped the $32.7mn increase in outlays.
Most of the growth in inflows was pegged
to tourism with travel receipts rising by 7.2%
as a result of modest increases in stay-over
tourists and average daily expenditure by
stay-over and cruise ship visitors. Inflows
were also buttressed by higher earnings of
shipping agents and larger amounts received
by foreign embassies, military and other
international entities to fund hurricane relief
and other charitable works. After a 5.4%
reduction in 2006, outflows resumed an
upward trend with a 10.9% increase that was
largely due to payments of some $26.1mn in
insurance and financial fees required in the
process of external debt restructuring, higher
international freight costs and a modest
increase in expenditure by residents traveling




Net outflows on the income account were up
significantly to $308.2mn with the $50.2mn
(19.4'-" increase over the previous year being
driven by heightened outflows for profit
repatriation, private sector interest payments
and reinvested earnings of some 78.9%,
20.2% and 18.9%, respectively. These
outflows were partly offset by an 11.9%
reduction in interest payments by the public
sector from savings realized through the
restructuring of its external commercial debt
as well as a small increase in the Central
Bank's foreign interest earnings. On the other
hand, the wrap up of construction of the US
embassy pushed earnings by local workers
lower while payments for foreign labour
remained relatively stable. This resulted in net
outlays for labour compared to the small net
surplus of the previous year.

Current Transfers

Net receipts from current transfers continued
an upward trend with a 26.3% increase that

Chart IV.5: Net Balances for Ser
S 100 .
S-100 -

included higher net inflows to the private
sector and government. Private sector
receipts were $24.2mn higher mostly because
of family remittances and international
transfers to religious and non-profit
organizations and, to a lesser extent, credit
unions. Of the $81.9mn received in
government grants, the majority of which
came from the ROC for budgetary support
and from Venezuela for poverty alleviation
and housing, some $40.0mn was transferred
to offshore entities involved with the
Universal Health Services (UHS) debt. After
payments for other expenses such as fees for
membership in international organizations,
government's net receipts were up by
$14.6mn for a total of $31.6mn.

Capital and Financial Accounts

Unlike 2006, there was no debt forgiveness
from the British government and the capital
account surplus therefore fell from $18.3mn
to $8.2mn. On the other hand, the surplus
on the financial account increased by 2.0%
to $141.0mn mainly featuring inflows from

vices, Income and Current Transfers

. "------*

1999 2000 2001 2002 2003 2004 2005 2006 2007

0 -- - Services Balance A Inco me Balance --1-Current Transfers Balance I

Chart IV.6: Main Components of the Financial AccountRADE & PAYMENTS

Chart IV.6: Main Components of the Financial Account









Financial Account Balance

A ,
N t -- . . e

Net Direct Investments
Trendline Net Borrowings Trendline

1999 2000 2001 2002

foreign direct investment into tourism, real
estate, electricity and aquaculture ventures as
well as an increase in reinvested earnings of
the banking sector. The government
successfully restructured its high cost
commercial bonds and loans during the year

by paying down a small portion and
exchanging the majority for a new 'super
bond'. This debt exchange and the scaling
down of new loan disbursements ensured
that the public sector's net impact on the
financial account was minimal. In other
noteworthy developments, the Central Bank

2003 2004 200b 2006 200/

used up some $37.1mn held in escrow
accounts to fund part of the government's
debt restructuring costs, while foreign
exchange inflows to the commercial banks
improved their net foreign asset position by
$81.4mn. While private sector entities
received fairly substantial loan
disbursements, their loan repayments were
only marginally higher. When combined with
a reduction in local deposits held by non-
residents, the result was a modest net outflow
by the private sector.

Chart IV.7: Gross Official International Reserves and Months of Imports

250 2.5



1.0 4


o o o o
0 0 0 0
0 0 0 0
p ul -,

g- Gross Reserves -l- Months of Imrrports


Box 5: Prospects for Sugar and Banana Exports


The regime under which sugar is exported to the EU will undergo the following major transformation
with the implementation of the CARIFORUM Economic Partnership Agreement (EPA) onJanuary 1,
2008 and the ongoing Common Agriculture Policy (CAP) reform process:

(i) Sugar Protocol (SP): Under the CARIFORUM EPA, the SP has been extended to September 30th
2009 and during this time, Belize's traditional quota of 42,000 long tons will be boosted further by 6,331
tonnes reallocated from the St. Kitts quota and a share of the 30,000 tonnes awarded to CARICOM
under the recently signed EPA.

(ii) Complimentary Quota (COQ: Subsequent to the discontinuation of the Special Preferential Sugar
(SPS) programme in June 2006, Belize was chosen as one of six African Caribbean Pacific (ACP)
countries that were awarded Complimentary Quotas (CQ). Under this programme, which began in July
2006 and which will run for three years, endingJuly 2009, Belize was awarded a basic quota of 12,067

The agreement provides for the reallocation of any unutilised Caribbean sugar export quotas within the
region and this consequently expands Belize's export potential since high-cost regional producers may
eventually withdraw from the export market.

Under the new regime, it is expected that the Sugar Protocol will be dismantled by October 1, 2009 and
replaced by a duty-free, quota-free system (DFQF). This is likely to result in an increase in the level of
Belize's sugar exports to the EU while lowering the unit price, as:

free access would be granted for ACP sugar subject to a global ceiling of 3.5 mn tonnes, with non-less
developed (LDC) ACP countries like Belize being subject to a pre-specified ceiling on exports from
2009/2010 to 2011/2012;

a 36.0% price reduction for ACP raw sugar would be fully implemented byJuly 1, 2009, with importers
of ACP sugar being required to pay at least *301.7 per tonne until September 2012;

from October 2012, a price information system will be implemented to aid commercial price negotiations
between importers and exporters in a transparent manner; and

from October 2015, entry of ACP sugar is to be on a duty-free, quota-free basis and subject to a
special safeguard clause.



Box 5: Prospects for Sugar and Banana Exports (cont'd)

Despite the impending dismantling of the current regime, uncertainty in exchange rate movements, increasing
freight costs and potential future price cuts, the industry expects that the EU price would still be favourable
vis-i-vis other markets after September 2009. Consequently, the industry's strategy is to reduce costs and
increase exports to the EU to compensate for phased and anticipated price reductions. Part of the
processor's cost reduction plan is the installation of a co-generation plant that will lower ,i - cost
while simultaneously encouraging more sugarcane production to meet co-generation needs and the increase
in the overall EU sugar quota.

In the longer term, uncertainties persist over the likelihood of further price reductions after 2012 that
may be necessary to meet the CAP reform objective of more closely aligning EU prices with the world
market price.


The preferential access of ACP banana into the EU continues to be under attack in the World Trade
Organization (WTO). In a challenge mounted by Ecuador, Columbia and the United States, the WTO
dispute settlement body ruled, on December 10, 2007, that the EU's import regime was not WTO
compliant. Ecuador and Columbia claimed that the EU's tariff of *176 per tonne failed to maintain total
market access for most favoured nation suppliers, while the US questioned the legitimacy of the zero
duty tariff-rate quota allocated exclusively to ACP banana. Prior to the dispute settlement process, the EU
had offered to reduce the tariff from *176 to *129 as an out-of-settlement solution.

With the implementation of the CARIFORUM EPA onJanuary 1, 2008, ACP banana is to enter the EU
on a duty free, quota free basis. The EPA follows a customs union arrangement which is acceptable under
the WTO rules and the EU therefore believes that this should remove the basis for a WTO challenge.
Nonetheless, concerns still remain that complainants could dispute the EPA if they feel that this agreement
is too injurious. The industry's long term viability is also subject to potential price reductions under the EU
banana sector reforms and the outcome of the EU free trade negotiations with other trading regions,
including low-cost Latin American and African suppliers. An implicit threat is the willingness of the EU
to further lower tariff levels which could affect the competitiveness of Belize's banana production.

On the positive side, the inception of the EPA will allow Belize to engage to sell to non-traditional buyers
even while ratcheting up its sales to the EU.

Agritrade: http://agritrade.cta.int/en/commodities/sugar_sector/executive_brief


CRNM: www.crnm.org/documents/updates_2007/special_rnmupdateonepa.htm

Central Government Operations

A more than tripling in foreign bilateral grants

together with substantial growth in receipts

from the GST, petroleum taxes and sales of

crown land underpinned a 27.3% expansion

in Central Government revenue during the

2007 calendar year. The growth in revenue

was such that even with total expenditure

being ramped up by 22.5%, the overall deficit

fell by 38.1% to $29.3mn (1.2% of GDP)

while the primary surplus grew to 4.2% of


The deficit was financed from domestic

sources with the government's overdraft

balance with the Central Bank increasing by

$20.0mn and its borrowing from commercial

banks also up by $4.2mn. Some $9.9mn in

deposits held with the Central Bank and

commercial banks was also drawn down with

offsetting payments of $3.5mn into several

suspense accounts resulting in a net decline

of $5.2mn.

Current revenue grew by a robust 14.8% to

S(.4' .9mn (25.6% of GDP) with a $60.8mn

increase in tax revenue being augmented by

a $23.1mn surge in non-tax revenue.

Revenues from income and profits posted

the largest increase of some $26.5mn (19.4" .;,

with the initial receipt of petroleum income

taxes accounting for $14.7mn. Next in line

was a $23.9mn (11.V..) increase in taxes on

Table V.1: Government of Belize Summary of Revenue and Expenditure
I. I- Cha nge
Jan-Dec Jan-Dec Jan-Dec durigs
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 2005B 2006 2007 2007^B->^^^^^I"li^^

Current Revenue
Tax Revenue
Non-Tax Revenue
Current Expenditure
Capital Revenue
Capital Expenditure (Capital II local sources)
Total Grants
Total Revenue and Grants
Total Capital Expenditure
Total Expenditure
of which Interest Payments

Net Privatization Proceeds
Domestic Financing
Financing Abroad

Ratio to GDP (%)
Sources: Ministry of Finance, Central Bank of Belize














Chart V.1: Central Government's Development Expenditure


2005 2006 2007

U Capital II

goods and services with the first full year of
GST collections accounting for 91.6% of this
growth. Revenue from taxes on international
trade also increased by $8.9mn (5.4%) as
higher collections of import duties and
environmental taxes more than offset the fall
in collections of revenue replacement duties.
Some $11.6mn in profits transferred from the
Central Bank, $4.4mn more in petroleum
royalties and higher collections from other
government departments for services such
as visas and permits boosted the growth in
non-tax revenues. At $28.4mn, capital
revenues were elevated by sales of crown land
including a 3000 acre portion of northern
Ambergris Caye that garnered $12.0mn.
Foreign grants peaked at an unprecedented
$87.2mn that included $80.8mn in
disbursements from bilateral donors such as
ROC and Venezuela. Multilateral agencies
also provided $6.4mn for projects such as
the Basic Needs Trust Fund (BNTF),
upgrade of the Customs Department's
ASYCUDA software and the Social

l Capital III

Investment Fund (SIF), among others.

There was a heightening in all categories of
current expenditure during the year except
for interest payments which were trimmed
after the external debt was restructured.
Spending on goods and services was
ratcheted up by 51.3%, partly due to the
reclassification of certain outlays previously
specified as capital expenditure and the one-
off payment of $26.1mn in insurance and
finance fees incurred with the external debt
restructuring. Subsidies and current transfers
were also bumped up by 53.5% with the
reclassification of contributions to the
National Health Insurance (NHI) scheme,
statutory bodies (such as the University of
Belize (UB), National Institute of Culture and
History (NICH), Toledo Institute for
Development and the Environment (TIDE),
Belize Trade and Investment Development
Services (BELTRAIDE), Coastal Zone
Management Authority (CZMA) and
payments for tertiary scholarships from the
capital budget to this line item. The


Box 6: Major Fiscal Initiatives in 2007

20th February, 2007 The Government Of Belize (GOB) successfully implemented the exchange of
external commercial debt for a new super bond with a face value of US 4., -.ii that will mature in 2029.
The new bond provides for step-up interest rates of 4.25% for the first three years, 6.0% for years four and
five, and 8.5% from year seven through to maturity. While 98.1% of the eligible claims were tendered at the
time of the restructuring, by year-end 99.1% of the participating claims were actually tendered and exchanged.

21st March, 2007 Four contracts valuing" I1 .Omn were signed by five companies to begin the infrastructural
phase of the 4-.Omn Southside Poverty Alleviation Project. Phase one involves works on drainage,
infrastructure, lot filling and street paving in the Lake Independence, Port Loyola, and Collet divisions of
Belize City. A major undertaking will be the construction of a canal that will drain both the Lake Independence
and Collet areas. Streets in other areas will be widened, resurfaced and provided with more adequate drainage.

29th March, 2007 UNICEF and GOB signed a Work Plan for 2007 to undertake the implementation of
programs budgeted at '2 4mn. The programs are aimed at improving the lives of children, women and
families with the specific focus being on guaranteeing basic human rights in areas such as education, health,
HIV/AIDS, child protection, child development, poverty, violence, social policy and governance.

30th March, 2007 The Government signed an agreement to pave the 9.5 mile San Estevan-Progresso
Road. Estimated at a cost of $9.5mn, this project will include the installment of culverts and drainage
systems to mitigate flooding in the area.

1st April, 2007 The Statistical Institute of Belize (SIB) was established as a statutory body with the
responsibility for collecting, compiling, analyzing and disseminating official statistics. The SIB replaced the
Central Statistical Office, which had been a department within the National Development Ministry. As a
nascent statutory body, SIB will continue to be dependent on Central Government for aid and resources.

9th October, 2007- The Petroleum Revenue Management Fund Act, 2007, No. 16 of 2007, was passed by
the House of Representatives and the Senate to establish, maintain, and operate a Petroleum Revenue
Management Fund, into which all revenues collected from the exploitation of petroleum resources in Belize
will be paid and kept. Part of these funds will be invested to generate future revenue streams that can be used
for the benefit of the country and part will be immediately disbursed to support government projects and
spending. The Act will take effect on a date yet to be determined by the government.

31st December, 2007 Following up from the Social Security Board Inquiry and the recommendations of
the Senate Select Committee, the Social Security Act was amended to establish new and improved provisions
for the protection of the Social Security Fund. The amendments provided for clarification of the Investment
Committee's role, incorporation into the law of the investment framework and guidelines, the publication of
the loan and investment portfolio of the BSSB, penal sanctions for breaches of the Act and the Regulations,
establishment of an Audit Committee of the Board and the streamlining of the provisions relating to the
NHI Scheme.

Sources: Government of Belize Press Releases and The Laws of Belize


establishment of the SIB in April, which
joined the ranks of statutory bodies entitled
to a government subvention, also
contributed to the upsurge in subsidies. A
5.1% increase in outlays on wages, salaries,
and pensions reflected the usual annual
increments awarded to employees as well as
a modest increase in staff hiring.

Notwithstanding substantial reclassifications
from capital to current expenditure, capital
outlays swelled by 62.7% to $159.0mn (6.3%
of GDP) as government activity heightened
in the run-up to the general elections
constitutional due in 2008. Expenditure on
locally funded (Capital II) and externally
funded (Capital III) projects increased by
14.0% and 54.2%, respectively. Concurrently,
capital transfers ballooned more than nine-
fold to $42.4mn with the transfer of $40.0mn
of grant funds to non-resident entities in
connection with the controversial UHS debt.

Approximately 24.0% of capital spending
went on infrastructural projects that included
the upgrading of south-side Belize City,
improvement of streets and drains in towns
and villages, upgrading of the San Estevan-
Progresso road and maintenance of highways
and feeder roads. Education accounted for a
further 17.7%, and included notable outlays
of $6.1mn on free text books for primary
schools and $3.4mn on the technical and
vocational training project. Social
development programs conducted through
entities such as the SIF and BNTF accounted
for another 14.6% of development outlays.

The health sector's share of the capital budget
was 10.7% with the majority going on health
sector reform. Capital outlays on
environmental projects accounted for 7.4%
of the total and were slated mostly for land
development and management. Other
notable expenditures were for national
security ($7.1mn), contributions to
multilateral agencies ($6.5mn) and purchase
of vehicles ($3.2mn).

Central Government's Domestic

Central Government's domestic debt rose by
7.3% to 12.7% of GDP with net new
borrowings consisting of $20.0mn from the
Central Bank's overdraft facility and $4.2mn
from commercial banks. The latter included
a $3.4mn disbursement from the Atlantic
Bank for the San Estevan-Progresso Road
project. A promissory note for $0.3mn was
also executed with the Belize Tourism Village
to cover Belize Harbour dredging costs.

Amortization payments totalled $11.7mn
and included $6.8mn that was paid to the
Development Finance Corporation (DFC)
using funds borrowed from the BSSB.
Repayments to commercial banks for
various infrastructure loans totalled $2.6mn
and $2.1mn was paid to statutory bodies and
non governmental organizations (NGO). The
latter included payments on the debt for
nature swap ($1.2mn), BSSB housing and
debt restructuring loans ($0.5mn) and the
Reconstruction and Development



Table V.2: Central Government's Domestic Debt
I ns oloen 2005 C2ol

Loans & Advances
Treasury Bills
Treasury Notes
Defence Bonds

Sources: Ministry of Finance, Central Bank of Belize

Corporation (RECONDEV) loan ($0.4mn).
Some $0.2mn was paid to the Fort Street
Tourism Village (FSTV) for the
aforementioned dredging costs.

Of the $25.4mn paid in interest, $14.5mn
went to the Central Bank for short-term
credit provided through the overdraft facility
and Treasury bills and the Bank also received
$4.8mn as a result of its holdings of long-
term government paper. A total of $4.4mn
went to the commercial banks with $2.6mn
representing interest on infrastructural
development loans and $1.8mn on their
portfolio of government securities. Statutory
bodies and the debt for nature swap
accounted for $1.lmn and private entities

received $0.7mn for securities held and loans

External Public Sector Debt

In order to bring external debt servicing onto
a more sustainable footing, the government
restructured $1,134.3mn in commercial
bonds and loans early in the year by paying
down a small portion and exchanging the
remainder for $1,082.0mn in a new 'super
bond'. As a result of the restructuring and
with new borrowings being confined to
project oriented and budget support loans
from bilateral and multilateral sources, the
public sector's external debt fell by 1.3% to
$1,943.6mn (or 76.7% of GDP). Central

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

Central Bank Corrercial Banks








150.0 -



[] 2007


Table V.3: Public Sector External Debt by Source

Outstandg I s Otst
Debt & Othe Vauaio Db
31S11200 Dsbusmn Amrizto Chre Adutet 31122007

Commercial Banks
Suppliers Credit






Government accounted for 93.8% of this.

Multilateral disbursements of $74.5mn
included $55.0mn in Caribbean
Development Bank (CDB) and Inter-
American Development Bank (IADB) policy
based loans and $4.9mn from OPEC for the
Belize City southside infrastructural project.
Bilateral disbursements of $45.8mn were
received consisting of $20.0mn from ROC
and $25.8mn from Venezuela.The
Venezuelan loan was a mixture of short and
long term credit to finance fuel purchases
under the CARICOM-Venezuela Petrocaribe
initiative. A Belize-Venezuela trade credit
agreement allows for 40.0% to 50.0%
(depending on the world price of crude oil)
of the fuel import cost to be treated as a long
term loan and the balance to be paid off
within 90 days. At year-end, the public sector
debt was comprised of bonds (58.8%),
multilateral loans (23.6%), bilateral loans
(17.(0"..) and commercial loans (0.6'". *.

Central Government's loan repayments
consisted of $39.7mn to bilateral lenders,
$24.0mn to multilateral creditors, $5.0mn to
BWS Finance Limited, $0.2mn to

commercial suppliers as well as the paying
down of $52.2mn on the restructured
commercial bonds. Repayments by the
financial public sector totaled $26.6mn with
$16.7mn going to multilateral lenders,
$8.6mn to bondholders and the remaining
$1.2mn being paid to commercial suppliers
and bilateral creditors. In the non-financial
public sector, the Belize Water Services Ltd
(BWSL) paid off its remaining loans with
Amtrade International Bank and CIBC Bank
that totalled $1.5mn, while the Belize Airport
Authority paid $1.9mn to CDB and $0.7mn
to the Government of Kuwait.

Interest and other payments amounted to
$118.1mn with Central Government
accounting for 93.0% of these outlays. Some
S4'1.5mn consisted of accrued interest paid
as a participation fee under the debt
restructuring and another $24.0mn was
expended when the first interest payment on
the 'super bond' fell due. The government
also paid $17.1mn to bilateral creditors,
$17.4mn to multilateral lenders and $1.5mn
to BWS Finance Limited. The financial public
sector paid $4.9mn to Belize Mortgage
Company (1\ IC) and $1.6mn to multilateral


creditors, while payments by the non-financial
public sector went mostly to CDB ($1.4mn).


Kuwait dinar and pound sterling
denominated loans. The loans denominated

in Special Drawing Rights (SDR), which is

The debt stock increased by $5.0mn with based on a basket of curre

upward valuation adjustments of $3.2mn, adjusted upwards by $0.2m

$1.4mn and $0.1mn, respectively, in euro,
Table V.4: Public Sector and Publicly Guaranteed Debt

ncies, were also

1S 2e00 2020

(in millions of BZ dollars)
Public Sector & Publicly Guaranteed Debt
Outstanding (end of period)

Public Sector Debt
Central Government
Non-Financial Public Sector
Financial Public Sector
Central Government
Other Public Sector
Publicly Guaranteed Debt
Other Public Sector
Privatized Enterprises
Private Enterprises
Private Enterprises(1

(in percent of GDP)
Public Sector & Publicly Guaranteed Debt
Outstanding (end of period)










Public Sector Debt 102.3 94.7 90.0
External: 87.0 81.2 76.7
Central Government 79.5 75.0 72.0
Non-Financial Public Sector 2.1 1.7 1.5
Financial Public Sector 5.4 4.5 3.3
Domestic: 15.3 13.5 13.3
Central Government 12.5 12.4 12.7
Other Public Sector 2.7 1.2 0.6
Publicly Guaranteed Debt 6.4 5.5 5.2
External: 4.9 4.0 3.5
Other Public Sector 0.1 0.1 0.1
Debt for Privatized Enterprises 3.1 2.7 2.4
Private Enterprises 1.7 1.3 1.0
Domestic: 1.5 1.5 1.7
Private Enterprises 1.5 1.5 1.7
Sources: CBB, Ministry of Finance
(1) Includes the UHS debt which is currently being litigated in the court.


Fueled by a credit upsurge and foreign
exchange inflows, growth in M2 (broad
money) accelerated to 15.4%, a sizeable
expansion that was rather atypical of a
weakening economy with modest annual
inflation. The monetary expansion was
strongest in the first semester, particularly in
the first quarter, which is the period when
inflows for merchandise exports and tourism
are normally highest. The pace slackened in
the second quarter and came to a practical
standstill in the third when economic activity
was disrupted by Hurricane Dean.
Transactions by a private utility involving
foreign loan repayments and buyback of
shares also exerted a significant
contractionary effect on the money supply
during this period. The regaining of
momentum in the last quarter coincided with

the opening of the tourism high season and
receipt of inflows for the Ambergris Caye
land sale and, to a lesser extent,
disbursements from foreign reinsurers.

The sharpest expansion was in quasi-money
which almost doubled its growth rate to
16.3% reflecting a marked buildup in time
deposits held by individuals as well as by the
BSSB. In a notable development, the latter
discontinued sterilizing its monthly surpluses
with the Central Bank in a search for higher
returns and shifted deposits to commercial
banks that bid up the interest rate in order to
attract the business of the largest depositors.
Meanwhile, although growth in narrow
money (M1) slowed, it was still vigorous at
14.0% with currency in general circulation
rising by 12.1% while savings/chequing and
demand deposits (most of which are held by
businesses and individuals) were up by 9.7%
and 16.9%, respectively. Whereas the

Chart VI.1: Ratio of M2 to GDP



60 -




94 95 96 97 98

99 00 01 02 03 04 05 06 07
+- M2/GDP



Chart VI.2: Growth in Commercial Bank Deposits

a Demand a Savings O Time

quarterly growth in quasi-money was rather
steady, Ml's increase was mostly in the first
half of the year since a substantial decline in
the third quarter almost fully offset a fourth
quarter rebound.

Bank liquidity benefitted from elevated
inflows (mostly from tourism, remittances
and foreign direct investment) that allowed
for a 149.1% ($81.4mn) improvement in the

net foreign assets of the commercial banks
even as the pace of credit to the private sector
accelerated. In addition to the $22.9mn
increase in their foreign assets, the banks were
able to repay some $58.5mn (46.5%) of
outstanding short term foreign liabilities
owed to affiliates and head offices. In contrast
to this buoyancy, there was only a modest
4.2% ($8.7mn) improvement in the Central
Bank's position as external debt service

Chart VI.3: Annual Change in Net Foreign Assets of the Banking System

2W 1

--- Commercial Banks -- Central Bank







payments consumed the bulk of inflows. At
$353.9mn, these inflows were 10.7% below
those of the previous year. Loan
disbursements, purchases from the
commercial banks, and sugar export receipts
accounted for 27.4%, 20.5% and 17.3% of
the total, respectively. In addition, bilateral
grants and payments by petroleum
companies combined for approximately
19.4% with investment interest and
miscellaneous cheques making up the
remainder. Foreign exchange outflows rose
by $14.5mn to S",45.6mn with external debt
payments accounting for 92.1% of the total.

Lending activity was unexpectedly brisk given
the deceleration that occurred in some
sectors. After a modest 2.1% increase in the
first quarter, loans to the private sector
accelerated to yield an overall expansion of
15.4%. The largest disbursements were for
personal loans and the services sector. The
latter accounted for 38.4% of the new loans

led by outlays for tourism (which was boosted
by reclassifications of some $24.0mn from
the real estate category) and distributive
trade. To a lesser extent, reclassifications also
factored in a 15.4% rise in lending for
construction that helped to drive allocations
for the secondary sector up by 13.3%. While
the value of disbursements for the primary
sector was comparatively smaller, it
nevertheless represented an accelerated
increase of 16.8% with funds being
principally earmarked for banana and marine

The monthly fluctuations in disbursements to
the public sector largely reflected timing
differences between Central Government's
external debt payments and its loan and grant
inflows during the year. In the first quarter,
the balance on the government's Central Bank
overdraft facility rose by $57.9mn and peaked
at $146.7mn as sizeable payments were made
in connection with the successful completion

Chart VI.4: Private Sector Loan Disbursements ($ millions)

Personal, 53.1

Agriculture, 14.3
S Fisheries, 12.2

Construction, 48.7

Transport, 10.0

Distribution, 20.1 OMa7
SManufacturing, 7.4

Tourism 53.9



of the debt restructuring program in
February. Overdraft financing was reduced
thereafter as disbursements and grant inflows,
particularly in the mid and ending months of
the year, outmatched debt service outflows.
At year-end, the government's Central Bank
overdraft balance was up by just $20.0mn to
$108.8mn and below the statutory limit of
$117.3mn. By comparison, disbursements
from the commercial banks totaled $4.2mn,
while deposits held with the Central Bank and
commercial banks were drawn down by a
slightly greater amount. Credit to statutory
bodies contracted by $12.0mn primarily due
to a shift in the BWSL's indebtedness from a
commercial bank to the BSSB.

Developments in commercial bank liquidity
in 2007 generally conformed to the seasonal
trends of the previous two years. After
receiving a strong seasonal boost from
foreign inflows and rising by 60.0%
($38.6mn) to peak at $102.9mn during the

first quarter, liquidity tightened by S44.4mn
over the next three quarters as the pace of
lending quickened. By the end of the year,
banks were holding a total of $58.5mn in
excess secondary liquidity which was only
$5.9mn lower than the 2006 year-end
position and almost identical to the
December 2005 position. Similarly, at
$8.7mn, the level of excess primary liquidity
was identical to 2005 and $6.5mn below that
of 2006.

Over the year, commercial banks acquired
$17.8mn worth of Treasury bills from the
Central Bank in secondary market
transactions. This contrasted with the
previous year when the banks sold off 50.0%
of their portfolio to take advantage of
lending opportunities with higher earning
potential. Most of the purchases in 2007
occurred during the first and second quarters
as banks adjusted their holdings in tandem
with the heightening in foreign inflows and

Chart VI.5 : Quarterly Change in Excess Liquidity


Nj -j jO W -O -j jO jO
c inn n CT C C C
S Excess Liquid Assets


moderate loan activity.

Notwithstanding the liquidity boost from
external inflows, weighted average interest
rates showed a tendency to rise during the
year mainly due to competition among banks
for large deposits. As a result of the
significant variations in liquidity levels among
the banks, offers for specific large deposits
were as high as 9.5% in some instances. This

helped to push the weighted average deposit
rate up by 30 basis points to approximately
6.0%. With the weighted average lending rate
increasing by 10 basis points to 14.3%, the
result was a further narrowing in the banks'
weighted average interest rate spread of 20
basis points to 8.3%, the lowest end of year
margin in sixteen years.

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



& 9.0


90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

The increasing likelihood of a global
economic deceleration due to instability in
international financial markets and rising
inflationary pressures will heighten the need
for careful economic management. A
necessary step in this direction for Belize
involved the successful restructuring of the
government's external commercial debt in
the first quarter of 2007 that brought a brief
respite to the country's debt servicing
pressures. While payments are now more
manageable, their considerable magnitude
ensures that the authorities' fiscal and
monetary stances will need to remain
conservative in order to maintain solvency
and safeguard the fixed exchange rate.
Notwithstanding this, the economy should
experience real growth of approximately
2.4% in 2008 due to a recovery in export
production, the acceleration in government
spending in the run-up to the February 2008
general elections and buoyancy in

The external current account deficit may
widen during the year mostly due to an
increase in the merchandise trade deficit and
lower grant receipts. The growth in imports
would be due to rising fuel acquisition costs
and inputs for large construction projects
such as the Vaca Dam and co-generation
plant. These should outstrip a projected 4.6%
expansion in export receipts stemming from
higher earnings from marine products and
petroleum as well as continued strong

growth in CFZ cross-border sales. Given the
rise in average monthly imports, coverage by
the official reserves is likely to edge
downwards from 2.3 to 2.2 months of
merchandise imports.

The primary sector is likely to be the principal
driver of growth fuelled by a significant
rebound in fisheries, a modest recovery in
agricultural output and a moderate increase
in petroleum production. With output
holding steady at 3,000 barrels per day from
the current field, petroleum production
should rise by 4.5% to reach 1.1mn barrels
in 2008. The expectation is that some 13.0%
will go into domestic sales with a portion of
this being converted into a more purified
product for the home market. Even with this
diversion, the volume of petroleum exports
should remain virtually unchanged from 2007,
while rising international prices should push
receipts up by roughly 20.0%.

Agriculture is currently projected to grow by
a robust 10.0% with higher output of banana,
citrus and grains as well as steady livestock
growth outweighing declines in sugarcane and
papaya. Farmers are expected to ratchet
banana production up by some 17.0% to
4.0mn boxes to take advantage of quota-free,
duty-free entry into the EU market under the
economic partnership agreement that takes
effect at the start of 2008. The decline in citrus
production experienced in 2007 should
flatten out in 2008, with deliveries rising by a
marginal 0.1% to 6.1mn boxes. On the other
hand, even with export volume boosted by
the draw down of inventory, weaker orange


juice prices should push total citrus export
earnings down by 9.8% to an estimated
$100.0mn. Sugarcane deliveries for the 2007/
2008 crop are expected to fall by 8.4% to
1.1mn long tons due to the damage sustained
from Hurricane Dean. Proceeding from this,
sugar exports are being forecasted at 82,200
long tons valued at $73.5mn, a 16.6% revenue
reduction that would be due to the reduced
tonnage sold to the preferentially priced EU
market and higher freight charges. While
papaya production is expected to recover
gradually and reach pre-hurricane levels by
May, the months in which output is below
par will result in annual exports falling by
approximately 4.0% to 70.0mn pounds with
earnings declining slightly to $25.0mn.

After its substantial contraction in 2007,
activity in fisheries is expected to undergo a
major expansion of more than 30.0% as
substantial previous investments reach
fruition and result in a significant boost to
farmed shrimp, fresh water tilapia and marine
cobia production. An additional upward
push is expected from cyclical upturns in the
wild capture of lobster and conch.

Contrasting with this, activity in the secondary
sector is expected to decline by 10.0% as a
moderate expansion in construction due to
the continuation of large projects such as the
cruise ship docking facility, the Vaca Dam
and co-generation plant, among others is
likely to be eclipsed by a sharp reduction in
manufacturing. The latter would reflect the
closure of the Williamson sewing factory and

lower sugar production as well as by a 1.3%
decline in domestic electricity production in
line with forecasted rainfall patterns.

While secondary activity falters, the economy
should receive a boost from services with this
economic sector expanding by an estimated
4.0% during the year. In addition to relatively
strong growth in distributive trade
particularly due to the projected increase in
commercial free zone cross border trade,
activity in tourism should maintain
momentum as a 3.7% growth in stay-over
tourists more than offsets a 7.2% decline in
cruise ship disembarkations. In a continued
climate of conservative fiscal and monetary
management, consumption should be
restrained, so that general government
services and community, social and personal
services would see only those modest
increases necessary for maintaining the
efficient provision of these services.

The upward trend in international crude oil
prices apparent since the last quarter of 2007
is expected to continue into 2008 and push
the domestic price level higher. The
international move to partially replace
petroleum with food oils will also continue
to exert upward pressure on food prices.
Given an unchanged tax regime and even with
government foregoing part of the tax
increase implicit in the higher international
fuel acquisition costs, the CPI is forecasted
to rise by at least 2.5% during the year.

Foreign Exchange Operations

In 2007, the Central Bank made net purchases
of $6.6mn as a result of its foreign currency
trade in dollars (US and Canadian) and Pound
Sterling. Purchases exceeded sales in seven
out of the twelve months, with loans and
grants from ROC, CDB, IADB and the
government of Venezuela, accounting for
most of the inflows in January, August, and
December. The notable receipts included
US$20.Omn from ROC in January,
US$12.5mn from CDB in August, and the
sums of US$15.Omn and US$10.Omn from
IADB and the Venezuelan government,
respectively, in the month of December.
These were substantially offset by external
payments, the largest of which occurred in
February when payments were made to
foreign bond holders who participated in the
debt exchange for the government's debt

Chart VII.1: Central Bank

restructuring bond. Trading in CARICOM
currencies was mostly for settlement of
official transactions and resulted in net sales
of $1.6mn during the year.

External Assets Ratio

Section 25(2) of the Central Bank of Belize
Act 1982 stipulates that it should maintain
external assets that amount to at least 40.0%
of the currency notes and coins in circulation
and the Bank's domestic deposit liabilities.
In 2007, the ratio dipped below the legal
threshold in February, March and November
largely due to the sizeable payments made to
external creditors on the public sector's
behalf. The ratio was at its highest in January
(57.6" .., the period just prior to the closing
of transactions connected with the
restructuring of the public sector's external
commercial debt. The bulk of these payments
were made in February which led to the
external assets ratio dipping to 38.4%, its

Dealings in Foreign Exchange

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
SIPurchases E Sales



Chart VII.2: External Asset Ratio

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
I r lForeign Assets i Domestic Liabilities - -A- - External Assets Ratio

lowest level in 2007. At the end of the year, Relations with Commercial Banks
the ratio recovered to 47.3%, the second
highest level for 2007, principally due to the Cash Balances
timely receipt of loan and grant funds. At
yearend te Banks eternal asts a untd The cash reserve requirement, which had been
year-end the Bank's external assets amounted
raised from 9% to 10% in September 2006,
to $198.2mn that was comprised of 88.8% r
Srwas unchanged throughout 2007. The
in cash and fixed deposits, 7.8% in foreign
commercial banks maintained cash holdings,
securities and 3.4% in holdings of SDR with
which while fluctuating, maintained an
the International Monetary Fund.
average excess of $16.2mn during the first
half of the year when foreign inflows to the
banking system from exports of goods and
services were highest. This tapered off in the
second half of the year as lending activity

Table VII.1: Commercial Bank Balances with the Central Bank

January 1, /b.U i /.b Ibb.Z 20.7
February 1,394.1 139.4 153.0 13.6
March 1,407.9 140.7 161.2 20.5
April 1,444.3 144.4 158.6 14.2
May 1,481.9 148.2 163.0 14.8
June 1,508.1 150.8 164.0 13.2
July 1,516.8 151.6 155.7 4.1
August 1,515.3 151.5 159.8 8.3
September 1,524.6 152.4 168.4 16.0
October 1,536.8 153.6 161.2 7.6
November 1,539.0 153.9 168.9 15.0
December 1,557.4 155.7 164.3 8.6

Table VII.2: Currency in Circulation

MNTH Nt in Tota ComercalBank Currncywi
I Vaul^^^^^^^^^^^^^^^^^^^^^^^^^^f^t Cah hePul^^^^ ic^^m^^





increased. The average excess in the latter
period was $9.9mn with July, August,
October and December being the months of
in which sharp decreases were recorded. The
tightening position of the banks was
supported by increased activity in the inter-
bank market facility, which enabled banks to
avoid the sale of foreign exchange to the
Central Bank to meet cash reserve
requirements. Commercial banks' sales of
foreign exchange to the Central Bank were
consequently down by $38.8mn when
compared to the previous year.

At the end of December, currency in
circulation was $16.4mn (9.8`.;.) higher than
in December 2006 due to an increase in public
holdings since the vault cash position of the
commercial banks was essentially the same.
The monthly averages of commercial bank
vault cash holdings and currency held by the
public were also higher than in the
comparable periods of the previous year by
$3.1mn (12.8%) and $14.7mn (11.8%),
respectively. The ratio of notes and coins was

largely constant with notes accounting for an
average of 90.0% of the currency issue. The
demand for currency also followed the usual
seasonal trend with the months of lowest and
highest circulation being January and
December, respectively. Where the public was
concerned, the largest increases (averaging
$6.8mn) were in the months of December,
November, March, August and June in
descending order of magnitude, which
compares with 2006 when December, April,
June and January were the notable months
yielding an average increase of $6.3mn.

Inter-Bank Market

Inter-bank lending activity accelerated in
2007 as commercial banks took full
advantage of the inter-bank market facility
to maintain their cash balances at the Central
Bank within the required level. This was the
most active year since the inception of the
facility in 1995 as it was essentially dormant
until the Central Bank effected a 6.0%
decrease (from 17.0% to 11.0I". in 2006 that






Chart VII.3: Inter-bank Market Activity

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

- Placed -- Borrow ed

made it more attractive to borrow from the
facility. Whereas placements were made in
only five months in 2006 and included offers
and loans that averaged some $4.1mn and
$3.6mn, respectively, there were placements
throughout 2007. An average of
approximately five loans were made each
month with activities for the year summing
to 64 offers and 51 loans. While the typical
offer was for approximately $3.6mn, actual
loans worked out to an average of $3.3mn

extended over an average period of eleven

Transactions with Central

By law the Central Bank is authorized to
extend cash advances to the Government of
up to a maximum of 20.0% of current
revenue collected during the preceding fiscal
year or a sum of $50.0mn, whichever is
greater. At $117.3mn, the legal ceiling for

Chart VII.4: Central Bank Holdings of Government Securities

A. JU U U U U -- -

-- A -- A. A -- A A A A A -- A -- A -

Jan Feb Mar Apr May Jun

Jul Aug Sep Oct Nov Dec

---Treasury Notes

--Treasury Bills

-- Defence Bonds

Chart VII.5: Central Bank Overdraft Financing to Central Government
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2007 was $11.3mn higher than that of the
previous year. Notwithstanding this, Central
Government experienced significant
difficulty in confining its demand for cash
advances during the year due to the
magnitude of its external commitments. In
seven out of the twelve months, its Central
Bank overdraft limit was exceeded with
advances peaking at $146.7mn in the month
of March when a substantial lump sum
payment connected with the restructuring of
the public sector's external commercial debt
was made. The overdraft balance fell to
$108.8mn at year-end, a decline that was
facilitated by loan and grant receipts from
the Inter-American Development Bank and

Treasury Bills

The value of Treasury bills available for trade
in the secondary market stood at $100.0mn,
the level to which it had been raised in 2006.
The yield also remained at 3.25% with no
change occurring since the decision to fix the
interest rate was taken in November 2002.

Given the sharp disparity between the yield
and lending rates, commercial bank demand
was largely a residual of their lending activity,
which resulted in the Central Bank playing
its usual dominant role in the domestic
Treasury bill market. The latter's monthly
holdings averaged $66.1mn as compared to
a monthly average of $66.3mn in 2006. After
peaking at $77.8mn in January, the Bank's
Treasury bill portfolio declined to its lowest
point of $53.3mn in the month of July before
rising again to reach $68.1mn at year-end.
The commercial banks, which are the next
largest players in the system, recorded a
monthly average of some $32.3mn in
Treasury bill holdings with the balance being
held by several small institutions and other

Treasury Notes

At the end of 2007, the Treasury notes issue
stood at $56.8mn with this being comprised
of some $25.0mn in one-year notes and
$31.8mn in five-year notes. Except for the
small amount of $0.3mn that carried a 1.0%




nominal rate, all Treasury notes had been
offered at the rate of 9.0%. Central Bank
efforts to spur activity in the secondary
market by increasing the amount sold to the
private sector had borne little fruit in 2006
and the secondary market was essentially
dormant in 2007 with minimal changes being
recorded in the structure of holdings over
the year. During the entire year the
commercial banks held some $10.0mn worth
in their portfolio and the Central Bank
recorded average holdings of S4-.5mn. At
the end of the year, holdings of the latter fell
slightly to $42.6mn while those being held
by other entities amounted to $4.2mn.

Supervision of Banks and
Financial Institutions

Efforts aimed at ensuring that the legislative
framework for the regulation and supervision
of Belize's financial sector is in line with
international standards and best practices
continued in 2007. Particular attention was
paid to the Banks and Financial Institutions
Act (BFIA), the International Banking Act
(IBA) and the Credit Unions Act (CUA), each
of which was subject to review. However,

while the amendment to the Credit Unions
Act was expedited, with approval from the
House of Representatives being received in
November, the process of re-drafting the
BFIA and IBA was more protracted. After
a series of discussions with the various
stakeholders, final draft documents were
prepared but these were not immediately
tabled in the House of Representatives.
Current expectations are that the legislative
process will be satisfactorily finalized in

Supervision of the financial sector continued
to be significantly facilitated by a technical
assistance grant from the IADB during the
year. The IADB technical assistance project,
which had the general objective of
improving the overall safety and soundness
of Belize's financial system, culminated in
December 2007 after providing three years
of timely funding and support. The chief
emphasis was on institutional capacity
strengthening that included the upgrading
of prudential norms and supervision tools
as well as staff development for domestic
and international banks and to a lesser
extent, credit unions and other non-banking

Table VII.3: List of Banks and Financial Institutions
Doesi Bank Inentoa BnsFacilI stiuin

Alliance Bank of Belize Ltd.
Atlantic Bank Ltd.
Belize Bank Ltd.
First Caribbean Int'l Bank Ltd.
Scotiabank (Belize) Ltd.

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

Belize Unit Trust Corp. Ltd.



Table VII.4: List of Credit Unions

Blue Creek Credit Union Ltd. Holy Redeemer Credit Union Ltd. St. John's Credit Union Ltd.
Citrus Growers & Workers Credit Union Ltd. La Immaculada Credit Union Ltd. St. Martin's Credit Union Ltd.
Civil Service Credit Union Ltd. N/bunt Carmel Credit Union Ltd. Toledo Teachers Credit Union Ltd.
Evangel Credit Union Ltd. Police Credit Union Ltd. WesleyCredit Union Ltd.
St. Francis Xavier Credit Union Ltd.

institutions. The Central Bank's Financial
Sector Supervision Department (FSSD)
capitalized on the resource allocation to
further develop its human resources and to
carry out its work in upgrading the legal

In addition to its vital role in screening
entities that seek to provide banking and
similar services to the public, the FSSD
maintained its primary focus on ensuring that
the institutions under its regulatory purview
manage their operations in a prudent manner
and in accordance with the existing laws. As
well as periodic on-site examinations, the
FSSD maintained a continuous off-site
surveillance of these institutions with the
latter being facilitated by an increase in the
number of prudential returns that were
submitted electronically during the year.
Using an updated risk-focused approach to
its monitoring of the financial sector, the
FSSD conducted three comprehensive on-
site examinations in addition to three follow-
up visits, two specialized examinations and
two examinations to check for compliance
with Anti-Money Laundering/Countering
the Financing of Terrorism (AML/CFT)
operational standards.

The work of supervision was carried out
against the backdrop of robust bank activity
during the year with the total assets of
domestic commercial banks rising by 10.5%
(from $1.9bn in 2006 to $2.1bn) and deposit
liabilities expanding by 14.3%. Ten requests
to extend credit facilities that were in excess
of 25% of the paid-up and unimpaired
capital and reserves of the domestic and
international banks were received and
processed during the year for a total of
BZ$55.5mn. In other developments, four
applications were received from groups
interested in opening 'Class A' international
banks and there was also one application for
a 'Class B' financial institution. After
completing its due diligence investigations,
the Central Bank issued one license for a 'Class
A' international bank, bringing the number
of licensed international banks to nine, while
the work of vetting the other applications
continued. No other licenses were issued
leaving the number of domestic commercial
banks at a total of five.

In its outlook for 2008, the Central Bank
expects to continue working closely with
regional counterparts and local institutional
stakeholders. Focus will be placed on
mechanisms to allow for the implementation


of Basle II and the execution of decisions
taken as a result of deliberations of working
groups including those on consolidated
supervision and standardized financial
institutions legislation throughout the

Information Systems

The Central Bank upgraded the Information
Systems Unit to the status of a full fledged
department known as the Information
Technology Department (ITD) in 2007, a
decision that was motivated by
recommendations made in the Bank's recently
completed organizational review.

Among the major projects spearheaded by
the ITD during the year were the Phase 2
Migration of SWIFT, the completion of the
parallel phase of the implementation of the
CS-DRMS version 1.2, the completion of the
Exchange 2003 upgrade, and the upgrade of
the Bank's network infrastructure. Systems
Development Analysts were sent for training
in the Microsoft .NET systems development
framework to pave the way for the Bank's
web-based development initiatives in 2008.

The ITD project to upgrade the Bank's
network infrastructure involved an increase
in the speed of the network backbone from
100 megabit per second to 1 gigabit per
second. Help-desk software was also
introduced to improve the support given to
end users and work was done to replace the
Linux email gateway with Fedora (version 7)

on an enhanced server to resolve space and
processing limitations.

With the assistance of IADB project
financing, steps were taken toward achieving
remote connectivity between the Bank's staff
and its headquarters during the year. In
addition to assisting with the acquisition of a
CISCO VPN ASA appliance, RSA token id
hardware and software, portable computers
and application servers, funds were also
provided for the requisite staff training
during the year. It is expected that staff/
Central Bank remote connectivity will be
fully deployed in 2008.

With a view to increasing the capacity and
flexibility of the Bank's data management
systems, action was taken to replace the
existing hardware and software being used
for data backup. As part of this process, the
SQL server databases were migrated to a new
server with greater processing and storage
capacity. By the end of 2007, the Bank had
upgraded and expanded its hardware
inventory by deploying four servers, forty-
two workstations and eight portable

Work on the upgrading of application
software proceeded apace with the
SWIFTNET Migration to Phase 2, being
completed on the live system by June 2007.
The associated backup and disaster/recovery
servers were also upgraded to version 6.0
and migrated to Phase 2. Further Swift
related work to complete the mandatory



migration is planned for early 2008. In other
developments, the ITD completed the in-
house development of a new system
designed to facilitate the Finance
Department's management of the abandoned
property reported by the commercial banks.
The ITD also oversaw the implementation
of the RDS cheque imaging system obtained
from Bank of America (BOA) which will
allow for cheque images to be transmitted to
BOA via the Internet and eliminate the need

to send paper checks by courier. The ITD
was also instrumental in implementing an
electronic inventory system to be used by the
Building Services Unit (BSU) and the Finance
Department in order to improve efficiency
in accounting and inventory management of
supplies held by the BSU.

The Board of Directors

The Board of Directors held 11 meetings in
2007 and considered 76 submissions.

Meetings & Conferences

In their capacity as executive officers to the
Bank and as advisors to Government, the
Governor and Deputy Governor attended a
variety of meetings, some of which are listed
in Box 7.

Financial Performance

The Central Bank's financial statements for
the year ended December 31, 2007, with
comparative figures for the previous year, are
annexed to this report.

During the year, the Central Bank's assets
increased by 2.5% to $467.8mn. The latter

included increases of 3.9% (to $198.1mn) in
external assets and 1.6% (to $269.7mn) in
domestic assets. A net operating surplus of
$9.6mn was recorded that was 25.6% lower
than in 2006. Gross earnings totaled $28.3mn
including interest income of $26.8mn and
$1.5mn in commissions and other income.
Some 73.1% of the Bank's earnings came
from its domestic operations, particularly
through its lending to Central Government.
Current expenditure totaled $18.7mn with
staff costs, interest payments and other
operating cost accounting for 37.2 %, 29.5%,
and 33.3%, respectively.

As provided for under Section 9(1) of the
Central Bank Act, $1.0mn (10.0% of the net
operating surplus) will be paid into the
Central Bank's General Reserve Fund. The
balance of $8.6mn will be transferred to the
Accountant General for the GOB's
Consolidated Revenue Fund.

Box 7: Meetings Attended by the Governor and Deputy Governor

Na-1c fMco gCoferne MnthPlc

CEMLA Audit and Alternate Committee Meetings

Conference on "Effective anti-money laundering and counter-terrorism
financing controls in the Banking Sector

Plenary Meeting of the CARTAC Steering Committee and the Committee of
Central Bank Governor's Meeting

Meeting of CARICOM Central Bank Governors

XLIV Meeting of Governors of CentralBanks of the American Continent

LXXXIII Meeting of Governors of Central Banks of Latin America and
Spain, and Joint Bank for International Settlements/Federal Reserve Bank of
Atlanta Meeting
Meeting of CARICOM Central Bank Governors

February Belize City






Bogota, Colombia

Trinidad and Tobago


Montevideo, Uruguay

Mexico City, Mexico

November Jamaica



Internal Audit

In accordance with guidelines set by the
Institute of Internal Auditors, the Central
Bank's Internal Audit undertook the first
quality assessment of its activities in the
month of April with the assistance of a
qualified independent reviewer from the
Deutsche Bundesbank. The performance
review revealed that Internal Audit was
generally compliant with professional
standards for internal auditing.

A substantial amount of time was devoted
to raising awareness of how the Enterprise
Risk Management (ERM) approach could be
used in the Central Bank. The broad range
of efforts included the coordination of in-
house workshops on the ERM framework
and methods of assessing risks. As part of
the process leading up to the Bank's formal
adoption of a Fraud Policy, Internal Audit
submitted its first report on Central Bank
compliance with the newly proposed
guidelines to the Audit Committee (a sub-
committee of the Central Bank's Board of
Directors). Internal Audit also prepared a
special report on the fire alarm system and
emergency evacuation procedures in addition
to conducting audits and reviews of the
following activities:

* End of year reconciliation of transactions in
order to assess procedural timeliness and ensure
that the appropriate adjustments were made.

* Foreign Reserve Cash Management to ensure

that funds are appropriately managed with a view
to providing adequate levels of foreign working
capital while maximizing returns within the
framework of existing laws and regulations.

* Pension Scheme operations in order to confirm
the accuracy of all calculations and record keeping
as well as the adequacy of controls with respect
to the processing and payment of contributions
and refunds.

* Security X-ray and Walk-through Detection Units
to document the functionality of the systems
and to confirm that the operations of the systems
are consistent with the established goals and
objectives of improving staff security at the

* WASP inventory software to assess its
functionality and effectiveness in building services
supplies inventory management.

Other routine monitoring was conducted for
stocktaking exercises, counting and
destruction of currency notes, information
systems back-up processes and the vacation
leave policy. As in previous years, Internal
Audit provided support to the Audit
Committee, which reviewed the financial
statements and management letter for the
2006 financial year that was prepared by the
Central Bank's external auditors. The
necessary technical support was also
provided to assist the Committee's decision
making process in the selection of the Bank's
external auditor for the 2007-2009 period.


Human Resources

Human resource issues such as the Central
Bank's promotions policy, performance
management system and compensation
system were among the principal areas of
focus in an organizational review that began
in 2005 and was completed early in 2007.
The review process was partially guided by a
Change Management Committee that had
been tasked not only with assisting in the
development of the Bank's strategic plans but
also with the subsequent promotion of the
enterprise risk management approach in the
Central Bank. The organizational review
yielded several recommendations that were
aimed at contributing to long term
improvements in the Bank's efficiency and
effectiveness. These were officially approved
for implementation by the Bank's Board of

At the Annual Employee Recognition
Ceremony that was held in February under
the theme "Commit to live our vision each day;
corporate excellence will follow", the Bank
honoured employees with 10, 15, 20, and 25
years of service. The coveted "Governor's
Choice" award of a full scholarship to a local
university was presented to Mr. Luis Teck, a
Senior Clerical Officer in the Research
Department who had been working at the
Bank for nineteen years.

Negotiations with the Christian Workers
Union were successfully concluded on 17
December 2007 with the execution of a
collective agreement that was made

retroactive to 1 January 2007. As part of the
agreement, the Bank's Board of Directors
approved a salary increase for staff in the
bargaining unit as well as increases in benefits.
Negotiations with the Public Service Union
that represents the Bank's Security staff also
commenced in 2007 and are expected to be
finalized in early 2008.


The Bank noted a decline in its rate of staff
turnover from 4.8% in 2006 to 4.0% in 2007
with 17 persons being hired while 5 staff
members left its employ for other pursuits.
At the end of the year, the number of
employees had increased by 5.5% to 153
persons comprised of 13 contract officers,
135 permanent staff members and 5
temporary employees.

Staff Development & Training

With a view to maximizing benefits from the
changes implemented as a result of the
organizational review, the Bank's
management adopted a two-year training
program aimed at providing staff with a new
and improved skill set. As a result, staff
members attended customized training
workshops delivered by facilitators from
University of the West Indies' (UWI) School
of Continuing Studies (Belize) in
Organizational Development & Transformation,
Developing People Skills, the New Supervisor,
Strategies of Critical Thinking & Analysis, and
Interpersonal Skills. The staffs technical skills
were also strengthened through other local
and overseas training courses. Locally, the UB



facilitated Advanced Microsoft Excel,
Access, and PowerPoint courses while in-
house training was conducted in Advanced
Microsoft Outlook and Crystal Report
Writer. The Employee Self-Serve Module of
HRPlus human resource information system
was also launched and made available to all
staff members. Twelve members of staff at
the managerial and professional level
participated in overseas training seminars,
and workshops that included SWIFT Customer
Credit Transfer & Cash Management, CISCO
Networking Technologies, Monetary & Financial
Statistics, Trust Examination, Anti-Monej
Laundering Terrorist Financing, Securities Market
Development, and Operational Audiing.

In June 2007, the Caribbean Regional
Technical Assistance Centre (CARTAC) held
its formal two-week Financial Programming
and Policies (FPP) seminar at the Central
Bank. In addition to a series of lectures, the
course included workshops to facilitate the
preparation of an internally consistent set of
macroeconomic policies for the selected
Caribbean country used in the case study.
Two consultants from the International
Monetary Fund were engaged to conduct the
training, which was expected to complement
and reinforce CARTAC's on-going work with
staff from the Central Bank of Belize, the
Ministry of Finance, the Ministry of National
Development, and SIB.

XXXIX Annual Monetary Studies

With the joint collaboration of the Caribbean
Centre for Monetary Studies (CCMS), the

Central Bank of Belize hosted the thirty-ninth
annual Monetary Studies Conference at the
Belize Biltmore Plaza Hotel in November.
The conference provided an opportunity for
regional central banks, universities and other
organizations to present papers for
discussion on specific topics of interest under
the conference theme "Economic and Social
Development Trends and Prospects in the
Caribbean". Among the presentations was a
paper entitled "Assessing the Direct Economic
Impact of Cruise Tourism on the BeliZean
Economy" that was authored by Central Bank
economists Azucena Quan-Novelo, Jair
Santoya and Rasiel Vellos.

Community Service

In support of the UB's Internship
Programme, one student was accepted to
meet the core requirements for graduation.
Eight senior secondary school students
participated in work-study programmes with
the Bank over periods averaging two weeks
in length and eight tertiary level students were
also given the opportunity to develop their
practical skills under the Bank's Summer
Employment Programme.

To mark World Diabetes Day, a staff
member voluntarily facilitated an awareness
programme in which blood sugar screening
tests were conducted for the 44 staff
members who participated. The Central
Bank and its staff also continued to support
other social projects including the Salvation
Army's Annual Christmas Appeal and the
Belize Cancer Society's Annual Walk.

A. Monetary Policy Developments

1998 (1st November) Commercial banks' liquid asset and cash reserve ratios were lowered from 26% to
24% and from 7% to 5%, respectively. The Central Bank also authorized the inclusion of new loans
for residential construction (up to 5% of deposit liabilities) as part of commercial banks approved
liquid assets.

2000 (3rd April) Commercial banks' cash reserve requirement on savings and time deposits was lowered
from 5.0% to 3.0%. New commercial bank loans for non-traditional, export-oriented enterprises
became classifiable as approved liquid assets.

2002 (2nd January) Amendments to the Exchange Control Regulations that allowed the licensing and
operations of Casas de Cambios became effective.
(1st October) The Offshore Banking Act was amended to enable domestic companies with EPZ
and CFZ status to conduct banking transactions with offshore banks licensed in Belize. The Act
was also renamed "The International Banking Act".
(28th September) Commercial banks' cash reserve requirements were raised from 3.0% to 5.0%
on average savings and time deposit liabilities and from 5.0% to 7.0% on average demand deposit
(1st November) The cash reserve requirements on demand, savings and time deposit liabilities
were harmonized at 6.0%.

2004 (29th January) The Export Processing Zone Act was amended to disallow the use of Belize currency
within an EPZ, require that all transactions be conducted in US dollars and specify that EPZ's are
subject to the Exchange Control Regulations.
(1st April) The Central Bank disallowed the inclusion of residential construction loans as part of
commercial banks' approved liquid assets, a move that coincided with the reduction of the liquid
asset ratio from 24% to 19%.
(1st November) The International Banking Act was amended to eliminate the co-mingling of resident
and non-resident deposits in domestic banks. The Central Bank decreed that commercial banks'
loans from affiliates must not exceed 10% of domestic deposit liabilities.
(1st December) Commercial banks' cash and liquid asset ratios were increased from 6% to 7%
and from 19% to 20%, respectively.

2005 (1st May) Commercial banks' cash and liquid asset ratios were raised from 7% to 8% and from
20% to 21% respectively.
(1st May) The Central Bank disallowed the inclusion of long-term loans to Central Government as
part of the commercial banks' approved liquid assets.
(11th July) Amendment to the Exchange Controls Regulations to repeal the licensing
of Casas de Cambios.
(1st July) Commencement of the new Commercial Free Zone Act to make new and better provisions
with respect to free zones.
(1st December) Amendment of the Credit Unions Act to provide for the appointment of the Governor
of the Central Bank as Registrar of credit unions.


2006 (1st January) Commercial banks' cash and liquid asset ratios were raised from 8% to 9% and from
21% to 22% respectively.

(1st January) The Central Bank disallowed the process of co-mingling domestic and offshore
deposits and required the commercial banks to transfer all foreign currency deposits belonging to
non-residents to their offshore branches as stipulated under the International Banking Act.

(1st September) Commercial banks' cash and liquid asset ratios were raised from 9% to 10% and
from 22% to 23% respectively.


B. Statistical Appendix

Table 1: GDP by Activity at Current and Constant 2000 Prices

103 2W g0 5 g06 07

GDP at current market prices

GDP at constant 2000 market prices
Primary Industries
Agriculture, hunting & forestry
Secondary Industries
Manufacturing (incl. mining and quarrying)
Electricity & Water
Tertiary Industries
Wholesale & retail trade
Hotels & restaurants
Transport & Communications
Other Private Services excl. FISIM
Producers of Government Services

All Industries at basic prices
Taxes less subsidies on products

1,975.2 2,110.4 2,229.6 2,427.3 2,534.0






Source: SIB

Table 2: Annual Percentage Change in GDP by Activity at Current and Constant 2000

GDP at current market prices 5.9% 6.8% 5.6% 8.9% 4.4%

GDP at constant 2000 market prices 9.3% 4.6% 3.0% 5.3% 1.6%
Primary Industries 38.9% 9.5% 3.0% -5.6% -16.5%
Agriculture, hunting & forestry 15.5% 11.9% -0.9% 0.9% -7.7%
Fishing 110.3% 5.5% 9.8% -16.1% -33.5%
Secondary Industries -3.6% 7.2% -3.3% 26.3% 8.2%
Manufacturing (incl. mining and quarrying) -0.5% 11.8% -4.1% 35.3% 13.5%
Electricity & Water 8.4% -1.5% -0.5% 38.0% -0.5%
Construction -17.9% 4.6% -3.6% -6.6% 0.6%
Tertiary Industries 6.4% 3.2% 5.4% 2.1% 4.2%
Wholesale & retail trade 1.4% -0.1% 5.4% 2.0% 5.1%
Hotels & restaurants 14.5% 8.3% 4.5% -0.8% 2.8%
Transport & Communications 8.6% 5.0% 8.8% 6.0% 5.4%
Other Private Services excl. FISIM 8.4% 5.3% 5.8% 4.3% 4.4%
Producers of Government Services 6.3% 1.3% 1.4% -4.6% 1.2%
All Industries at basic prices 9.4% 5.2% 3.8% 4.6% 0.7%
Taxes less subsidies on products 8.6% 1.4% -1.9% 10.3% 6.9%
Source: SIB



Table 3: Bona fide Tourist Arrivals & Expenditure

Stayover Arrivals
Air 175,965 179,892 184,332
Land 43,815 49,398 47,253
Sea 7,256 8,550 9,990
Total stayovers 227,036 237,839 241,575
Cruise Ship Arrivals 720,298 590,338 560,478

Tourist Expenditure ($mn) 329.1 531.2 571.2
Sources: Immigration Department, BTB, CBB

Table 4: Quarterly Percentage Change in CPI Components
by Major Commodity Group

Food, Beverage and Tobacco 346.6 6.3 5.9 3.1 5.8 5.3
Clothing and Footwear 92.0 2.0 1.0 -0.1 0.3 0.8
Rent, Water, Fuel and Power 167.0 -0.8 0.6 -0.2 5.9 1.4
Household goods & Maintenance 85.3 3.1 3.6 0.8 1.7 2.3
Medical Care 20.1 2.8 2.7 0.0 1.0 1.6
Transport and Communication 170.1 -0.3 -1.5 -3.9 3.4 -0.6
Recreation, Education, Culture 80.4 1.6 1.8 0.1 0.3 0.9
Personal Care 37.9 3.4 3.8 0.6 0.8 2.2
All items 1000.0 2.6 2.4 0.3 4.1 2.3
Source: SIB

Table 5: Balance of Payments MerchandiseTrade

Goods Exports, f.o.b. 650.5 854.3 857.0 0.3%
of which: Domestic Exports 397.8 543.4 502.4 -7.6%
CFZ sales 227.4 277.0 310.5 12.1%
Other Re-exports 25.2 33.9 44.0 29.9%
Goods Imports, f.o.b. 1,112.4 1,223.9 1,284.0 4.9%
of which: Free Circulation Area 938.9 1021.3 1,044.5 2.3%
CFZ(1) 173.6 202.6 239.6 18.3%
Merchandise Trade Balance -462.0 -369.6 -427.1 15.6%
(1) This CFZ item excludes fuel and goods obtained from the free circulation area.


Table 6: Domestic Exports


1 2s00 200 6 c20

Traditional Exports 362.3
Sugar 69.9
Citrus Juices(1) 77.4
Citrus Concentrate 76.5
Not-from -Concentrate 0.9
Molasses(1) 5.5
Bananas 49.9
Marine(1) 98.1
Garments 34.5
Papayas 26.9
Petroleum(2) 0.0
Non-traditional Exports 35.5
Total Exports 397.8
Sources: SIB, BSI, CPBL, CBB
(1) Reflect actuals sales and not export shipments
(2) Estimated F.O.B value of petroleum shipment.



as reported by SIB

Table 7: Exports of Sugar and Molasses

205 2006 200

(ln to s ($0 0 ) (o gtn) ('0 ) ln o s $0 0

88,131 69,899



96,309 100,065



Molasses(2) 33,336 5,519 35,100 6,264
Sources: Belize Sugar Industries, SIB
(1) Reflects value of export shipments.
(2) Reflect actual sales as reported by the processor.

83,132 88,142
67,187 75,105
13,143 10,302
2,215 2,160
587 575

41,097 5,805

Table 8: Exports of Bananas

1205 200 2 71

Volume (metric tons)
Value ($mn)
Source: SIB




(1) Adjusted for the US $0.24 per 40 pound box to cover out of quota
tariff costs for the 2006 shipments.




Table 9: Export Sales of Citrus Juices and Pulp(')

2005 2006 20S

Concentrate ('000 ps)
Concentrate value ($mn)

Not-from-concentrate Exports ('000 ps)
Not-from-concentrate Value ($mn)

Pulp Export ('000 pounds) 2,548
Pulp Value ($mn) 1.6
Source: Citrus Products of Belize Ltd
(1) Reflects actual sales as reported by the processor and not the value
as reported by the S IB. Export shipments go to inventory for sale at


of export shipments
a later point in time.

Table 10: Exports of Marine Products

2005 2006 2007
0our e Vau Vour e Vau our au
('00 lb s) D ($'00 ('0 lbD s)D a$00 ('0 l ) ($00

Lobster Tail
Lobster Head
Whole/Fillet Fish
Source: SIB

502 14,703
20 126
19,024 74,530
547 7,501
307 1,206
4 55
20,404 98,121





Table 11: Other Major Exports

Garm ents

Volume (m n Ibs)
Value ($ m n)


3 .6

1 .7

Volume ('000 Ibs) 63,129 76,004 72,943
Value ($m n) 26.9 31.0 26.1
Petroleum (1)
Volume (barrels) 0 713,411 956,476
Value ($m n) 0 77.0 127.9
Source: SIB
(1) Quality differentials and international transportation cost w ere taken
out of the C.I.F. value as reported by the SIB to derive a F.O.B.value.






Table 12: Gross Imports (CIF) by SITC Categories

0 Food and Live Animals 118.7 109.2 120.7 118.2 135.6
1 Beverages and Tobacco 8.9 9.8 10.5 11.2 12.2
2 Crude Materials 6.7 7.3 9.1 10.9 12.9
3 Fuels and Lubricants 161.2 184.3 236.0 246.5 266.0
Of which electricity 28.4 29.7 40.3 33.2 46.4
4 Animal and Vegetable Oils 3.3 3.2 3.2 3.9 4.0
5 Chemicals 82.7 76.3 88.7 93.6 102.0
6 Manufactured Goods 128.7 136.8 138.9 164.2 164.2
7 Machinery and Transport Equipment 203.7 175.9 199.8 219.1 251.2
8 Miscellaneous Manufactured Goods 103.2 81.8 101.1 102.4 101.8
9 Commodities -notclassified elsewhere 0.9 0.0 0.0 0.0 0.0
Export Processing Zones 130.7 113.8 124.7 157.9 98.5
Personal Goods 3.4 2.6 2.7 3.4 3.3
Total 952.1 901.1 1,035.4 1,131.4 1,151.8
CFZ Direct Imports 180.5 156.6 190.7 222.6 263.3
Grand Total 1,132.6 1,057.7 1,226.1 1,354.0 1,415.1
Sources: SIB; CBB

Table 13: Balance of Payments Service, Income and Current Transfers


Services 603.5 317.6 286.0 747.6 300.3 447.3 796.3 333.0 463.3
Transportation 59.4 100.2 -40.8 57.1 109.1 -52.0 59.8 113.8 -54.0
Travel(1) 427.2 83.3 343.9 542.0 82.1 459.9 581.2 85.5 495.7
Other Goods and Services 81.3 110.9 -29.5 100.9 91.4 9.5 100.7 115.4 -14.7
Govt. Goods and Services, N.I.E 35.6 23.2 12.4 47.6 17.7 29.9 54.5 18.3 36.2
Income 13.6 242.4 -228.9 20.0 278.1 -258.1 14.0 322.3 -308.2
Labour Income 7.5 11.7 -4.2 11.9 11.4 0.5 4.7 10.4 -5.7
Investment Income(2) 6.0 230.7 -224.7 8.1 266.7 -258.6 9.3 311.8 -302.5
Current Transfers 136.7 34.3 102.4 184.3 36.4 147.9 273.1 86.3 186.8
Government 11.0 4.8 6.3 21.8 4.9 17.0 81.9 50.3 31.6
Private 125.7 29.5 96.2 162.5 31.5 131.0 191.2 36.0 155.2
(1) Tourism earnings for 2005 were based on actual inflows into the banking systerr while estimates for 2006 & 2007
were based on Visitor Expenditure Surveys.
(2) 2006 and 2007 data include an estimate for profit remittances from the tourism industry.


Table 14: Balance of Payments Capital and Financial Accounts


CAPITAL ACCOUNT 5.9 18.3 8.2
General Government 5.2 16.1 6.6
Other Sectors 0.8 2.2 1.6
FINANCIAL ACCOUNT 288.7 138.2 141.0
Direct Investment Abroad -2.0 -1.1 -2.0
Direct Investment in Belize 253.8 207.7 224.7
Portfolio Investment Assets -0.4 -0.5 -0.8
Portfolio Investment Liabilities 36.1 -42.7 158.3
Financial Derivatives Assets 0.5 0.0 0.0
Financial Derivatives Liabilities -11.1 0.0 0.0
Other Investment Assets -78.3 -27.2 9.4
Monetary Authorities -61.3 24.3 37.1
General Government 0.2 6.9 -3.8
Banks -18.3 -32.8 -22.9
Other Sectors 1.1 -25.6 -0.9
Other Investment Liabilities 90.0 2.1 -248.6
Monetary Authorities -2.6 -0.4 0.0
General Government 90.2 64.0 -175.8
Banks 6.5 -64.5 -58.5
Other Sectors -4.1 3.0 -14.3
CHANGES IN RESERVES (Minus = Increase) 24.4 -99.6 -45.8

Table 15: Official International Reserves


Gross Official International Reserves(1) 71.6 171.3 217.0 45.8
Central Bank of Belize
Holdings ofSDRs 5.032 5.8 6.8 1.0
IMF Reserve Tranche 12.125 12.8 13.4 0.6
Other 36.8 134.5 177.4 42.9
Central Government 17.7 18.2 19.4 1.2
Foreign Liabilities 2.7 2.4 2.4 0.0
CARICOM 0.3 0.2 0.0 -0.2
Other 2.4 2.2 2.4 0.2
Net Official International Reserves 68.9 168.9 214.6 45.8
(1) These numbers have been revised to reflect only usable reserves as defined by BPM5.

Table 16: Balance of Payments Summary

CURRENT ACCOUNT -302.4 -32.4 -85.2
Goods: Exports f.o.b. 650.5 854.3 857.0
Goods: Im ports f.o.b. -1112.4 -1,223.9 -1,284.0
Trade Balance -462.0 -369.6 -427.1
Services: Credit 603.5 747.6 796.3
Transportation 59.4 57.1 59.8
Travel(1) 427.2 542.0 581.2
Other Goods & Services 81.3 100.9 100.7
Gov't Goods & Services 35.6 47.6 54.5
Services: Debit -317.6 -300.3 -333.0
Transportation -100.2 -109.1 -113.8
Travel -83.3 -82.1 -85.5
Other Goods & Services -110.9 -91.4 -115.4
Gov't Goods & Services -23.2 -17.7 -18.3
Balance on Goods & Services -176.0 77.7 36.2
Incom e: Credit 13.6 20.0 14.0
Compensation of Employees 7.5 11.9 4.7
Investm ent Income 6.0 8.1 9.3
Incom e: Debit -242.4 -278.1 -322.3
Com sensation of Em ployees -11.7 -11.4 -10.4
Investment Incom e(2) -230.7 -266.7 -311 .8
Balances on Goods, Services & Income -404.9 -180.3 -272.0
Current Transfers: Credit 136.7 184.3 273.1
Governm ent 11.0 21 .8 81 .9
Private 125.7 162.5 191.2
Current Transfers: Debit -34.3 -36.4 -86.3
Government -4.8 -4.9 -50.3
Private -29.5 -31.5 -36.0
CAPITAL ACCOUNT, n.i.e. 5.9 18.3 8.2
Capital Account: Credit 7.9 20.5 10.2
Capital Account: Debit -2.0 -2.2 -2.0
FINANCIAL ACCOUNT, n.i.e. 288.7 138.2 141.0
Direct Investm ent Abroad -2.0 -1 .1 -2.0
Direct Investm ent in Belize, n.i.e. 253.8 207.7 224.7
Portfolio Investm ent Assets -0.4 -0.5 -0.8
Portfolio Investm ent Liabilities, n.i.e. 36.1 -42.7 158.3
Financial Derivatives Assets 0.5 0.0 0.0
Financial Derivatives Liabilities -11.1 0.0 0.0
Other Investm ent Assets -78.3 -27.2 9.4
Other Investm ent Liabilities 90.0 2.1 -248.6
NET ERRORS & OMISSIONS -16.6 -24.5 -18.1
OVERALL BALANCE -24.4 99.6 45.8
RESERVE ASSETS (Minus = increase) 24.4 -99.6 -45.8
(1) Tourism earnings for 2005 w ere based on actual inflow s into the banking system,
w while estimates for 2006 & 2007 were based on Visitor Expenditure Surveys.
(2) 2006 and 2007 data include an estimate for profit remittances from the tourism industry.


Table 17: Government of Belize Revenue and Expenditure

TOTAL REVENUE & GRANTS (1+2+3) 634,648 678,523 531,930 601,276 765,477
1).Current revenue 586,505 650,921 511,461 566,008 649,915
Tax revenue 530,428 593,923 457,833 514,495 575,321
Income and profits 138,203 170,256 120,291 136,659 163,122
Taxes on property 4,297 5,618 5,979 4,393 5,960
Taxes on goods and services 217,027 237,910 175,155 207,896 231 754
Int'ltrade and transactions 170,902 180,139 156,408 165,548 174,485

Non-Tax Revenue 56,077 56,998 53,628 51,513 74,594
Property income 1,465 7,700 8,338 1,356 12,643
Licenses 10,928 10,423 11 842 10,499 12,287
Transfers from NFPE's 23,587 18,672 19,923 19,642 27,178
Repaymentof old loans 2,621 15,094 3,900 4,578 541
Rent & Royalties (1) 17,477 5,108 9,624 15,437 21 945

2). Capital revenue 11 327 10,126 6,390 9,988 28,366
3). Grants 36,815 17,475 14,079 25,280 87,197

TOTAL EXPENDITURE (1+2) 735,262 703,236 688,239 648,578 794,758
1). Current Expenditure 620,744 585,236 561,151 550,832 635,734
W ages and Salaries 219,464 235,313 221,264 218,075 229,687
Pensions 39,992 39,019 39,756 39,016 40,490
Goods and Services (2) 138,699 129,309 115,512 104,676 158,387
Interest Payments 170,217 107,938 149,523 141,973 134,885
Subsidies & current transfers (2) 52,372 73,657 35,097 47,093 72,284

2). Capital Expenditure 114,518 117,999 127,087 97,746 159,024
Capital II (local sources) 80,502 49,956 49,657 67,869 77,391
Capital III (foreign sources) 30,383 64,835 54,852 25,442 39,228
Capital Transfers & Net Lending(3) 3,633 3,208 8,578 4,435 42,405
Unidentified Expenditure 0 0 14,000 0 0

CURRENT BALANCE -34,239 65,685 -49,691 15,176 14,181

OVERALL BALANCE -100,615 -24,713 -156,309 -47,302 -29,281

PRIMARY BALANCE 69,603 83,225 -6,786 94,671 105,604

FINANCING 100,615 156,309 47,302 29,281
Net Privatization Proceeds 0 44,391 0 0

Domestic Financing 77,410 -19,000 -8,863 20,434
Central Bank 131 791 -10,161 58,788 8,930
Net Borrowing 81,174 16,534 47,003 696
Change in Deposits(4) 50,617 -26,695 11,785 8,234
Commercial Banks -23,942 -19,611 -26,970 23,725
Net Borrowing -18,242 -14,217 -24,679 22,037
Change in Deposits -5,700 -5,394 -2,291 1,688
Other Domestic Financing(s) 1,028 10,772 -9,214 -12,221
Transaction with Gov't Guaranteed Debt -31,467 0 -31,467 0

Financing Abroad 9,594 127,565 56,002 -2,039
Disbursements (6) 1,230,951 427,779 169,400 1,202,296
Amortization (7) -1220,406 -299,730 -122,835 -1 203,078
Change in Foreign Assets(8) -951 -484 9,438 -1,256

Other 13,611 3,353 162 10,886
Sources: Ministry of Finance, Central Bank of Belize
(1) Rent and royalties included $4.8mn (2006) and $9.2mn (2007) in petroleum royalties.
(2) These line items contained expenditures that were previously classified as part of capital spending up to the end of March, 2007.
(3) Capital transfers In 2007 included $40.0mn that was transferred to non-resident entitles in connection with the UHS government guaranteed
(4) Deposits with the Central Bank excludes 'UK GOB Suspense', 'Supervisor of Insurance', 'GOB Special fund for WASA Projects' and 'Foreign
Deposits by GOB'accounts. The latter is included in Financing Abroad as 'Change in Foreign Assets'.
(5) Other Domestic Financing included receivables of $12.7m n for Venezuelan fuel purchased from GOB in 2007.
(6) Disbursements in 2007 included $25.8mn for petroleum imported from Venezuela.
(7) Amortization in 2007 included $8.3mn in payment for petroleum imported from Venezuela.
(8) Balances on accounts held externally.

Table 18: Central Government's Domestic Debt


Overdraft 89,093 0 0 12,269 23,377 112,470
Central Bank 88,850 0 0 12,269 19,959 108,809
Commercial Banks 243 0 0 0 3,418 3,661

Treasury Bills 100,000 0 0 3,215 0 100,000
Central Bank 85,737 0 0 2,248 -17,592 68,145
Commercial Banks 12,027 0 0 920 17,780 29,807
Other 2,236 0 0 47 -188 2,048

Treasury Notes 55,800 0 0 5,001 0 55,800
Central Bank 44,243 0 0 3,951 -1,672 42,571
Commercial Banks 10,000 0 0 900 0 10,000
Other 1,557 0 0 150 1,672 3,229

Defence Bonds 15,000 0 0 1,242 0 15,000
Central Bank 10,000 0 0 800 0 10,000
Commercial Banks 100 0 0 9 0 100
Other 4,900 0 0 433 0 4,900

Loans 39,966 10,389 11,746 3,715 0 38,609
DFC (Debt Restructuring)0) 6,820 0 6,820 128 0 0
BSSB(2) 643 6,669 492 416 0 6,820
GOB/US Debt Swap 8,937 0 1,240 242 0 7,697
Reconstruction & Development 2,061 0 399 286 0 1,662
BBL (Infrastructure dev.) 20,152 0 1,864 2,521 0 18,288
Guardian Life Bze 1,000 0 0 90 0 1,000
Atlantic Bank Ltd. 290 3,402 762 32 0 2,930
Belize Tourist Village (3) 63 318 169 0 0 212

TOTAL 299,859 10,389 11,746 25,442 23,377 321,879
(1) Outstanding loan balance to DFC at Jan 30th 2007 was paid-off with a loan from the BSSB.
(2) GOB has outstanding loan with BSSB consisting of (1) Hopeville Housing Project and (2) loan used to pay-off the DFC debt.
(3) A Pronissory Note made to Belize Tourist VIg reimbursing them for cost of dredging of Belize Harbour. This loan is interest free.


Table 19: Public Sector External Debt by Creditors(')

CENTRAL GOVERMVIENT 1,820,981 1,202,296 1,203078 109,848 3,461 1,823659
Barco Nad cal ct Correrdo Exterior 8,999 0 1,059 531 0 7,940
Fondode Financ. c las Exportadones 544 0 218 29 0 327
Govenrret of great Britain 5,054 0 3826 0 99 1,327
Governrret of PeoFles Rep. d China 0 0 0 0 0 0
Governrret of the Lhited States 4,908 0 1,515 181 0 3393
Govenrret of Trinidad and Tobago 16 0 4 0 0 12
Govenrret of Venezuela(2) 101,146 25,814 108268 2,190 0 18692
Kuwait Fnd fcr Arab Eccnoric ev 18,213 0 1,676 508 1,032 17,569
Repubicof Chna 261,388 20,000 14,688 15,083 0 266,700
Allfirst Bank of Maryland 1,260 0 840 60 0 420
KBC Bank NV 5,869 0 5,869 242 0 0
Manufacturers & Traders Trust Co. 7,786 0 1,730 417 0 6,055
Belize Bank Ltd. 0 0 0 0 0 0
Bear Seams &CO. Inc. 680,483 0 668827 29,993 0 11,656
BWS FinarceLirrited 14,883 0 4,961 1,488 0 9,922
Russer Financal Ltd. 0 0 0 0 0 0
Citibank Triricdad &Tobago 5,143 0 5,143 157 0 0
Citicorp Iarchart Bank Ltd 37,857 0 37,857 1,896 0 0
International Bank cfMari 105,246 0 105,246 2,561 0 0
Providert Bark & Trust of Belize 1,000 0 0 90 0 1,000
Rcyal MIrchant Bark 217,205 0 217,205 12,814 0 0
Belize Estate and Co. Ltd 0 0 0 0 0 0
Caterpillar Finarci Services Corp. 188 0 188 4 0 0
Expert Irort Bark of the Lhited States 0 0 0 0 0 0
Caribbean Deeloprrert Bark 103,922 29,091 6,441 5,344 0 126,572
European Econmnic Com-runity 17,729 0 667 114 2,103 19,165
European Investrrnt Bark 646 0 210 14 76 512
Inter-Arrerican Dvelopnet Bark 159,102 40,414 7,826 8,984 0 191,690
International Fund for Agric. Dev. 1,704 0 408 88 150 1,446
Intl. Bankfcr Reccnstruction & De. 54,225 0 7,674 2,729 0 46,552
Opec Fund for Int'l. Devcpment 6,466 4,947 733 344 0 10,680
Bark of NewYork (New Bcnd Issu)3 0 1,082,029 0 23,985 0 1,082029

NON-FINANCIAL PUBLIC SECTOR 41,065 0 4,142 1,604 432 37,355
Kuwait Fund fcr Arab Econonic Dv 6,916 0 703 136 376 6,589
Anirade Irtemaaicnal Bank of Georgia 1,009 0 1,009 50 0 0
CIBC Bark & Trust Company 494 0 494 22 0 0
Caribbean Developrrert Bark 32,646 0 1,936 1,397 56 30766

FINANCIAL PUBIC SECTOR 108,087 0 24561 6,600 1,077 82603
PaineWebber Real Estate Secarities Inr. 1,400 0 200 78 0 1,200
N.V. D Smet S.A. Engineers 565 0 565 20 0 0
Govenrrert of the Lhited States 1,322 0 428 36 0 894
Caribbean Developrrert Bark 36,052 0 15,414 1,258 93 20732
European Econmnic Comrnunity 557 0 37 5 72 592
European Investrrnt Bark 9,892 0 1,297 310 912 9,507
Belize Vbrtgage Cobpany (4) 58,298 0 8621 4,892 0 49,677
GRAND TOTAL 1,970,133 1,202,296 1,233782 118,052 4,970 1,943618
(1) Exludes contingent liabilities of the Central Gornmennt
(2) Dsbtrsenrnts of $25.8rnwerefor petroleuminported under the Petrocaribe Initiative.
(3) The new'super bond' that was exchanged for various commercial bonds and loans.
(4) BMC is the issuer of DF/ONorth American Securitization Loan through the Bank of NewYork


Table 20: Factors Responsible for Money Supply Movements

Net Foreign Assets 134.2 261.0 351.1 90.1
Central Bank 140.8 206.4 215.1 8.7
Commercial Bank -6.6 54.6 136.0 81.4

Net Domestic Credit 1,411.2 1,565.9 1,790.6 224.8
Central Government (Net) 146.6 183.6 211.4 27.9
Other Public Sector 61.3 28.0 15.9 -12.0
Private Sector 1,203.3 1,354.3 1,563.3 208.9

Central Bank Foreign Liabilities (Long-term) 0.0 0.0 0.0 0.0

Other Items (net) 213.5 321.9 405.6 83.7

Money Supply M2 1,331.9 1,504.9 1,736.1 231.2

Table 21: Money Supply

Money Supply (M2) 1,331.9 1,504.9 1,736.1 231.2

Money Supply (M1) 516.1 617.8 704.4 86.6
Currency with the Public 117.5 136.9 153.4 16.5
Demand Deposits 254.6 326.3 381.3 55.0
Savings/Cheque Deposits 144.0 154.7 169.7 15.1

Quasi-Money 815.8 887.1 1,031.7 144.6
Savings Deposits 115.7 135.9 151.6 15.7
Time Deposits 700.1 751.2 880.1 128.9

Table 22: Net Foreign Assets of Banking System

Net Foreign Assets 134.2 261.0 351.1 90.1

Central Bank 140.8 206.4 215.1 8.7
Foreign Assets 143.5 208.8 217.5 8.7
Foreign Liabilities(Demand) 2.7 2.4 2.4 0.0

Commercial Banks -6.6 54.6 136.0 81.4
Foreign Assets 147.6 180.4 203.3 22.9
Foreign Liab. (Short-Term) 154.2 125.8 67.3 -58.5


Table 23: Net Domestic Credit


Total Credit to Central Government 249.2 271.7 294.3 22.7
From Central Bank 181.8 228.9 229.5 0.7
From Commercial Banks 67.4 42.8 64.8 22.0

Less Central Government Deposits 102.6 88.1 82.9 -5.2

Net Credit to Central Government 146.6 183.6 211.4 27.9
Plus Credit to Other Public Sector 61.3 28.0 15.9 -12.0
Plus Credit to the Private Sector 1,203.3 1,354.3 1,563.3 208.9
Net Domestic Creditof the Banking System 1,411.2 1,565.9 1,790.6 224.8

Table 24: Sectoral Composition of Commercial Banks' Loans and Advances

$m n

PRIMARY SECTOR 141.7 155.8 182.0 26.2
Agriculture 95.9 106.5 120.8 14.3
Sugar 9.5 11.5 13.4 1.9
Citrus 16.0 19.4 18.6 -0.8
Bananas 58.0 64.4 73.9 9.5
Other 12.4 1 1 .2 14.9 3.7
Marine Products 19.6 15.2 27.4 12.2
Forestry 1.7 2.0 1.8 -0.2
Mining & Exploration 24.5 32.1 32.0 -0.1

SECONDARY SECTOR 381.6 373.2 422.7 49.5
Manufacturing 19.2 24.6 32.0 7.4
Building & Construction 300.8 316.5 365.2 48.7
Utilities 61.6 32.1 25.5 -6.6

TERTIARY SECTOR 472.4 539.3 619.6 80.3
Transport 33.3 45.8 55.8 10.0
Tourism 71.5 79.3 133.2 53.9
Distribution 157.6 173.8 193.9 20.1
Othe r(1) 210.0 240.4 236.7 -3.7

Personal Loans 259.0 322.2 375.3 53.1
TOTAL 1254.7 1390.5 1599.6 209.1
(1) Includes government services, real estate, financial institutions,
professional services, and entertainment.

Table 25: Commercial Banks' Holdings of Approved Liquid Assets


Holdings of Approved Liquid Assets 330.0 374.3 416.7 42.3
Notes and Coins 35.6 39.6 42.5 2.8
Balances with Central Bank 111.8 149.1 167.8 18.7
Money at Call and Foreign Balances (due 90 days) 120.0 131.0 124.4 -6.6
Treasury Bills maturing in not more than 90 days 22.8 18.1 34.8 16.7
Other Approved assets 39.8 36.5 47.2 10.7
Required Liquid Assets 271.6 310.0 358.2 48.2
Excess/(Deficiency) Liquid Assets 58.4 64.3 58.5 -5.9
Daily Average holdings of Cash Reserves 112.2 150.0 164.4 14.4
Required Cash Reserves 103.5 134.8 155.7 20.9
Excess/(Deficiency) Cash Reserves 8.7 15.2 8.7 -6.5

Table 26: Commercial Banks' Weighted Average Interest Rates

Weighted Lending Rates
Personal Loans 16.0 16.3 16.2 -0.1
Commercial Loans 14.2 13.8 13.8 0.0
Residential Construction 13.1 13.1 13.1 0.0
Other 12.2 12.4 13.5 1.1
Weighted Average 14.3 14.2 14.3 0.1
Weighted Deposit Rates
Demand 0.7 0.7 1.1 0.5
Savings/ Cheque 5.3 5.3 5.2 -0.1
Savings 5.2 5.2 5.2 0.0
Time 7.8 8.2 8.4 0.2
Weighted Average 5.5 5.8 6.0 0.3
Weighted Average Spread 8.8 8.5 8.3 -0.2



Table 27: Central Bank Dealings in Foreign Exchange


Mot US $,Cndan$ n K AI Crece




Table 28: External Asset Ratio

. As- Asset.R




Table 29: Inter-bank Market Activity


January 2.7 2.7
February 7.8 6.8
March 10.9 5.9
April 8.7 8.5
May 14.8 6.1
June 14.9 8.8
July 9.4 7.6
August 11.9 4.3
September 11.7 1.5
October 13.3 0.9
November 19.7 4.3
December 28.5 8.0

Septem ber
Novem ber
Decem ber

Aug ust

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