Belize was adversely impacted by the global economic crisis, which came on the heels of the 2008 food and fuel price increases, leading to a slowdown in growth and an increase in poverty. Recently, the country has begun its recovery with growth rates above 2.5%. Read More »
Since gaining independence from the United Kingdom in 1981, Belize has experienced a peaceful and democratic transition, with power alternating between two major parties, the United Democratic Party (UDP) and the People's United Party (PUP). However, a long-standing territorial dispute with its neighbor Guatemala has not yet been resolved. In December 2008, both countries agreed to refer the dispute to the International Court of Justice (ICJ), requiring referenda in both Belize and Guatemala which to date have not been carried out.
The country's global comparative advantage is derived from its natural resource base, which supports the tourism and agriculture sectors, and its advantageous geographical proximity to major markets. Belize's main development challenges are rooted in its high vulnerability to external shocks, including terms of trade, natural hazards and impacts of climate change, while the government's ability to address these challenges is constrained by high debt levels and limited fiscal space.
Although Belize's economy has traditionally been oriented toward agriculture, the services sector grew in importance during the 1990s and has been by far the largest contributor, accounting for 60% of GDP. The agricultural sector, which accounts for around 10% of GDP but over 50% of total exports, is dominated by the sugar and citrus industries.
As a lower middle-income country, Belize was adversely impacted by the global economic crisis, which came on the heels of the 2008 food and fuel price increases, leading to a slowdown in growth and an increase in poverty. The latest Country Poverty Assessment showed that during the 2002-2009 period, the overall poverty rate increased from 34% to 41%, while extreme poverty increased from 11% to 16%.
Growth resumed in 2010, reaching 2.9%, buoyed by an increase in electricity production. However, high debt levels (83.5% in 2010) and increasing fiscal pressures remain a persistent challenge for policymakers. The IMF estimates GDP growth for 2011 at 2.5%, and estimations for 2012 are being revised downwards from 3.0% to 2.7%. The latest data from the Statistical Institute of Belize shows GDP returned to positive growth in the third quarter of 2011, after contracting in the second quarter.
The World Bank Board of Directors endorsed in September 2011 a new Country Partnership Strategy (CPS) with Belize for the next four years. The strategy supports the country's efforts to adopt a sustainable natural resource-based economic model, while enhancing Belize's resilience to climate change and natural hazards.
This new strategy follows the successful implementation of an Interim Strategy Note, which represented the Bank's re-engagement with the country after a long hiatus, and included the Bank's first loan to Belize in almost 10 years. The strategy supports two main areas:
Enhancing the institutional capacity of the government in natural resources management and climate change-related activities. This includes incorporating environmental sustainability into development policy and strategy formulation, planning, coordination, implementation and monitoring.
Investing in the country's resilience to climate change and natural hazard impacts. The program will finance natural resource-based adaptation measures and physical infrastructure designed to protect the most vulnerable.
The Bank's program will be complemented by support from the International Finance Corporation (IFC), the private sector arm of the World Bank Group, through its financing and advisory services, focused on the following areas: financial market development, access to finance, infrastructure, agribusiness and tourism, and green construction and other climate resilient activities.
The ongoing Municipal Development Project (US$15 million) seeks to improve service delivery in several municipalities by helping town and city councils address drainage and traffic management (roads and signage). In addition, the project supports infrastructure investments in public spaces, parks, tourism enhancements, small bridges, markets, and street lighting. These projects will in turn improve the environment and the quality of life in the participating municipalities. The project also supports capacity building, so that municipalities are better prepared to carry out their new responsibilities.
During FY 09-11, a Conditional Cash Transfer (CCT) Non Lending Technical Assistance (NLTA) successfully achieved its objectives to support the government in its efforts to examine the suitability and feasibility of developing a CCT program that would help reduce poverty and improve the human capital of children. The flexible assistance provided under the NLTA culminated in the launch of a CCT program, “Building Opportunities for Our Social Transformation” in Belize. The NLTA provided critical technical assistance to support the government in the design and early implementation of the CCT program.