Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No.: 20708
MEMORANDUM OF THE PRESIDENT
OF THE
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
TO THE
EXECUTIVE DIRECTORS
ONA
COUNTRY ASSISTANCE STRATEGY
OF THE WORLD BANK GROUP
FOR
BELIZE
August 2, 2000
Caribbean Country Management Unit
Latin America and the Caribbean Region
This Document has a restricted distribution and may be used by recipients only in the
performance of their official duties. Its content may not otherwise be disclosed
without World Bank authorization.
Currency Unit: Belize Dollar (BZ$)
US$1.00 - BZ$2.00 (Fixed)
FISCAL YEAR: APRIL 1 TO MARCH 31
WEIGHTS AND MEASURES: Metric System
ABBREVIATIONSAND ACRONYMS
ANDA
ACP
BEL
BESIP
BFY
BOP
BTL
CARICOM
CAS
CDB
CDC
CET
CGCED
CVSS
DFID
DOD
EU
FTAA
GDP
GEF
GNP
IDB
IDF
IFAD
IFI
MBC
MOE
MTES
NAFTA
NEAP
NGO
NLS
NPESAP
OECD
PEU
PUP
QAG
SIF
TA
UDP
UNDP
WASA
WTO
Associationof NationalDevelopmentAgencies
AfricanCaribbeanand PacificCountries
BelizeElectricityLimited
BelizeEducationSectorImprovementProgram
BelizeFiscalYear
Balanceof Payments
BelizeTelephoneLimited
CaribbeanCommunity
CountryAssistanceStrategy
CaribbeanDevelopmentBank
CommonwealthDevelopmentCorporation
CommonExternalTariff
CaribbeanGroupfor Cooperationin EconomicDevelopment
Councilof VoluntarySocial Services
Departmentfor InternationalDevelopment
DebtOutstandingand Disbursed
EuropeanUnion
Free TradeAgreementof the Americas
GrossDomesticProduct
GlobalEnvironmentalFacility
Gross NationalProduct
Inter-AmericanDevelopmentBank
InstitutionalDevelopmentFund
InternationalFund for AgriculturalDevelopment
InternationalFinancialInstitution
MesoamericanBiologicalCorridor
Ministryof Education
Medium-TermEconomicStrategy
North AmericanFree Trade Agreement
NationalEnvironmentalActionPlan
Non-Governmental
Organization
Non-LendingServices
NationalPovertyEliminationStrategyand ActionPlan
Organizationfor EconomicCooperationand Development
ProjectExecutionUnit
People's UnitedParty
QualityAssuranceGroup
SocialInvestmentFund
TechnicalAssistance
UnitedDemocraticParty
UnitedNationsDevelopmentProgram
Waterand SanitationAuthority
WorldTrade Organization
Vice President
Country Director
Task Team
David de Ferranti
Orsalia Kalantzopoulos
Raj Nallari, Marco Scuriatti, Claudio Visconti and Caroline Becquart
B3ELIZE
FOROFFICLAL
USEONLY
COUNTRYASSISTANCESTRATEGY
TABLE OF CONTENTS
EXECUTIVESUMMARY...............................................................
i
I. SOCIAL,ECONOMICAND POLITICALCONTEXT....................................
1
*
*
*
*
*
POVERTYAND SOCIALISSUES .....................
...........................
ECONOMICISSUES...............................................................
FINANCIALSECTORISSUES. ......................................................
ENVIRONMENTALISSUES......................
,
POLITICALSITUATIONAND GOVERNANCEISSUES........................
1
3
4
4
4
II. MACROECONOMICPROSPECTSAND EXTERNALENVIRONMENT...........
5
III. GOVERNMENT'SDEVELOPMENTAGENDA FOCUSEDON POVERTY
REDUCTION.........
7
A. ENHANCINGECONOMICGROWTH............................................
B. IMPROVINGACCESSTO AND QUALITYOF SOCIALSERVICES.......
C. MODERNIZINGTHE STATE AND IMPROVINGGOVERNANCE..........
D. IMPLEMENTINGPOLICIESFOR ENVIRONMENTALLYSUSTAINABLE
DEVELOPMENT..............................................................
IV. WORLDBANK GROUP ASSISTANCEPROGRAM FOR BELIZE FYOI-05........
A. PROGRESSTOWARDSOBJECTIVESOF THE CAS OF NOVEMBER1993
B. SELECTIVITIYANDSEQUENCINGOF BANK GROUPASSISTANCE......
*
e
*
*
*
*
*
*
*
SELECTIVITY.........................................................
BANK'S PROPOSEDASSISTANCEPROGRAM ............
...................
THE BANK GROUP'S ROLE WITHIN THE CONTEXTOF OVERALL
EFFORTSOF DEVELOPMENTPARTNERS.....................................
TRIGGERS.........................................................
BASE CASE LENDINGSCENARIO................................................
LOW CASE LENDINGSCENARIO.................................................
INSTRUMENTSFOR LENDINGAND NON-LENDINGSERVICES.........
IFC.........................................................
MIGA.........................................................
C. PERFORMANCEINDICATORS.......................................................
D. CREDITWORTHINESSAND MANAGING PROGRAMRISKS ........
V. CONCLUDINGREMARKS.............................................................
8
9
11
12
13
13
15
15
16
18
19
20
20
20
20
21
21
.......... 22
24
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties. Its contents may not be otherwise disclosed without
World Bank authorization.
THE WORLDBANK GROUP'S COUNTRYASSISTANCESTRATEGY
FOR BELIZE
EXECUTIVESUMMARY
i.
Belize is the only anglophonecountryin CentralAmerica. It is smalland ethnicallydiverse,with
a sparselydistributedpopulationof 240,000,and is nestledbetweenthe MexicanYucatanpeninsulaand
Guatemala. In spiteof a substantialinfluxof poor peoplemigratingfrom strife-tomCentralAmerican
countriesduringthe late 1980sto mid 1990s,substantialprogressin the socialconditionshas been
achievedin Belize. Nevertheless,Belizecontinuesto be facedwith majordevelopmentchallenges,in
part due to its smallsize. Based on a 1996survey,it was estimatedthat about33% of the population
remainedbelow the povertyline,most of which lived in the southernruraldistrictsof Toledoand Cayo.
The CGovernment
estimatesthat the povertysituationhas changedlittleduring 1996-99. The poor are
comprisedmostlyof indigenousMayans,refugeesand migrantagriculturalworkersfrom neighboring
CentralAmericancountries,as well as smallfarmnersand manufacturingworkers.
ii.
Sincethe lastBank CAS of November1993,economicgrowthhas declinedfroman averageof
over 9% a year during 1987-92to around3% during 1993-98. Coupledwith rising annualpopulation
growth,per capitaincomeshavethus remainedstagnantand unemploymenthas risen. The underlying
factorsfor this economicslowdownare an expansivefiscalpolicywhichwas compensatedfor by a tight
monetarypolicythat has keptdomesticinterestrates high, and erodedthe internationalcompetitiveness
due to rising costsof labor,electricityand water. Thecentralgovernmentsavings(currentrevenueless
currentexpenditure)declinedfrom 2.7% of GDP in March 1994to 0.6% of GDP in March 2000. The
overallpublicsectordeficits increasedover the years and were largelyfinancedby externalborrowing,
often on commercialtermns,or by privatizationproceeds. Externaldebt of the public sectorhas increased
rapidlyin recent years. In addition,the constraintsof a small economy,suchas smallproduction
volurnes,erosionof preferentialmarketarrangementsand limitedeconomicdiversification,susceptibility
to naturaldisasters,oligopolisticstructurein severalmarkets,limitedhumanresourceand administrative
capacity,and the high cost of public serviceshave compoundedthe difficulties.
iii.
In the midst of these difficulties,the PeoplesUnitedParty (PUP)cameto power in August1998
with an overwhelmingparliamentarymajorityon an ambitiousplatformof economicgrowth,social
developmentand povertyreduction. After almosta two-year,nation-wideconsultationswith the civic
society, the Government recently formulated a Five-year National Poverty Elimination Strategy and
Action Plan (NPESAP)with supportfromthe CaribbeanDevelopmentBank (CDB)and the UK
Departnent for InternationalDevelopment(DFID).This CAS forthe period 2001-2005,whichbuilds on
the NPESAP,was initiatedin June 1999and has been preparedfollowingextensiveconsultationswith the
Government,key NGOs,private sectorgroups,and multilateraland bilateralagenciesbased in Belize.
iv.
The overarching goal of the Government's development agenda is to reduce povertyfrom about
33% in 1999to 28% by 2004.As a first step in its commitment,the Governmentwith DFID assistance
plans to preparea povertyupdatein late-2000.The followingarethe four mainpillars of the
Government'spovertyreductionstrategy:
Enhancingeconomicgrowth.The gradualerosionof preferentialmarketarrangementsis projectedto
reducereal GDP growthby about 1-2%per year. The economyhas responded,albeitto a limitedextent,
throughdiversificationin tourism,financialservices,garmentmanufacturingand shrimp farming. There
is now a broad consensusin the countrythat sustaininga real GDP growthof 5% per year(per capita
privateconsumptiongrowth of about 3%)requiresprudentmacroeconomicmanagement,in particular
sustainablefiscalpolicy, trade liberalization,broadeningthe economicbase, acceleratinglandtitling and
improvingthe regulatoryframeworkin criticalsectorsthat is conducivefor private sectorparticipation.
-11-
In this context, the Bank will be assisting the Government by providing policy advice based on frequent
reviews of public expenditures, including the prioritization of the public sector investment program;
Improving Access to and Quality of Social Services. The rural population, particularly in the poorer
districts of Toledo, Cayo and Stann Creek, has limited access to basic education, health services, safe
water, sanitation, land and housing, and essential transport and telecommunication services. The
Government strongly believes in the need for a multi-pronged approach to the problem, based on
investment in education, health, land development and housing for the low-income groups, along with a
facilitation of micro credits, and reform of safety net programs to improve their efficiency and
effectiveness in terms of cost, outreach and targeting. The Bank's involvement in Primary Education and
the Social Investment Fund has been critical in supporting Government policy in these areas. Follow-up
operations in education and social protection along with a review of the social safety nets are envisaged in
this CAS;
Modernizing the State and Improving Governance. Over time, the public sector has become large with
deteriorating systems of financial control and accountability and falling standards of quality of public
services. The Government has embarked on an ambitious program of political reform and is encouraging
more voice for diverse groups to ensure better targeting and effectiveness of social and economic
investments and prevent corruption, money laundering and drug trafficking. In order to attract and retain
qualified personnel, the Government has initiated the reform of the civil service and is strengthening
public institutions, including decentralization to local agencies and communities. While the laws and
mechanisms to deal with these problems are in place, there is a need for greater monitoring and
enforcement capacity within the Govermment. The Bank has planned a Procurement and Financial
Management Review in FY03 to provide needed advice in this area, which could be advanced in timing
should the Governrmentaccelerate the pace of public sector reforms; and
Environmentally Sustainable Development. The main sources of growth in Belize - tourism, sugar,
bananas, citrus, forestry and aquaculture - are based on natural resources. Using the natural capital in a
sustainable manner is therefore critical. As detailed in the 1996 National Environmental Action Plan
(NEAP), the poor are affected by inadequate land and waste management, water pollution, and natural
disasters. Protection of historical sites in Belize is crucial for preserving the cultural heritage and the
livelihood of the Mayans. As painfully reconfirmed by Hurricane Mitch in late 1998, natural disaster
management is imperative because Belize lies in the hurricane belt and much of the coastal land is below
sea level, thus prone to frequent flooding. The Bank is committed to financing critical road and drainage
works which will enable small farmnersto access the regional markets and reduce flooding in six rural
areas through the proposed Roads and Municipal Drainage Project.
v.
The Bank's Assistance Strategy. Against this background, the Bank will seek close
coordination and burden sharing within the overall efforts of the development community to maximize its
value added and utilize its global knowledge. Since the last CAS, the Bank has had limited success in
influencing successive governments in following a consistently prudent fiscal policy. Consequently, the
Bank has identified a smaller program with emphasis on non-lending services, in particular to clarify its
understanding of the difficult issues ahead of project preparation and to generate open discussion of such
issues. Bank projects would be small, ranging between US$7-13 million per project, and well-focused to
minimize risks. Further, the Bank will manage and mitigate these risks by monitoring, together with the
IMF, the fiscal situation, helping strengthen project execution capacity, and maintaining an intensified
portfolio monitoring effort.
The three triggers for the Base Case Lending Scenario are: [a] satisfactory implementation of the
vi.
Bank-financed projects as measured by realism and proactivity indices (para. 58); and [b] improvement in
the macroeconomic management (by generating central government savings of at least 3% of GDP on a
consistent basis and containing the ratio of external debt service to government revenues at no higher than
-iii-
25%); and [c] move towards a regular monitoring of poverty and social conditions and increase the net
enrollment rates in primary and secondary schools. Should the Government fail to comply with [a] or [b]
or [c] as mentioned above, the Bank will move to a zero lending scenario by halting the preparation of
pipeline projects until there is a demonstrable improvement in complying with the triggers. In such a
scenario, the Bank would continue to engage the Government through non-lending activities and donor
coordination.
vii.
Risks. Belize is a stable democracy. While the incumbent Government has an overwhelming
majority in the Parliament and broad support in the local Town Boards, it faces three main risks over the
medium term relating to external economic and natural shocks, macroeconomic management, and
implementation capacity. First, although to a large extent Belize has successfully absorbed the erosion in
preferential trade arrangements of its main agricultural exports since the late 1980s, it is likely to
experience low growth or even a recession during this decade if there is further erosion in the said
arrangements as well as a slowdown in the highly competitive tourism and garment industries due to
further appreciation of the real exchange rate. Fortunately, Belize has good relationships with the
European Union, the CDB and the IDB, and with bilateral donors, in particular the UK, Canada, the USA,
and Taiwan, China, which stand ready to provide assistance during this economic transition and some of
them have large programs, spread over several areas -- highways and roads, land and agricultural
development, water and sewerage, power development, basic needs, hurricane reconstruction, disaster
preparedness, environment. Second, fiscal performance may not improve or may even worsen, which
could lead to higher external borrowing and difficulties in the availability of foreign exchange and
coutnterpartfunds for projects. The large current account deficit in the balance of payments, low foreign
exchange reserves holding, and recent commercial borrowings by the Government coupled with financial
sector vulnerabilities pose additional risks. Third, Belize has limited human resources capacity and the
recently initiated changes in the civil service have to be well managed by the Government so as to
maintain its capacity to implement policies and projects.
viii.
Issues for Executive Directors' Discussion. Given the above mentioned risks, are the Bank's
triggers on fiscal deficits and project implementation identified in Section IV adequate for the lending
scenarios?
*
Does the resulting lending program and non-lending services for the next five years represent the
most appropriate role the Bank can perform to support the Governrnent's development efforts?
*
The Government would like to ensure the continuity of the Bank's support. Do the Bank instruments
and program as spelled out in the CAS provide for flexibility in the Bank's response to a changing
environment and the associated risks?
-1MEMORANDUMOF THE PRESIDENTOF THE
INTERNATIONALBANKFOR RECONSTRUCTIONAND DEVELOPMENT
TO THE EXECUTIVEDIRECTORS ON A
COUNTRYASSISTANCESTRATEGYOF THEWORLD BANKGROUP
FOR BELIZE
1.
Belize is an English-speaking country situated in Central America, bordered on the north by
Mexico, in the south and west by Guatemala, and on the east by the Caribbean Sea. Its area is about
23,000 sq. km., and population density is estimated at 10.4 persons per sq. km. About 22% of the total
population of 240,000 live in Belize City, which is the largest business center in Belize. Belmopan, the
capital of the country, is about 50 krn away from Belize City and has a population of about 7,000. This
CAS points out that since 1981, successive governments have pursued reasonably sound economic and
social policies that improved the standard of living of the majority of the Belizeans (section I). To
sustain economic and social progress in the face of rapidly changing external environment, Belize has to
now improve its international competitiveness in traditional exports and accelerate economic
diversification (Section ID). The Government's development agenda for the next five years is focused on
poverty reduction (Section III) and is supported by the Bank Group's assistance strategy (Section IV).
1.
SOCIAL, ECONOMIC AND POLITICAL CONTEXT
2.
Poverty and Social Issues. Consecutive years of economic growth since early 1980s coincided
with improvements in the living standards for a large part of the population. Life expectancy at birth
increased from 67 in 1981 to 75 in 1996, and infant mortality decreased from 35 per 1,000 births in
1981 to 26 per 1,000 births in 1996. Other social indicators, such as the literacy rate, primary and
secondary school enrollment ratios, access to safe water, and immunization rates also indicate progress
during the last two decades.
Box 1: Diversity and Inequity in Belize
The ethnically diverseand sparsely distributed populationpresents an enormous challenge for the
delivery of social services. Since 1980,an estimated 50,000 Central Americans(mostly
Guatemalans,Salvadoransand Nicaraguans) have fled civil strife in their own countries and
imnmigratedto Belize. In addition,an estimated 18,000relatively wealthy persons, have
immigratedto rural Belize from Taiwan, China. The result today is a multiethnicmultilingual
population,which is 48% Mestizo, 27% Creole, 11% Maya, 5% Garifuna,2% East Indian, and 6%
other (Asian, Whiteand other groups). About 44% of the populationis 14 years or younger.
While English is the official language, it is no longer the first languageof the majority of the
population. An estimated 70% of children begin schoolwith no knowledge of English and only
35°h move from primary to secondary school; these children are at high risk of repeating a grade
or droppingout of school, and hence of perpetuatingpoverty and inequity. The challenge for
Belize is to develop a responsive educationalsystem that can deal with these problems.
3.
However, as economic growth declined from an average of 9% a year during 1987-92 to 3% a
year during 1993-98, unemployment increased from 9% in 1993 to 14.3% in 1998. With an annual
population growth of almost 3%, per capita incomes have remained stagnant in recent years. As such,
according to the 1996 Poverty Assessment, about 33% of the total population is poor, and 13%
extremely poor. The Government estimates that the poverty situation and profile has changed little by
end-1999. Poverty is concentrated primarily in Southern Belize, especially in the districts of Cayo and
Toledo (Table 1). Ethnically, poverty is most prevalent among the indigenous Mayans and the
agricultural immigrants from the Central American countries. Most of the poor depend on agriculture
-2and fishingfor their livelihood,except in the BelizeDistrict,wherethepoor dependon constructionand
informaltradingactivities. Most immigrantfarmworkersearn substantiallylowerwagesthan nonimmigrantsand live in muchworseconditions.For the lowestexpenditurequintilefor the countryas a
whole,about49% of employmentwas providedby the agricultureand fishingsectors.The Maya
constitute11% of the nationalpopulationbut comprise27.6%of the poorestquintile. Malnutrition
amongMayan childrenis 45% comparedto 6% amongall Belizeanchildren.
4.
The overallincidenceof povertyin rural areassuch as Cayoand Toledois in the rangeof 4158%,comparedto about25% in urban areas. About99% of the urban populationhave accessto safe
water comparedwith 74% in rural Toledoand 82% in ruralCayo (Table 1). While59% of the urban
populationhaveaccessto adequatesanitationfacilities,only 22% of the ruralpopulationhave such
access. Povertyis widelyprevalentamongclearlyidentifiableeconomicgroupswho live in ruralareas
-- MayanIndians,smallfarmersand agriculturalworkers,most of whomrecentlymigratedfrom
neighboringcountries. Corn and beans as well as a few vegetablesare importantcrops for these groups.
The poor live in large householdsand have fewer income-earnersthan the non-poor.To a largeextent,
the Mayansandthe recentimmigrantsfrom CentralAmericahavenot beenable to benefitfrom the
economicgrowthexperiencedby Belizeduring 1987-92.
Table1: SelectedPovertyand SocialIndicatorsin KeyDistricts,1996
National
Categories
Poverty Estimates (%)
25.3
Poor Households
Poor Individuals
33.0
ExtremelyPoor Households
9.6
13.4
ExtremelyPoor Individuals
26.0
Infant Mortality *
Child Mortalityunder 5 years old*
31.1
75.2
of pop.)
Access to Safe Water (%/o
76.1
Electricity Coverage (for lighting) (% of pop)
Highest Level of Education Attained by Heads of Households
PrimaryandLower(%)
l
Belize District
(Urban)
76.31
Cayo
(Rural)
Toledo
(Rural)
18.6
24.5
4.9
6.5
29.4
32.8
99.0
90.9
33.5
41.0
15.9
19.7
17.9
20.6
81.8
75.8
47.6
57.6
40.2
47.2
30.1
49.5
74.0
34.1
93.3
76.3
88.5
26.2
13.0
Secondary(/0)
l
15.8|
* per 1,000 live births
Note: Nationalpoverty line is BZ$1,287per annum (less that US$2per day)for an adult, an amount
sufficient onlyfor the procurement offood, shelter, clothing and basic necessities.Extremelypoor
individualsare defined as those who live on resources valued at less than BZ$7S51(less than US$1per
day)for an adult, an amount sufficient onlyfor basic subsistence.
7.7
Source: 1996 PovertyAssessment by CDB; Governmentof Belize - Social Indicators, 1999
5.
A hostof socialindicatorsalso pointto the severityof povertyin the rural areas. Thepoorest
quintilehas lessaccessto educationand training,makingit moredifficultto escapepoverty. Further,
the poor are more likely to be afflictedwith ailmentsbecausethey dependon untreatedwater from
rivers and streams.Factors contributingto povertyin ruralBelizeincludethe skeweddistributionof
land,the lackof accessto creditbecauseof inadequatecollateralas landtitlingis insecure,and hence
lowproductivity.
6.
Growingunemployment,particularlyamong the youth due to high dropout rates at an early
age is creating another pocket of poverty in and around Belize City. Unemploymenthas
contributedto greater drug use, criminality,and teen pregnancy,as well as a higher risk of
HIV/AIDS. These are critical problemsthat are common in most Caribbean countries. Although
school enrollment for girls is higher than that for boys,this does not translate into gains for women,
who earn less and are less likely to be employedthan men - the female unemploymentrate is 21%,
-3comparedto 10% for men. While the male labor participationhas remained at about 79% over the
and more
years, the femaleparticipation in the labor force has been steadily increasing (now 40%/O),
are gainfully employed each year. Womentend to be employedin education and health services,
trading, hotels and restaurants, public administrationand other services.
7.
Economic Issues. Belize is a small, open economy, with exports of goods and services
accounitingfor 59% of GDP in 1999. Merchandiseexports are comprisedof sugar, bananas,citrus
and small manufacturing. After rapid growth in the 1980sand early 1990s,tourism now accounts
for over 20% of GDP and is the major foreignexchange earning sector. The departure of the British
defense force in 1994,whose presence generated4% of GDP, and a slowdown in tourism had a
negative impact on the growth rate. The mix of expansionaryfiscal policy compensatedby a very
tight monetary policy, lower prices for sugar and bananas in the preferential markets, and a
depreciatingMexican Peso, which made Mexico relatively more competitivein tourism, are
underlying factors for this lower growthrate. An appreciating real exchange rate as a result of rapid
increase in wage rates and input costs has also contributedto a slowdown in export growth. Despite
the recent reduction in the CARICOMtariff rate from 25% to 20%, the level of tariffs is still high
and thLequantitativerestrictions on 26 items makes the trade systemrestrictive. The Governmentis
aware of the inconsistencybetween its commitmentto maintainthe exchange rate peg at BZ$2 per
US dollar to limit inflation,and the expansivefiscal policy. As a result, external positioncontinues
to remain weak and the central bank continues to ration foreignexchange.
TheGovernmentis now tryingto stimulate
8.
growth,throughhigh levels of public investment,in
Growth andInflation
particularin essentialinfrastructureand housingfor the
6
6..
relativelypoor. To encourageprivatesectoractivity,
4
the Governmenthas replacedthe 15%VAT with an 8%
2
3
salesitax,and reducedtherates appliedto businessand
personalincometaxes.Output in 1999grew by 6.2%
2 .
I _::"I___._-after growthof 1.5%in 1998. The Governmentis of
5 1996 1997 1998 1999
1993 199
the view that expansionof economicactivityhas
i' GDPg.owth CPlinfi
enabledthe tax revenuesto be stable. Inflationhas
remainedlowat 1%per year in line with imported
Investmentand Saving
35
inflation. However,centralgovernmentsavings
A
30
(currentrevenueless currentexpenditure)declined
25
from 2.7%of GDP in 1996/97to 0.6%of GDP in
0 20'
1999/2000(Table2). The overallpublicsectordeficit
l0
is estimatedat 5.4% of GDP by end-March2000.
1993 1994 1995 1996 1997 1998 1999
However,if the proceedsfrom the sale of the electricity
I_ D-GNSD
companyand the securitizationof housingare taken
into account,the overall fiscal situationwouldshow a
smallsurplus. Reflectinglower nationalsavings,the
Real Exchange and Interest Rate
10.
currentaccountdeficitof the balanceof payments
140$
widenedto about8% of GDP in 1999(6% of GDP in
/
11
1998)due to a surgein import volume. Externalpublic
96
debt,althoughat around 50%of GDP, remains
93 ._I_I____*_
R
manageable,withdebt servicerepresentingabout 11%
1993 1994 1995 1996 1997 1998 1999
IREER --- RejIjnterestRate
of exports of goodsand non-factorservicesand about
Figure 1: SelectedMacro Indicators
23% of Governmentcurrentrevenues. Debt relief from
the UK and Taiwan,China duringthe past few years
has helpedBelizeto meet all of its repayment
obligationson scheduleand has increasedits foreignexchangereserves.
_
-4In addition, in January 1999, Belize secured from Moody's a (sovereign) rating of Ba I for long-term
government bonds, Ba2 for long-term foreign currency bonds and Ba3 for deposits denominated in
foreign currency. In light of the large current account deficit in the balance of payments, low foreign
exchange reserves position, and short termnborrowing in recent years, the Government has been advised
by the Bank and other agencies to refrain from commercial borrowing.
9.
Financial Sector Issues. The high interest rates and the increasing land values are attracting
some capital inflows. While non-performing loans accounted for only 3% of total loans in late-1999,
the Central Bank is limited by the number of trained technical personnel to do its regulatory and
supervisory work but is currently taking steps to address this limitation through technical assistance for
training. The export services firms, credit union, building societies, and insurance companies and other
financial intermediaries are not adequately regulated or monitored. Financial conglomerates have crossownership of financial, industrial and commercial enterprises. A small, open economy such as Belize is
vulnerable to volatile capital inflows, money laundering, and mismatch in its assets and liabilities. The
recent OECD report on harmful taxation has categorized some Caribbean countries, including Belize, as
a tax haven. The Central Bank is actively seeking assistance from.external agencies in strengthening its
capacity to manage all aspects of the financial sector but this would require sustained efforts over time.
Environmental Issues. Belize is known for its extensive tropical forests, pristine coral reefs,
10.
sand beaches in various Cayes, and Mayan ruins in several locations. Although Belize has managed to
preserve its environmental capital to a greater extent than its neighbors, it still faces some serious
environmental problems that adversely affect the poor and growth prospects. These include: (i)
inappropriate land use and deforestation; (ii) inadequate sanitation and waste disposal facilities; (iii)
contamination and degradation of water resources; and (iv) inadequate disaster management capability.
Although about 60% of Belize's territory is still under closed cover forest, it is estimated that a high
percentage of land cultivated by small or subsistence farmers is ecologically fragile, lying in hilly
topography. Inadequate water supply and sanitation facilities, especially in rural areas, are the primary
causes of the incidence of malaria, gastrointestinal and other diseases, which involve significant social
costs to the poor. Although the main threats to the coral reef are effluents from sugar and citrus
processing, and runoff from fertilizers and pesticides, inadequate sanitation in coastal areas and
untreated sewage from urban centers are also impacting ocean nutrients and the coral reefs. In addition,
Belize is prone to severe flooding and erosion from high tides and hurricanes.
11.
PoliticalSituation and GovernanceIssues. Belize gained political independence from the
United Kingdom in 1981 and became a representative democracy and an independent member of the
British Commonwealth. Belize has a framework of checks and balances. Belize has a two-party
democracy, an independent judiciary, an Auditor General, an Attorney General, and elections once
every five years. In addition, a free and independent media and the reasonably well-educated citizenry
all point to a progressive country. The two political parties--the incumbent People's United Party (PUP)
and the United Democratic Party (UDP) - have alternated in power but pursued similar economic
development policies over the years. During the last elections in August 1998, the PUP, under the
leadership of Mr. Said Musa, won a landslide victory over the UDP. In March 2000, the PUP won 7 of
the 8 Town Board seats thereby consolidating its position at the local level. The PUP enjoys popular
support at the national and local levels and is well poised to implement a strong reforn program.
12.
Belize, like other small states, has limited institutional capacity but a high demand for provision
of a range of public goods and services. Its private sector is also small but faced with global pressures
to compete in exports. There is a continuous need for training and capacity building in both, the public
and private sectors, and for public-private collaboration. The Political Reform Commission, which was
forned in January 1999, submitted a report to the Government in early 2000 outlining the need for
reforns to strengthen the legislature, the judiciary, and the local governments to achieve "a greater
democracy." The Government has begun to implement reforms, such as the introduction of direct
-5elections for local governments, the delegation of authority to local governments, the introduction of
referenda for matters of national importance, the appointment of a Contractor-General and an
Ombudsman, and the establishment of an Integrity Commission.
13.
There are several areas where reforms are still needed to strengthen the public sector and
achieve better governance. First, the system of public accounting and accountability is weak. There are
substantial delays in the auditing of government accounts, and transparency in public policy needs to be
enhanced. Second, as in other small states with open borders and limited enforcement capacity, Belize
is susceptible to pressures of bribery, money laundering and trans-shipment of drugs. In addition, the
existence of 26 quantitative restrictions and discretionary tax-and-duty exemptions increases the
likelihood of rent-seeking behavior. Several Government officials do acknowledge that there are signs
of increase in activities in each of these areas but that the Government does not have the skilled
manpowverto monitor, investigate, collect evidence and enforce the laws that been enacted to prevent
corruption, money laundering and drug trafficking. Third, senior civil servants are not under the purview
of the FPublicService Commission rules, thus the top layer of civil servants are not independent in
providing technical advice and are vulnerable to political pressures. Also, in containing wages and
reforming the civil service, the Government needs to ensure that its capacity to implement policies and
projects is maintained.
-I. MACROECONOMIC PROSPECTS AND EXTERNAL ENVIRONMENT
14.
Belize has true growth potential and should be able to further broaden its economic base. Its
relative strengths are the abundance of land, forest, and water resources and its location to the large
markets of Mexico and the USA. Other advantages include a niche market for a multifaceted
tourism sector, and agribusiness. The Government, therefore, aims to integrate Belize further into the
world economy and to expand its trade and investment opportunities through new agreements. The
country is continuing to expand its trading horizons by negotiating bilateral trade agreements with
several countries such as Mexico, Spain, Cuba, Costa Rica, Guatemala, Nicaragua, El Salvador, and
Honduras. It is also seeking membership in the Free Trade Agreement of the Americas (FTAA) which
is, at the moment, targeted to be concluded by the year 2005. Furthermore, within the EU context, and
in collaboration with other African, Caribbean and Pacific (ACP) countries, CARICOM is negotiating a
new Lome Convention and a free-trade agreement with the Andean countries. Belize has also
concluded investment promotion treaties, such as double taxation treaties, with the UK and CARICOM
countries in recent years. Foreign direct investment has been overwhelmingly concentrated in banking,
resort t-ourism,and land development. The 5% of GDP capital account surplus that currently exists is
mainly due to private capital inflows associated with private investment in the citrus industry and
foreign borrowing by domestic commercial banks.
15.
However, Belize is subject to several external risks arising from the uncertainty in
preferential trade arrangements for its major exports to the EU and the USA (Box 2). Since the late1980s, real prices for banana and sugar exports to the preferential markets have declined sharply.
Notwithstanding this, Belize has been able to satisfactorily improve land productivity in traditional
agriculture and diversify its economic base.
-6Box 2: Need to Improve Competitivenessin Traditional Exports and Diversify into New Exports
Belize faces competitivepressures for all its exports. The preferentialprices for bananas, sugar and
citrus could continue to decline duringthis decade. If this occurs, real GDP could decline by about 12% per year, foreignexchange earnings drop by as much as 6% per year and additional500 people each
year (0.5% increase in head count each year) could fall into poverty, unless Belize is able to quickly
restructure its agriculturaloperations, reduce its unit costs, and acceleratethe pace of economic
diversification.
The banana sub-sectorcontributes about 5% of GDP, 6,000jobs (7% of the labor force), and 16% of
foreign exchange earnings. The EU quota of 55,000 tons provides an economicrent of US$15 million
per year. However,the industry faces high labor costs (25% of productioncost) and low yields (650
boxes per acre compared to 1,000 boxes per acre in other Central American countries). In light of
recent rulings against the EU Banana Import Regime by the WTO panel, the Banana Import Association
of Belize is restructuringbanana production, with assistance from the EU.
Sugar contributes about 8% of GDP, 5,000jobs in Corozal and Orange Walk, and 20% of foreign
exchange earnings. The EU quota is 50,000 tons, while the US quota is 15,000tons. Faced with
uncertainty about the future of the preferentialarrangements,the Governmentis working with the Sugar
Industry Association in improvingproductivityand modernizingthe sugar refinery.
Citrus, mostly orange and grapefruit, is producedprimarily for the US market and yields about 11% of
foreign exchange earnings. It is cultivatedin Stann Creek Valley close to processing facilities in
Pomona and Alta Vista. Recent acquisitionof the citrus processingplants by the Commonwealth
DevelopmentCorporation (CDC) is expectedto invigorate the performanceof the citrus industry.
Tourism, which is a highly competitive industry,accounts for about 20% of GDP. To accelerate
tourism expansion, the Governmentwith the private sector recently establisheda National Council to
develop historic Mayan ruins and eco-tourism resorts, and improve price competitivenessand service
quality of hotel properties.
Encouraged by the rapid growth in shrimp farming, the Governmentis facilitating expansion in other
agribusiness relating to fruit and processing. The small garment industry is encouragedthrough fiscal
exemptionsin free zones. To stimulate other services, the Governmentrecently announced the
formation of a public-privatesector Committeeto develop informatics,ship registry, and insurance
services. Further, the Governmentneeds to improve its competitivenessby eliminatingthe quantitative
restrictions, tightening the fiscal policy, including containing wage growth in the public sector, and
reducing costs of key services such as electricity,water and telephone services.
16.
The macroeconomic projections underpinning this CAS assumes a gradual reduction in the
preferential prices of major commodities, a gradual improvement in the Government's savings and a
restoration of the competitive real exchange rate. Under these conditions, and with the implementation
of the development agenda outlined below, real GDP could continue to grow at about 5% per year
(Table 2). The growth impetus is projected to be coming from traditional agriculture, tourism and
related construction, financial services, non-traditional exports such as fish, shrimp, papayas, ginger,
fruits, rice, beans, edible oils, spices, nuts and vegetables. External public debt would stabilize at
around 50% of GDP while debt-service to government current revenues would be less than 25% and the
debt service ratio would be about 11% of exports of goods and non-factor services. This could result in
a gradual increase in for'eign exchange reserves to about 3 months of imports and goods and services,
and improve the external current account balance.
-7Table 2: Selected Economic Indicators, 1996-2004
9
.0
199
I
2
i 200!
2002
Real growth rates (% per year)
1.8
1.5
7.7
1.8
6.2
5.0
3.7
6.0
5.2
2.7
5.0
0.4
2.6
5.0
2.7
2.5
5.0
2.7
2.5
5.0
-2.0
0.4
3.2
-2.0
6.8
13.2
-1.8
8.7
6.9
7.5
9.2
4.0
3.5
GrossDomesticinvestment
Gross national saving
19.3
23.7
23.0
24.2
23.8
23.8
23.0
23.1
23.7
18.2
20.2
16.9
16.2
16.1
16.2
17.1
17.4
18.1
BOP Current Account Balance
Savingsl/
Central CGovernment
-1.1
-3.5
-6.2
-8.0
-7.7
1.8
2.7
2.4
0.6
2.1
-7.6
2.5
-5.0
3.0
-5.7
3.0
-5.6
3.0
Inflation (CPI eop %)
6.4
-0.6
-0.8
-1.0
2.5
0.4
0.2
0.3
0.5
GrossReservesinmonthsof
imports
2.0
1.7
2.1
2.6
2.8
2.7
2.8
2.9
3.0
GDP (mp) per capita
GDP at factor cost
Private Consumption per capita
-0.6
1.4
Exports (Merchandise fob)
2.4
Shares of GDP (%)
Other
1/ CurrentRevenueminusCurrentExpenditure.
Source: Governmentof BelizeandBank StaffEstimates.
1II. GOVERNMENT'S DEVELOPMENT AGENDA FOCUSED ON POVERTY REDUCTION
The PUP Government came into office in August 1998 on an ambitious platform. Its election
17.
manifesto included the generation of 15,000 new jobs over five years to reduce unemployment,
lowering of taxes for business expansion, building of 10,000 new homes over five years primarily for
low income families, educational and health sector reform, the empowerment of women for social
development, and political reform for greater decentralization of power and accountability within the
Government. Once in office, the Government endorsed the still ongoing nationwide consultations
convened to outline a national strategy for poverty elimination. Thefive-year National Poverty
Elimination Strategy and Action Plan (NPESAP) was approved by the Cabinet in August 1999, and
forms the basis for this CAS. At the same time, the central objectives of major donors' assistance
programs have converged to focus on poverty reduction. The Government estimates that poverty at end1999 is about 33% and intends to reduce poverty from 33% in 1999 to 28% by 2004. The Government
has recognized that, as a first step, poverty monitoring needs to be strengthened. Since the 1996 Poverty
Assessrnent is the only available benchmark study, the Government has sought DFID's assistance in a
follow-up poverty survey, which is expected to be completed by early 2001. It is also strengthening its
data base on social indicators with external assistance. Further, the Government has recently established
a Social Development Committee, which involves NGO participation, to improve data collection and
analysis as well as policy suggestions.
-8Figure 2: The Four Elements of a Development Agenda focusing on Poverty Reduction
Enhancing Economic Growth
*
*
*
Improving Fiscal Management
Strengthening Financial Sector
Supervision
Enabling Frameworkfor Private Sector
Participation
Improving Access to and Quality of
Social Services
*
*
*
*
Modernizingthe State and Improving
Governance
*
*
*
Transparent,Efficient and ResultsOrientedFinancial and Personnel
Management
Effective Anti-Corruption,Money
Laundering and Drug Trafficking
Measures
Decentralization of Servicesprovision
Increasing EducationalAttainment
Improving Access to Healthcare
TargetingSafety Netsfor the Poor
Improving Land Titling, Housing and
Essential Infrastructure in Rural Areas
ImplementingPoliciesfor
Environmentally Sustainable
Development
*
*
*
Land4Forestry and WasteManagement
TourismExpansion
Natural Disaster Management
A. Enhancing Economic Growth
18.
Improving Fiscal Management. Over the years, excessive government spending, in particular
on wages, and increase in tax and duty exemptions led to a steady decline in public savings. Since
taking office in August 1998, the Government has pursued an aggressive public sector investment
program focused on stimulating economic activity through provision of essential infrastructure and
building houses for the relatively poorer segments of the population. To strengthen the fiscal position,
the Government has embarked on an ambitious privatization program, and is re-designing its investment
program by establishing clear development priorities. In addition, to generate Government savings of
3% of GDP on a consistent basis, the Government is resolved to contain public sector wage bill, broaden
the tax base by reducing discretionary exemptions, and improve tax and customs administration. The
ongoing Financial Management Development Project, supported by the DFID, is expected to provide a
foundation for better coordination between planning and budgeting functions, and lead to effective
implementation of the necessary fiscal reforms.
19.
Strengthening Financial Sector Supervision. Under the Banks and Financial Institutions Act of
1996, the Central Bank began to improve banking supervision. However, the favorable environment
created by this Act led to rapid expansion in other financial institutions such as insurance companies,
credit unions and building societies. With IDB and possibly IMF support, the Government intends to
strengthen the supervisory capacity and prudential reporting norms but this will require sustained efforts
over time. Reforms are to be tackled along three lines: (a) introducing necessary legislation to regulate
activities not covered by the existing legal framework (i.e., building societies and insurance companies)
and strengthening supervision at all levels; (b) paying particular attention to the detection of money
laundering schemes; and (c) encouraging more financial discipline through increased competition with
the planned entry of a new bank. In addition, the Governrmentfacilitated the opening of a privately
-9managed Small Farmers and Business Bank to provide greater access to credit for small producers and
the self-employed.
20.
Enabling Framework for Private Sector Participation. The private sector faces a number of
constraints which include high domestic lending rates, foreign exchange shortages, cumbersome
investment approval process involving ministerial discretion for duty exemptions, expensive and
inadequate electricity, water and telecommunication services, and inadequate land tenure and lack of
land titling. In addition, the requirements for high severance payments, stringent regulations for hiring
and firiing,the lack of flexibility in working hours, the inability to secure work permits for foreign
skilled workers, and the seasonal nature of activities in various sectors hamper labor market productivity
and limit the supply of skilled labor.
21.
The Government has embarked on a multi-pronged strategy aimed at: (i) supporting private
sector participation and development, such as helping promote investments and exports; (ii) providing
large infrastructure (e.g., roads, ports) while enabling the local governments and communities to deal
with srnaller infrastructure (e.g., maintenance of schools and interior roads, waste management in
Cayes); (iii) strengthening regulatory frameworks in critical sectors that are to have private participation
(e.g, power, solid waste management, water and sanitation, airport and seaport services). The Public
Utilities Commission (PUC) Act was passed in August 1999, and the PUC will regulate the supply of
the three public utilities - electricity, telecommunications and water and sewage; and (iv) enhancing
private sector participation in the provision of public services and infrastructure maintenance, including
through concession arrangements and contracting out services.
22.
Apart from reducing the CET, the Government is committed to a gradual phase-out of the 26
outstanding quantitative restrictions. The lack of land zoning and slow pace of land titling is
constraining agricultural production. Undefined land rights are a major limitation to the productive use
of land particularly in producing non-traditional exports such as acquaculture, papayas, ginger, fruits,
rice, beans, edible oil production, spices, nuts and vegetables. To compete in the international economy
(Box 2 above), the Government developed a five-year strategy under which it is: (i) currently improving
the drainage and. irrigation facilities, rehabilitating plantations, enhancing quality control, and improving
environmental management in the banana sub-sector with the support of the EU; (ii) working with the
private Sugar Industry Association (SIA) in restructuring the industry, including the sugar refinery; and
(iii) embarking on a land reform program, with IDB and IFAD support, to complete a national policy of
land use and accelerate the pace of land reform and titling over the next three years.
B. Improving Access to and Quality of Social Services
23.
Increasing Educational Attainment. Although public spending on education is comparatively
high in Belize (5.8% of GDP), the Government is aware of the significant problems of equity, quality,
and access at all levels, which affect the poor and the indigenous most severely. This is illustrated by a
net enrolment of 85% for the 5-12 year age group and 35% for the 13-16 year age group. Only 38% of
the 5-14 year age group complete primary education in the minimum of eight years. The low enrollment
at secondary level is mainly due to the lack of access. Belize's population is multilingual. While
English is the official language of instruction in schools, in most households children use Spanish,
Creole, Maya, Garifuna or one of the various other languages. This poses additional difficulties for
children in the primary education cycle.
24.
The Government is planning to have pedagogic support mechanisms in place in primary school
to assist non-English speakers, while developing a medium term strategy to enable the education system
to cope better with the problems of multi-lingualism. A solution would be to move the education system
towards a policy of bi-lingualism in English and Spanish. School financing is inequitable, as both
primary and secondary schools in poor areas receive a lower budget allocation per student, hence are
-10-
likely to have less qualifiedteachers and inferiorfacilitiesand materials. Secondaryschools are forced
to limit admissionbecauseof a shortageof space(coverageis low at 34%) and low achievementlevels.
Educationreform is one of the highestprioritiesof the Governmentwhich, with support from the Bank
and DFID, is preparingthe six-yearBelizeEducationSectorImprovementProgram (BESIP). This
jointly preparedproject will assist the Governmentto addressurgentequity and qualityproblemsat
primaryand secondaryeducationlevels,and the developmentof a longerterm educationsectorstrategy.
During2001-2004,the firstphase of the project aims to: (i) increasepre-schoolcoverage;(ii)provide
supportfor achievinguniversalcoverageof primaryeducation;(iii) continuethe primaryeducation
curriculumreforminitiatedunder the previousBank project;(iv) increaseaccessto and quality of
secondary education;(v) start implementationof school financereformto make public education
finance sustainableand equitable;(vi) strengthenthe Ministryof Education's administration;and (vii)
improveteachertraining and educationresearch. The Governmentplans to provide training for youth
and adults,which shouldinvolvethe private sector in orderto ensure that labormarket demandsshape
the content of programs. The Governmentalso plans to provideaccessto post-secondaryand adult
educationforpoorer communities.
25.
ImprovingAccess to Healthcare. Healthexpenditurein Belize,primarilypublic expenditure,is
high (7.1% of GDP),and the overallhealth conditionscomparefavorablywith otherLatin American
countries. However,the poor, in particularthe young childrenand womenof reproductiveage,are at
the highest healthrisk. Accessto and quality of health care for the poor are inadequate. The public
sectorhas had difficultydeliveringservicesto a relativelysmall and dispersedpopulation. Patientstend
to bypassthe ill-equippedgovernmenthealth units in favor of the few hospitalsand the private sector,
where the health standardsare variable. The Governmentis currentlypreparinga Health SectorReform
Program,with the assistanceof the IDB,which over the nextthree years will: (i) strengthenthe
organizationalcapacityof the public sectorto plan, deliver and procurehigh quality and high value
services;(ii)rationalizeand improvethe coverageand quality of servicesprovidedby the public and
private sectors;and (iii) achievean equitableand sustainablesystemof sector financing,by setting up a
nationalhealth insuranceschemeas the prime source of fundingfor personalhealth care services. The
EU is supportingthe upgradeof the Karl HeusnerMemorialHospital. Health sectorreformshould have
a majorpositive impacton the poor, as it wouldraise the quality of careavailableto them and alleviate
the problemsof accessibilitythrough transportationsupport.
26.
TargetingSocial Safety Nets to the Poor. A largeproportionof the poor people live in remote
rural areas,with little accessto safety nets. Provisionof social infrastructure,includingsmallwater
systems in poor communitiesis occurringthroughthe CDB's Basic Needs Trust Fund (BNTF),the
Bank's Social InvestmentFund (SIF), and the DFID's Provisionof BasicNeeds. DFID also supportsa
text book schemeand refurbishmentof schools in poorer areas.A small socialassistanceprogramof
cash transfersto the elderly,the disabledand the destituteis in place. Remittancesfrom relativeswho
have emigratedabroadalso constitutean importantinformalsafetynet. Althoughthese sources of
support for the poor are helpful,the overallsafety net is inadequatefor the largeproportionof the
populationthat is poor in Belize. As noted in the Government'sNPESAP,actionsare urgentlyrequired
to review and rationalizethe safetynet programs in order to improveefficiencyand effectivenessin
terms of cost, outreachand targeting. Plans to modifythe pension and social securitysystem are being
consideredby the Government. A recent actuarialreview indicatedthat in the absence of major changes
in contributionrates and benefits,expenditurewouldexceed revenuewithin 10-15years.
27.
Improving Land Titling, Housing and EssentialInfrastructure in RuralAreas. Landrights
and titles need to be clearlydefinedto facilitateaccessto credit and empowerthe poor. However,the
ancestrallandclaims of the indigenouspeople complicatethe situationas multipleleasesare issuedfor
the sameplot of land. With the IDB supportedLandAdministrationproject, the Government,
recognizingthe linkbetween landtenure and equity, is keento: (i) clear the backlogof unsurveyed
leases:(ii) unify the land titling system;(iii) improvethe land registrysystem;and (iv) initiate a land
-11-
adjudicationsystem for grantingsecure landtenure. It is formulatinga comprehensivenationalland use
program,coveringagriculture,tourism,and forestry,througha recentlyestablishedLand Advisory
Committee.
The poor live in dwellingswith woodenwalls and, in the South,with thatchedroofing and
28.
earthen floors. Housingstock,particularlyin the poorer districtsof Toledo and Cayo, has not keptpace
with the influxof immigrants.As manypeople live in temporaryshelters,over a five yearperiod,the
Governmentintendsto provideabout 10,000low-incomehouses for the poor with support fromthe
GermanGovernment(financedthrough DeutscheBank) and Taiwan,China. Alreadyin 1999,the
Ministryof Housing,Social SecurityBoard and the DevelopmentFinanceCorporationhave funded
some 2,393houses. The Governmentbundlesthe mortgagesto the SocialSecurityBoard which in turn
securitizesand sells them to the financialmarkets.This could leadto a streamof income for the
Governmentand transfersthe credit risk to buildingsocieties and mortgageinstitutions.However,the
Governmentis awarethat, in the past, mortgageswith the public sectorinvolvementhave had higher
delinquencyrates.
Poverty is higherin the relativelyunder-developedSouthernBelizeregion. About58% of the
29.
people in Toledoand 41% of the populationin Cayo are poor (Table 1). Stann Creek district is the other
poorer area in rural South.The Government(with funding from the IDB) is currentlypreparinga
RegionalDevelopmentPlan focusedon improvingconditionsin thesedistricts as a follow-upproject to
the Environmentaland SocialTechnicalAssistanceproject,which was supportedby IDB and DFID. It
will enhancethe intendedsocial and economicbenefitsof the SouthernHighwayproject, and mitigate
any potentialnegativesocial, economicand environmentalconsequencesof the highwayupgrading.
The project focuseson improvingand modernizingregional infrastructure,and developinghuman
resourcesthrough increasededucationand training. Theplan emphasizesa more efficientand effective
use of naturalresources,particularlylandresources,and enhancedagriculturalperformancein domestic
food and exportcrops.CIDA's IndigenousPeople's Park Co-managementProject in Punta Gorda,
Toledo,also supportspovertyreductionin this region. In addition,the Bank's proposedRoads and
MunicipalDrainageprojects completesthe road networklinkingthe urban and rural areas, and would
reduce floodingin six rural areas, includingBenqueand Punta Gorda in SouthernBelize.
C. Modernizing the State and Improving Governance
Belize like other small states has limited institutional capacity but a higher demand for
30.
provision of a range of public goods and services, including central government functions, tax and
customs administration, regulatory activities, provision of education, health and social services, judicial
services, foreign relations and security arrangements. Belize also has large unmet demands in
infrastructure. Costs of infrastructure are high compared to other countries because of the broad
dispersion of the population, the geography (terrain and several Cayes) and the need for imported inputs.
The limited institutional capacity of the public sector is stretched thin across several activities. The
domestic private sector is also small and weak. In order to overcome the disadvantages of a small state,
the Government feels that there is a continuous need for training and capacity building in both public
and private sectors, public-private collaboration and regional cooperation. In addition, the Government
is cognizant that better governance impinges upon the stability and efficiency of domestic and foreign
investments, facilitates equitable access to public services to all segments of the population, and
empowers the diverse civic groups. The Government has initiated actions to develop processes and
institutions that will improve the accountability of public management and enhance institutional
capacity to deliver essential services that are of quality, timely and cost-effective. The following are
critical areas of reform in the short to medium-term.
-1231.
Transparent and Efficient Financial and Personnel Management. Central government
employeesnow numberabout7,000 persons(8% of the total laborforce),reduced from the previous
level of about 9,000persons during 1994-95. Overstaffingis still commonin most ministries,especially
at the clerical levelswhilethere is a shortageof specialized,technicaland managerialpersonnel.The
total wage and salary expenditureshave increasedfrom 33% of the total expenditureduring 1994-95to
40% in 1999/2000. The Cabinet has recentlyapproveda policy for the reformof the public service and
the establishmentof a Departmentof ManagementServicesthat will spearheadthe reformprocess,
includinggreaterautonomyto ExecutiveOfficersin each Ministry/Department,rationalizationof
functions,and the establishmentof a humanresourcedevelopmentcommittee. The Governmenthas
recentlybegun to implementa series of measuresunderthe DFID supportedproject. The next
importantsteps in realizingthe full benefitsof the new systemare trainingof public officersand
completionof the auditsof public accountsin 2000.
32.
Effective Anti-Corruption, Money Laundering and Drug Trafficking Measures. The
Government does not have the skilled manpower and the resources to effectively monitor,
investigate, collect evidence and enforce the laws pertaining to these problems. In the past, in
partnership with the USA, efforts have been made at combatingdrug trafficking in the country. In
the area of money laundering, as well as bribery and corruption, the Organizationof Economic CoOperation and Development (OECD) is supporting efforts to combat such activities. With the
support of the internationalcommunity and through ongoing regional cooperation Belize should
continue to strengthen its legal and institutionalframeworksand enforcementcapacity in each of these
areas.
33.
Decentralization of Services Provision. As a part of political reform, the Government has
advocatedthe decentralizationof political authorityto towns and rural communitiesby enactingthe
Town CouncilAct and the Village CouncilsAct, both in 1999. With regardto fiscal decentralization,
the Governmentis taking a cautiousand evolvingapproachwhich will gradually foster local
governmentcapability. The Governmentinvitescivic participationin committeesit establishes.With
DFID support,the Governmentis focusingon strengtheningthe civil societyorganizations.New
legislationgoverningNGOs was draftedby the NGO community,ledby the umbrellagroup,
Associationof National DevelopmentAgencies(ANDA).
D. ImplementingPoliciesfor EnvironmentallySustainableDevelopment
34.
Land, Forestry and Waste Management. The 1996 National Environmental Action Plan
(NEAP) detailed that population pressures, rapid increase in tourism, increased use of pesticides in
agriculture, subsistencefarming and fishing by the increased number of poor, lack of land titling
and frequent floodingwere leading to: (i) inappropriate land use and deforestation; (ii) increased
need for sanitationand waste disposal facilities; and (iii) contamination and degradation of water
resources. Water pollution, inadequate solid and liquid waste management impact
disproportionatelyupon the poor. The Government is currently updating the environmental
legislation while strengthening the implementation capacity in environmental units in key ministries
with external assistance. The Government intends to: (i) raise user charges to adequate levels to
finance environment-relatedactivities; (ii) decentralize and involve local communities and NGOs in
the design, implementation,and monitoring of regulations and collection of environmental fees; (iii)
facilitate land zoning by preparing broad environmental guidelines which will include the use of
market-based instrumentsand the sale of land at market prices; (iv) provide technical assistance and
extension services to Mayan communities to improve the productivity of their land and to safeguard
the environment;and (v) undertake investments with cost recovery for providing potable water and
sanitation facilities to rural areas, with a focus on flexibility in cost recovery for poorer households.
-13The NEAP proposed a restructuring and a reallocationof financial and human resources across
environment-relatedMinistries and departments,and eventually a clear delimitation of
responsibilities for each Ministry and Department.
TourismExpansion. Tourism,which accountsfor 20% of GDP, has been rapidlygrowing
35.
duringthe past two decadesand has contributedto coastalzone deforestation.In 1998,the Government
requesteda private firm to prepare a tourism strategy. After consultationswith the private sector,the
Governmentis committedto addressingproblemsinvolvingwater pollution,coastal zonedegradation,
and inadequatesolid waste disposal.At present,private tourismdevelopersin severalkeys are trying to
minimizethe adverseimpactby servicingtheir own developments.Also, in order to addressthe
depletionof natural speciesin Belize,the Governmenthas developeda National BiodiversityStrategy
and ActionPlan and is now seekingfunds for implementation.
NaturalDisasterManagement. Belizeis in the hurricanebelt and much of the coastal land is
36.
below sea level and thereforeprone to frequentflooding,particularlyin the poorer areas. Despite large
investmentsin drainage systems,floodingremainsa problemdue to a lack of funds for maintenanceof
drainagesystems. HurricaneMitchof October 1998did not causemuch damageto Belize,but it did
expose the weaknessesin the country's system of disasterpreventionand preparedness. The IDB is
assistingthe Governmentto strengthenthe capacityof the National EmergencyManagement
Organizationand rehabilitatehurricanesheltersin critical locations,while the Bank has committedto
financingcritical drainageworks in six municipalitiesto reduce floodingand the impactof flooding,
withthe Roads and MunicipalDrainage Project.
IV. WORLDBANKGROUPASSISTANCEPROGRAMFOR BELIZE,FY01-05
Thedevelopmentagendadiscussedaboveprovidesa frameworkto advancethe short to
37.
medium-termobjectivesarticulatedby the Governmentand the civic society. Withinthis framework,
the Bank, in close collaborationwith the Governmentand otherdevelopmentpartners,will seek to
identifyappropriateinterventions,taking into considerationthe fiscalsituationand the reformeffort of
the Government,and will build on the lessonslearned in Belizeover the years.
A. ProgressTowardsObjectivesof the CAS of November1993
The 1993CAS had identifiedfivepriorities for Bank intervention:(i) improvementsin the
38.
macroeconomicframework,which were to be achievedthroughthe implementationof
recommendationsof the Bank-supportedMediumTerm EconomicStrategyPaper (MTESP)and Public
ExpenditureReview(PER); (ii) improvementsin the public sector's planningcapacityand the
developmentof basic infrastructureand relatedregulatoryframeworks,whichwere to be advancedwith
the BelizeCity InfrastructureProjectand the ongoingSecondPowerDevelopmentProject; (iii) human
resourcedevelopmentand povertyalleviation,whichwere to be addressedthrough the Primary
EducationDevelopmentProjectand the SocialInvestmentFund Project;(iv) environmental
preservation,which was to be advancedthrough implementationof the recommendationsof the BankassistedNational EnvironmentalActionPlan (NEAP);and (v) donor coordinationwithinthe context of
a Public SectorInvestmentProgram,whichwas to be strengthenedthrough closecoordinationwith the
IMF on the macroeconomicframeworkand with the financialsupport of the EuropeanUnion, the IDB,
the CDB,the UK DFID, and CIDA on the lendingprogram.
WhatWorkedWell... The three smallerprojects(out of four projects)since the last CAS have
39.
workedsatisfactorily. The SecondPowerDevelopmentProjectwas successfulin introducinga
regulatoryframeworkwith a tariff-settingmechanismand ensure a higherlevel of reliabilityand lower
cost of power supplyresulting from the interconnectionwith the Mexicanpower grid. The Primary
-14Education Development Project has achieved substantial improvements in the delivery and cost
recovery mechanism of basic education and has served as a vehicle for identifying the details of the
education reform strategy. The ongoing Social Investment Fund project is well targeted and achieving
significant results on the ground in poorer communities through small infrastructure subprojects. The
Government has requested that the Bank remain engaged in education and the social safety nets through
the preparation of new projects for each in FY01 -05.
40.
What Worked Less Well... A larger, more complex project with objectives too broad for its
work program components, namely the Belize City Infrastructure Project (BCIP), presented problems in
both implementation and in meeting project objectives. The project's overall outcome was rated
marginally satisfactory because the physical works under the project were of good quality but the
project had limited success in ensuring the availability of funding for regular operation and maintenance
from the Belize City Council.
41.
The Bank was unable to effectively influence macroeconomic management. During the decade
of the 1990s, the Bank worked together with successive Governments to prepare two separate
adjustment programs, the first focused on private sector development and the second on public sector
adjustment. However, on two separate occasions, despite the advanced stage of preparation of the
adjustment program, the then governments were unwilling to agree on the reform packages. This was
due to the politically difficult conditionalities involving a reduction in the size of the civil service, a
containment of wage increases, and a reduction in the public investment program, and the lack of
political will. However, the ongoing DFID-assisted Financial Management Development Project does
include part of the reforms recommended by the Bank. As such, the revenue and expenditure
monitoring appears to be improving. In 1998, the Bank prepared a Review of the Tax and Duty
Exemptions, and the Government has been reducing discretionary exemptions, albeit at a slower pace, in
line with the study's recommendation.
42.
IBRD moved from a portfolio of four projects during 1995-98 to one project now (SIF
approved in 1997 for US$7 million) under implementation with an undisbursed amount of US$3.7
million. Overall, as indicated in Table 3 below, the performance of the portfolio has been satisfactory.
Annual disbursement ratios for the past 4 years have been high and problem projects have been few and
short-lived (i.e. less than 12 months).
Table 3: Selected Indicators of Bank Portfolio Performance, FY96-FYOO
No. of ProjectsunderImplementation
Commitments(US$mil)
AverageImplementation
period(years)
Percentof ProblemProjects
[by number]
RealismIndex
DisbursementRatio(%)
Source: IBRD.
1996
4
46
4.3
0
1997
4
46
3.1
0
N/A
21
N/A
37
1998
3
33
4
67
[2projects]
100%
48
1999
7
2.3
0
2000
1
7
2.8
0
100%
36
100%
5
1
43.
Summary of Lessons from Recent Performance. Lessons learned since the 1993 CAS and the
project implementation have helped shape this CAS:
*
Full Government commitment is necessary for a program to succeed. Particularly in the area of
reform programs including macroeconomic and fiscal management areas, the Bank in collaboration
with the IMF should consider a deeper engagement with the Government. To ascertain
Government's commitment, active policy dialogue and tighter donor coordination regarding the
objective and measures of a reform are necessary;
-15* Elecauseinstitutionalcapacityamongstthe Ministriesand project implementationunits is limited,
projectsmust be simple,clearlydefined,and gearedto achieveclear and targetedpolicy objectives,
and well definedinstitutionalstrengtheningcomponents,includingclear procedures,need to be
integratedintoall newprojects;the presenceof welltrained staff throughoutimplementationcan
help in the early detectionof, and swiftaction to correct,design weaknessesand adaptto changing
circumstances.For example,SIF project implementationimprovedgreatlyafter its initial difficulties
in retaininghigh qualityPEU staff had been overcomethroughdialoguewith the Government;
*
Strengtheningthe financialmanagementof projects is crucial. The SIF project is presentlya
successfulLACI pilot project with disbursementsmade based on quarterlyProjectManagement
Reports. By replicatingthis experience,new lendingprojectswill have a better prospectfor sound
financialmanagement,in spite of the limitedavailabilityof accountingprofessionalsin Belize;
*
Incorporatingthe activeparticipationof all stakeholdersincludingmunicipalities,local governments
and relevantMinistriesfrom the earlieststageof the project is criticalto assure sustainabilityof
those institutionsresponsiblefor the operationsand maintenanceof physicalworks - this would
avoidthe shortcomingsexperiencedin the Belize City InfrastructureProject.
*
Sincethe Bank's programremains smalland selective,donor coordinationis critical to effectively
achieveGovernment'spolicy objectives. The Bank will continueto encouragethe Governmentto
take the lead in organizingdonor coordinationand civic societyparticipationmeetings at least twice
a year and providesupportas requested.
CAS Consultations.This CAS was preparedin consultationwith the Government,civil society,
44.
and developmentpartners. The Government'sNPESAP is a soundpovertyreductionstrategyfor Belize
and the first of its kind in the Caribbeanregion. It was preparedafter nationwide consultations. In
addition,the DFID preparedan assistancestrategyafter significantconsultationswith the civic groups.
Beforepreparingthis CAS and giventhe closeworkingrelationshipbetweenthe Bank and the DFID,
the Bank staff soughtand reviewedthe minutesof the consultationsthat DFID had with the civic groups
and took into considerationthe concernsof the representativesof the civic society. TheBank staff then
consultedwith the Governmentand selectivemembersof the privatesector and NGOs. This CAS
builds on the NPESAPand took into considerationthe DFID assistancestrategy. Further,an earlier
version of the CAS was sharedwith the Governmentas well as developmentpartners,and comments
were receivedfrom the Government,the CDB,the IDB,the EU, DFID and CIDA. Throughthis process,
a generalagreementhas emergedon the developmentagenda (detailedin the annexedCountryProgram
Matrix)and the four areas focused on povertyreduction(see Figure 2).
B. Selectivityand Sequencingof Bank GroupAssistance
Selectivity.Given the tight fiscal situation,the extensiveassistanceprovidedby other
45.
developmentpartnerswith substantialknowledgeof the countryand the region, such as the CDB,the
IDB,the EU, and the DFID, and in view of the country's limitedimplementationcapacity,the Bank has
followedand continuesto follow a selectiveand disciplinedapproachdespiteeagernessof the
Governmentfor severalprojectsfrom the Bank. As such, the Bank will be only involvedin basic
educationand socialprotectionprograms,while providingtechnicaladviceand supportin
updatingpovertysurveysand strengtheningregulatoryframeworksin power and water sectors.
The Bank will not be involvedin financingoperationsin agriculture,tourism,water and
sanitation,health,judicial reform,publicsectorreformor financialsector reform.
Theprinciples underlyingthe Bank's programinclude:(1) no morethan 3 projects under
46.
simultaneousimplementationin any given fiscalyear for the next five years; (2) with each new project
averagingaboutUS$10 millionper project in new commitments;translatingto a total lendingprogram
-16of 3 projects totaling about US$30 million; and (3) a maximum of one major piece of formal economic
and sector work per year. These principles have been discussed with the Government and could change
if the conditions so warrant. Under a Base Case Scenario (Table 4), the Bank will maintain a small
program focused on the poverty reduction objective. The principle of selectivity that will be followed
in order to remain cautious (within prudential limits) for both lending and non-lending services include:
*
Focus on poverty reduction through investment in education and facilitating economic
diversification because of concerns about the erosion of preferential arrangements and its adverse
impact on poverty. Examples of this primary focus are the proposed Education Sector Improvement
Project (in FY02) and a social protection project (in FY05) after review of expenditures on social
sectors and safety nets, and the proposed Roads and Municipal Drainage project, which is geared to
complete the road network and supports disaster mitigation efforts in six, relatively poor, rural areas.
The Bank will be actively involved with the Government and the civic society and gauge their
readiness to undertake the necessary sectoral reforms before embarking on new projects.
*
Knowledgeand experience-basedcomparativeadvantageas in the Roads and Municipal
Drainage project, the proposed Education project and the proposed non-lending service on
strengthening the regulatory framework in the water and sanitation sector while fostering private
sector participation. These tasks build on achievements and experience gained in previous Bank
projects, such as the Belize City Infrastructure project and the Primary Education project.
*
Complementarity with other donors projects, such as the ongoing SIF Project that is cofinanced
by EU; and the proposed Education Sector Improvement project will be cofinanced by DFID. In the
event of an external shock arising due to erosion of preferential prices for main exports or due to a
natural disaster, the Bank will review the PSIP and collaborate with other agencies in putting
together an adequate financing package.
47.
Bank's Proposed Assistance Program. Based on the above selectivity criteria and as detailed in
Table 4 and the Country Program Matrix for the period FY2001 -FY2005 (Annex B 1) the thrust of Bank
activities will be focused on supporting poverty reduction efforts. The Bank intends to be fully
supportive of the country's goal of poverty reduction through private sector-led economic diversification
and growth, and improved access to and quality of basic services, the two (of the four) critical pillars of
the Government's development agenda.
-17-
Table4: CurrentStockandProposedBaseCaseScenariofor the LendingProgram,FYOi-05
FY01FY02
FY03
FY04 I
FY05
BelizeanPoliticalCycle
In
=w
ProposedBaseCaseLendingScenario
Sustaining
EconomicGrowth
CriticalInfrastructure
Roadsand
Municipal
DrainageProject
.
.
.
._-_.
-_._
Increasing
Accessto BasicServices
....................
..............................................................
......................
..............................
......... ............
.................
..........
cto
Education
Education
Improvement
.
Project
.....................................
............ ..........n...................SocialInvestment
Social
Protection
Project
OngokJgSF
Modernizing
theState
Drainage
component
OftheRoads
_________________________________Projectabove
NewProjects
1
NewProjectsCommitments
(US$mill.)
13
Projectsin Portfolio
2
TotalCommitments
(US$mill.)
20
Implementing
Environmental
Policies
1
10
3
30
0
0
2
23
0
0
2
23
1
7
3
30
ProposedNon-Lending
Services
Sustaining Economic Growth
SuEstaining
Economic
Growth
IncreasingthePoor'sAccessto Basic
Services
Just intime
Justin time
Justin time
ESW
OngoingIDFIndigenousReiwf
People;
Supportfor
povertyupdate
(withDFID)
Modernizing
the StateandImproving
Governance
Implementing
Environmental
Policiesfor OngoingGEF
Sustainable
Development
TotalCostUS$'000
120
WorldBankfiscalYear
48.
PSIP-MTES
Review
PSIP-MTES Justin time
Review
ESW
ReSocial
SafetyNets
_
ReviewPortfolio
Regulatory Procurement
watersector andFinancial
Management
80
80
120
50
Support for direct poverty reduction is to be provided by Bank projects as follows:
(i) Ongoing Social Investment Fund, which provides targeted subprojects to poor communities. If this
project continues to achieve satisfactory ratings, the Bank proposes to review the social safety nets (in
FY04) and consider a Social Protection Project (in FY05). Lessons from the implementation of the
Poverty Reduction Fund in St. Lucia; in particular those related to assistance to those affected by agrorestructuring will help in the design of a social protection project for Belize;
(ii) The proposed Belize Education Sector Improvement Project (FY02), will be based on the
experience and knowledge gained from the Primary Education Development project. Given the interest
-18of the Government and the DFID in such a project, the Bank is comrnitted to long-term involvement in
this sector, provided the Government is resolved to implement far-reaching educational reforms. This
project is likely to focus on school finance reform, improved access, equity and quality at primary and
secondary levels, improved sectoral management, and introduction of bilingual education;
(iii) Proposed assistance to Government in monitoring the poverty situation (FYO1)and reviewing social
safety nets (FY04);
(iv) ImprovingBasicInfrastructureandStrengtheningRegulatoryFrameworks.Buildingon the
experience of past Bank projects in the sector (two road maintenance projects and the BCIP), the Bank
has prepared the proposed Roads and Municipal Drainage project. This project will upgrade the
condition of the Burrell Boom Road, and link the rural western region with the northern region and
complete the road network. In addition, this project will help strengthen the institutional capacity of the
relevant Ministries. The Bank would also provide NLS to strengthen the regulatory framework for the
water and sanitation sector (FY02); and
(v) Safeguardingthe EnvironmentandIndigenousCulturetofacilitate TourismExpansion. The
support of the Bank and other donors to the 1996 Environmental Report and the 1996 NEAP have been
complemented by the GEF-supported Meso-American Biological Corridor (MBC) project and the
Northern Belize Biological Corridors (NBBC) project which are currently under implementation. The
aim of these projects is to secure long term conservation of bio-diversity of global importance in the
Mayan lowlands by maintaining ecological linkages between protected areas across northern Belize. In
addition, an IDF for capacity-building for indigenous peoples has recently been approved. The project
will also rehabilitate/construct drainage infrastructure in six municipalities, where the population is
relatively poor, to reduce possible flooding as observed during Hurricane Mitch in late 1998. As part of
its regional effort, the Bank has recently studied the insurance market for natural disasters in the
Caribbean Region and is exploring possible preparation of a Caribbean Re-insurance Facility to support,
inter alia, catastrophic insurance as a mechanism for disaster mitigation.
49.
The Bank Group'sRole withinthe Contextof the OverallEffortsof DevelopmentPartners.
The CDB, IDB, DFID and EU have the largest assistance programs to Belize and their programs are
facilitated by country offices in Belize. The CDB currently has an ongoing lending program of five
project totaling US$52 million, of which US$38 million are undisbursed. The IDB has five ongoing
projects totaling US$44 million, of which US$37 million are undisbursed. In addition, DFID has a
lending program of US$21 million, and the EU of US$19 million (Table 5 summarizes the assistance
programs of major donors). A key aspect of the Bank Group's strategy will be to continue developing
complementarities with other agencies involved in Belize within the context of a well-articulated Public
Sector Investment Program. This will involve close coordination with the IMF on the macroeconomic
framework, and with the major donors on their lending programs. Examples of coordination with
donors include the SIF Project that is co-financed by the EU, the recently closed Power Development
Project that was financed in parallel by the CDB, and the Belize Education Sector Improvement
Program (BESIP) which is jointly prepared with DFID. The Bank will continue to coordinate with other
donors. Table 5 summarizes the main areas of activities of external agencies in Belize, and identifies
the areas in which the Bank is playing or could play a role during the period of this CAS.
50.
In addition to the country program, the Bank will continue to organize regional policy platforms
such as the biennial CGCED and the Small States Initiative, in which Belize is an active participant. As
chair of the CGCED, the Bank works closely with the Governments and development partners involved
in the Caribbean economic development agenda in focusing on developmental challenges faced by the
Caribbean region. During the 1990s, the Bank, the IDB, and major bilateral agencies collaborated in the
preparation and discussion of common regional issues, such as trade liberalization, impact of erosion of
-19EU preferentialtrade arrangementsin bananasand sugar,implicationsof NAFTAon the region's
exports,issuespertainingto public sectormodernization,private sectordevelopment,financialsector
development,labormarket, and tourism,and a regionalenvironmentalactionplan. TheCGCED
regionalagendafor the June 2000 meetingin WashingtonDC, whichwas developedin close
cooperationwith clientcountriesand externalagencies, focusedon a 20-yearVision for the Caribbean,
and discussedissuesrelatingto improvingeducation,enhancinggovernance,tourism-environment
prospectsas well as risk diversificationand disastermanagement.Sincemid-1990s,representatives
from the private sectorand civic groupsinvolvedin povertyand environmentissuesalso participatein
the CGCEDdiscussions.
Table5: BankGroup'sRole in the Contextof the OverallDonorEffortin Belize
__
Enhancing
Sustainable
Economic
Growth
Area of Intervention
Improving Fiscal Management
IMF
FinancialSector Strengthening
DFID/CDB
Improving Frameworkfor private sector
Participation
Trade and AgriculturalReform
IDB/DFID
Regulatory Frameworks- power and water
HighwayConstruction
Road Rehabilitationand Maintenance
ImprovingEducational Attainment
Improving Access to Health Services
Increasing
ces
Poor's
Ac-cess
the States and
Goveiance
IDB/EU
IBRD
IDB/EU/Taiwan, China/
Kuwait/DFID
CDB/EU
DFID/IBRD
CDB/EU/PAHO/IDB
Targeting Social Safety Nets for the Poor
Land distributionand basic infrastructure
IBRD
IDB/DFID
SocialInvestment Fund
EU/IBRD
Housing for the Poor
Modernizing
Financier/Advisor
.
Taiwan,China/CDB
Establishing Poverty Monitoring System
DFID/IBRD
Transparent and EfficientFinancial and
DFID
Personnel
DFID
Management
Ati-Corpion,
Money Launderingand
Drug Trafficking
DFID
Decentralization - supportto communities
USA/DFID
ProtectingBio-diversity:
GEFAUNDP
Forestry Management
DFID
Land-useManagement
IDB
Environmentally CoastalZone Management
Sustainable
SustainableTourism
Development
Waste and Sewage Management
EnhancingParticipationof Local
Communities
EU
EU/IDB
UNDP
UNDP/DFID/CIDA
and NGOs
EmergencyPreparedness
IDB/CDB
World Bank Presence is indicated in Bold.
Acronyms indicate the agencies that are present in the areas represented by each row.
Source: Programs of External Agencies.
51.
Triggers. Giventhe Bank's currentassessmentof Belize's macroeconomicposition,political
context,and implementationcapacity,decisionson Bank financialassistanceover this CAS periodwill
dependcriticallyon triggers associatedwith: (a) satisfactoryimplementationof Bank projectsas
measuredby realism and proactivityindices(see para. 58); and (b) followinga prudentmacroeconomic
policy, in particular,increasecentralgovernmentsavingsfrom the 0.6% of GDP nowto at least 3% of
-20GDP per year (throughreductionin tax exemptionsand improvingtax administration)and containthe
externaldebt serviceto governrment
currentrevenuesat no higherthan 25% in each year over the CAS
period;and (c) satisfactoryimplementationof the overallreformprogram,in particularmove towardsa
regularmonitoringof the povertyand social indicatorsand increasenet enrollmentrates in primaryand
secondaryschools(Table6 below). The governmentsavingshas been identifiedas one of the triggers
to ensure improvementin fiscalmanagementand the availabilityof counterpartfundingfor the projects,
while monitoringthe externaldebt serviceto revenuesratiowill helpcontaincommercialborrowingby
the Government. Together with the IMF staff, the Bank staff will monitor the macroeconomic and
financial sector situation.
52.
Base CaseLendingScenario. Assumingperformanceunderthe aforementionedthree triggers
remains on track over the five years of the CAS period, under the Base Case Scenario, the Bank will
maintain a small program focused on the inter-related objectives of poverty reduction and economic
diversification and consisting of: (1) preparation of no more than 3 projects over the next five years,
averaging about US$ 10 million per project in new commitments; translating to a total lending portfolio
of 3 projects for a total of about US$30 million; and (3) one piece of economic and sector work per year.
53.
Low Case Scenario. Should the Governrmentfail to satisfy triggers (a) or (b) or (c) mentioned
above, the Bank would consider shifting to the zero lending by halting further preparation of pipeline
projects until there is a demonstrable improvement in complying with the triggers. In such a scenario,
the Bank would continue to engage the Government through non-lending activities and coordinate with
the IMF and other external partners in moving the Governrmenttowards prudent policies and achieving
its development objectives.
54.
Instruments for Lending and Non-Lending Services. The Bank's administrative budget for
Belize, as with other small states, is very limited. It is therefore critical for the Bank and the
Government to work together to optimally use the Bank Group's small lending and non-lending
program to maximize the development impact to reduce poverty. One operation which the Government
has selected for preparation is a single currency loan for the proposed Roads and Municipal Drainage
project. Following this, the Government is keen to secure a possible investment loan in FY02 in the
form of the proposed Belize Education Sector Improvement Project (BESIP). The Government would
like a follow-up project for social investmnentbut this would depend upon further review of the social
safety nets and social sector spending (in FY04).
55.
With respect to non-lending services, the Bank would: (i) support the Government in the regular
monitoring of poverty; (ii) review public expenditures on regular basis, in close collaboration with the
CDB; (iii) provide relevant technical assistance through all new lending operations to strengthen the
institutional capacity to both design and implement projects/sector strategies; (iv) prepare just in time
policy notes on social sector spending or review the social safety nets should the Government so
request; (vi) collaborate with GEF in natural resource/bio-diversity related activities; (v) seek IDF
resources for capacity building (e.g. ongoing institutional strengthening of indigenous people); and (vi)
consider piloting Bank's new financial products, in particular a possible sugar price risk management
insurance for small farmers in the sugar sub-sector.
56.
IFC. IFC's portfolio consists of two projects. One investment is in the Belize Electric
Company Ltd. ("Becol"), a hydroelectric power generator; it was approved in FY93, for US$ 10 million
plus equity of US$ 5.0 million. Becol is one of Belize's largest electricity producers with an installed
capacity of 25 megawatts (the country's total estimated installed capacity is 65 megawatts). The other
investment is a loan to a shrimp farm and associated distribution company; it was approved in FY98 for
up to US$ 6 million. The project is expected to double production and provide valuable foreign
exchange earnings to the country as well as diversify agricultural production away from the traditional
sugar, bananas and citrus. IFC recently approved an up to US$ 10.0 million investment in another
-21-
shrimpfarm and is currentlyevaluatinga third. Given the small sizeof the economy,the relativelyslow
pace of reformand the activeparticipationof othermultilateraland bilateralagenciesas well as the
CommonwealthDevelopmentCorporation,it is expectedthat IFC's activitywill continueto be limited.
As reformsoccur,IFCwill respondto opportunitiesto supportviableprojects,particularlyin exportorientedsectorslike agribusinessand tourism.
57.
MIGA. Belizebecamea fullmemberof MIGA on June 29, 1992. MIGAhas no activeprojects
in Belize. MIGA'sguaranteeprogramis ready to supportprojectsin sectorswhere foreignprivate
financingis potentiallyfeasibleor needed.
Table 6: Proposed CAS Benchmarks, 1999-04
1999 2002 2004
KeyCountryDevelopmentIndicators:
PovertyHeadcountRatio(%estimatesat end-year)
Indicatorsto be Monitoredby the Bank:
PrimarySchoolNet Enrollment(%at end-year)
SecondarySchool(12-16years)Net Enrollment(% at end-year)
33
30
28
85
90
42
42
95
5
50
34
34
LeadingProgressIndicators:Sincetrackingthe povertyheadcountratiomayinvolvesometime lag,the
Governmentandthe Bankstaffwouldmonitorthe followingmacroindicatorson an annualbasis. These
indicatorswillhelpin the timelyassessmentof the povertysituation.
1. Unemployment
Rate,whichis currently12.3%of the laborforce,and shouldbe decliningin eachof the
fiveyearsof the CASperiod;
2. Per CapitaPrivateConsumptionGrowthshouldbe about3% per yearin eachof the fiveyearsof the CAS
period
C. PerformanceIndicators
58.
The achievementof the CAS objectiveswillbe measuredthrough CountryDevelopment
Indicatorsand the BankProgram PerformanceIndicatorsover the nextfive years (Table 6).
CountryDevelopmentIndicators
* Macroeconomic indicators related to poverty: Data on the population below the poverty line is only
availablefor 1996. The DFID has beenworkingwith the Ministryof EconomicDevelopmentin
strengtheningits capacityto updatethe PovertyAssessmentin 2000 and beyond (onceevery3
years). The Governmentneeds in particularto take advantageof the nextpoverty surveythat is
plannedfor this year and establishsystematicand consistentpovertymonitoringand evaluation
tools. Oncethe Governmentputs in place thesetools, the progressindicatorsmentionedabovewill
be complementedby a more completeset of social indicators. The Government,in the meantime,
wouldmonitoron a yearlybasis (i) the growthrate of per capitaprivate consumption;and (ii)the
unemploymentrate, as two leadingindicatorsfor povertyreduction.
* Social indicators related with poverty: The Government is keen to measure progress in reducing
poverty not only directly by the poverty updates but also indirectly through the monitoring of four
social indicators,data on which are availableon an annualbasis with a 3-6 months lag. These
-22include: (i) primary school net enrollment rate; (ii) secondary school net enrollment rate; (iii) infant
mortality rate; and (iv) access to safe water. For its part, the Bank will work with the Government
and monitor only indicators (i) and (ii) above, pertaining to primary and secondary school
enrollment rates, while supervising Bank-financed projects, in particular the Belize Education Sector
Improvement (BESIP) and the SIF projects.
Bank Program Performance Indicators
* Portfolio Management: The small size of the Bank program lends itself to focused monitoring. In
accordance with new portfolio monitoring practices, close attention will be paid to Realism and Proactivity indices as well as the Quality Assurance Group's (QAG) "at risk" flags, which draw special
attention to project specific financial management and procurement problems, including availability
of counterparts funds and slow disbursements. Given the country situation, supervision budgets for
Belize are in line with Bank averages. As such, in the event projects become a "potential problem"
(i.e., possessing three or more QAG flags), the Bank will have to increase the supervision budgets
and increase its intensity to mitigate risks.
*
Project Effectiveness: Key success indicators for the each of the projects in the portfolio during the
next five years will be monitored.
*
Increase in Educational Access. In particular, under the proposed BESIP project, performance
indicators include: (i) primary school net enrollment rate to be increased from 85% now to at least
95% by end-2004; and (ii) secondary school net enrollment rate to be increased from 34% now to at
least 50% by end-2004.
59.
The Bank will strengthen its self-evaluation through more frequent review of country
portfolio performance and assessment of the progress in poverty reduction and social development
that is proposed in this CAS.
D. Creditworthinessand Managing ProgramRisks
Creditworthiness. Although Belize has been able to obtain investment grade from Moody and
60.
access to intemational capital markets, further borrowing from foreign commercial banks may restrict
external funding or even impose a reversal in the rating. The Bank's exposure in Belize remains
modest. Moreover, current IBRD debt outstanding and disbursed (DOD) in Belize is only US$40.6
million and accounts for 11% of the total DOD of the country. The Government intends to implement
the development agenda outlined in the NPESAP over the short to medium term, and is committed to
avoid short to medium term borrowing as in the past. Under this strategy, the Government would
contain its debt service on public sector external debt to government current revenues at no higher than
25% and the debt-service ratio at around 11% of exports of goods and non-factor services (Table 7). At
a minimum, the set of policies identified by the Government in its agenda, if implemented would allow
for a gradual increase in gross foreign reserves to 3 months of imports of goods and services, and
improve the external current account deficit. With a rapidly growing population, despite a cap on new
immigration by the Government, a real GDP growth rate of about 4-5% a year would be required to
reduce poverty. The IBRD exposure remains manageable with debt service to IBRD at 16-18% of total
public debt service and 2% of the country's total exports.
-23Table 7: Exposure Indicators, 1996-2004
Oelow indettedoess)
(guideine
196
19
24.2
12.9
45.5
92.9
12.3
5.6
72.0
22.3
11.6
70.1
133.3
40.8
28.6
379.3
9
19
00
20*1
20
24.9
12.5
50.0
100.2
16.6
8.3
146.8
22.5
10.9
49.4
101.2
15.5
7.7
85.0
23.8
11.4
46.9
97.0
15.1
7.1
66.5
24.6
11.5
46.7
94.6
14.3
6.7
61.7
23.1
10.6
46.5
91.9
13.6
6.3
53.5
ob00 200w
OverallIndebtedness
Debt Service/Govt.Current Revenues
DebtService/XGS"
DOD / GDP mp
DOD/XGS"
Shorttermdebt/DOD
Short term debt / GDP mp
Short term debt/GrossReserves
22.4
10.1
46.5
91.9
12.8
5.9
46.0
20.4
9.4
46.2
92.0
12.1
5.6
40.1
IBRDExposure
16.8
17.4
17.0
15.9
17.9
16.8
12.8
12.7
11.3
IBRD DS / Public DS
54.1
49.0
46.0
38.6
41.1
40.3
30.9
29.7
28.9
Pref creditorDS/publicDS
1.7
1.9
1.9
1.9
2.2
2.0
1.5
1.3
1.4
IBRD DS / XGS "
1/ Exports of Goods and Services.
Note: There was a significantincrease in short to medium term debt borrowing in 1997 (from US$ 35.4 Million in 1996 to US$ 185.3 Million in
1997). This increase had an impacton the overall 1997-99 indebtednessratios.
Source: World Bank Staff estimates.
ManagingRisks. Belize is a stabledemocracy. The incumbentGovernmenthas an
61.
overwhelmingmajorityin the Parliamentand broad supportin the localTown Boards.It is therefore
uniquelypoised to implementa strongreformprogram.However,Belize facesthree main risks over the
medium term pertainingto externalshocks,macroeconomicmanagementand local implementation
capacity. First, Belize is a small economy,vulnerableto economicshocks,suchas the erosionof the
preferentialprices for its major exports,and natural disasters. To a large extent,Belize has successfully
absorbedthe sharp declinein sugar and bananaprices sincethe late-i980s. However,it is likely to
experiencelow-growthduringthis decade becauseof furtherdeclinein real prices in sugar, bananas,
citrus, tnd a slowdownin the highly-competitivetourism and garment industries. This would decrease
per capita incomesand make it difficultto achievethe objectiveof povertyreduction.Fortunately,
Belizehas good relationshipswith the EuropeanUnion,the UK, Canada,USA and Taiwan,Chinaas
well as with multilateraldevelopmentbanks such as the IDB and the CDB. As such, externalsupport
during the economictransitionand possiblenatural disasters is likelyto somewhatmitigatetheir adverse
impact.Second,fiscal performancemay not improveor may evenworsen,which could lead to higher
externalborrowingand difficultiesin the availabilityof foreignexchangeand counterpartfundsfor
projects.The largecurrentaccount deficit in the balance of payments,low foreignexchangereserves
holding, and recent commercialborrowingsby the Governmentcoupledwith financialsector
vulnerabilitiespose additionalrisks. Third,Belize has limited humanresourcescapacityand the
recently initiatedchangesin the civil servicehaveto be well managedby he Governmentso as to
maintain its capacityto implementpolicies and projects. Takingthese risks into account,the Bank has
identifieda smallerprogramthan the previousCAS with emphasison non-lendingservices,in particular
to clarify our joint understanding of the difficult issues ahead for project preparation and to generate
open discussion of such issues. Bank projects would be small and well-focused to minimize risks.
Further, the Bank will manage and mitigate these risks by quarterly monitoring the fiscal situation,
designing projects that strengthen the execution capacity, maintaining its intensified portfolio
management effort, and stepping up donor coordination.
-24V. CONCLUDING REMARKS
62.
The Bank Group proposes a pragmatic work program that would help the Government move
towards poverty reduction at a time of transitional difficulties faced by Belize on account of the gradual
erosion of the preferential market access for its major commodity exports; provide financial support for
education, basic infrastructure, and social protection; and sharpen the macroeconomic and portfolio
management. This approach would provide valuable and timely assistance to Belize without
overburdening its debt servicing or implementation capacity while ensuring prudent management of the
economic and implementation risks facing the country in the medium to long term. At the same time,
the Bank Group is aware of the extreme vulnerability of the small states to external events and stands
ready to re-assess its program, should the macroeconomic and portfolio management conditions so
warrant it.
August 2, 2000
Washington D.C.
James D. Wolfensohn
President
By:
Sven Sandstrom
BELIZE
Country Assistance Strategy
ANNEXES
Annex A.
Annex Al.
Annex B 1.
Annex B2.
Annex B3.
Annex B4.
Annex B5.
Annex B6.
Annex B7.
Annex B8.
Annex B9.
Annex B10.
Belize at a Glance
Country Program Matrix, FY01-FY05
Selected Indicators of Bank Portfolio Performance and Management
Bank Group Program Summary
IFC and MIGA Programn
Summary of Non-lending Services
Belize Social Indicators
Key Economic Indicators
Key Exposure Indicators
Status of Bank Group Operations
Statement of IFC's Held and Disbursed Portfolio
Summary of Development Priorities
Belize at a glance
POVERTYandSOCIAL
Latin LowerAmerica middleBelize & Carib. income
1998
Population,
mid-year(millions)
GNPper capita(Atlasmethod,USS)
GNP(Atlasmethod,US$billions)
0.24
2,610
0.61
502
3,860
1,933
88B
1,740
1,541
2.7
3.8
1.6
2.3
1.1
1.5
8/4/00
Development
diamond*
Lifeexpectancy
Averageannualgrowth,1993-99
Population(%)
Laborforce(%)
Mosi recentestimate(latestyear avallable,i993-9
line)
Poverty(%of populationbelownationalpoverty
Urbanpopulation(%oftotalpopulation)
at birth(years)
Lifeexpectancy
Infantmortality(per1,000livebirths)
(%of childrenunder5)
Childmalnutrition
Accessto safewater(%of population)
Illiteracy(%of populationage 15+)
population)
Grossprimaryenrollment(%of school-age
Male
47
75
26
6
75
..
121
123
119
Female
75
70
31
8
75
12
113
..
58
68
35
14
71
14
102
105
..
99
TRENDS
RATIOSand LONG-TERM
KEYECONOMIC
1979
1989
1998
1999
GDP (US$billions)
0.36
0.68
0.73
..
..
..
..
30.3
59.7
20.9
25.1
23.0
49.9
15.9
16.9
24.2
48.8
14.5
16.2
..
-5.0
1.7
39.9
8.5
-6.2
2.2
50.0
12.3
-8.0
2.3
49.4
10.7
1998
1999
0.15
Grossdomesticinvestment/GDP
Exportsof goodsandservices/GDP
GrossdomesticsavingslGDP
Grossnationalsavings/GDP
Currentaccountbalance/GDP
Interestpayments/GDP
TotaW
debt/GDP
Totaldebtservice/exports
Presentvalueof debt/GDP
Presentvalueof debWexports
0.4
47.2
..
..
G
GNP
per
,
capita
G
pGross
D
\
|primary
enrollment
Accessto safewater
Bele
group
Lower-middle-income
Economic
ratios,
Trade
I
Investment
Domestic
Savings
Indebtedness
1979-89 1989-99
(averageannualgrowth)
GDPat marketprices
GNPpercapita
Exportsof goods and services
1999-03
3.9
1.0
4.1
1.1
4.5
1.1
4.5
2.0
5.2
2.9
6.8
2.1
-0.9
6.9
4.8
Belize
group
Lower-middle-income
STRUCTURE
of the ECONOMY
Growthof Investment
andGDPI%)
1979
1989
1998
1999
(% of GDP)
Agriculture
Industry
Manufacturing
30.8
21.9
15.1
20.4
26.5
16.4
17.8
24.0
14.2
17.7
23.9
14.2
20
a
Services
47.3
53.1
58.2
58.3
-20-
..
..
..
63.9
64.2
68.0
-40-
15.2
69.1
19.9
57.2
17.5
58.5
Privateconsumption
consumpton
Generalgovernment
Importsof goodsandservices
(averageannualgrowth)
40
1979-89 1989-99
9
-GDl
_ .
1998
1999
Agriculture
Industry
Manufacturing
Services
2.2
3.9
3.2
4.1
6.1
3.1
3.4
2.8
-1.5
-1.1
-2.9
4.0
4.5
4.5
4.5
5.1
20
Privateconsumption
Generalgovernment
consumption
Grossdomesticinvestment
Importsof goodsandservices
0.0
0.9
6.6
2.2
4.1
8.1
0.2
1.7
9.5
4.6
1.6
4.8
8.0
-0.7
12.0
11.5
-9
-10
-1S
Gross national product
3.7
3.9
3.8
4.6
97
98
99
C-GDP
Growthof exportsandImportsI%)
15
1C
97
Oa
99
Exports -- *-Imports
Note:1999dataare preliminary
estimates.
with itsincome-group
average.If dataare missing,thediamondwill
' Thediamondsshowfourkey indicatorsin thecountry(in bold)compared
beincomplete.
Belize
PRICESand GOVERNMENT
FINANCE
1979
1989
1998
2.0
-0.8
-0.3
..
27:1
5.9
-6.1
25 9
51
-2.7
1989
1998
1999
94
194
45
25
22
327
58
18
84
208
41
27
22
367
57
29
83
92
101
91
91
101
91
Inflation(%)
1999
DomesticpHices
15 -
(% change)
Consumerprices
ImplicitGDPdeflator
Govemmentflnance
(%of GDP,includescuffentgrants)
Currentrevenue
Currentbudgetbalance
Overallsurplus/deficit
3.6
3.6
10
355 5
o
..
96
s
Y
9
99
s
GOPdeflator
CPI
O
TRADE
(US$millions)
11979
Totalexports(fob)
Commodity1
Commodity
2
Manufactures
Totalimports(cf)
Food
Fuelandenergy
Capitalgoods
Exportpriceindex(1995=100)
Importpriceindex(1995=100)
Termsoftrade(1995=100)
..
ExportandImportlevels(US$mill.)
400
350
300
250
200-u
100
50
o
93
94
ss
g,
97
* Exports
98
99
*Imports
I
BALANCEof PAYMENTS
(UJS$
millions)
1989
1998
1999
Exportsof goodsand services
Importsof goodsandservices
Resource
balance
193
227
-35
338
386
-48
357
427
n*
-71
2
Netincome
Netcurrenttransfers
-11
28
-29
36
-31
43
-4
Currentaccountbalance
-18
-42
-58
7
30
-11
28
13
86
-28
no
Financingitems(net)
Changesin netreserves
Memo;
Reservesincludinggold(US$millions)
Conversion
rate(DEC,locabUS$)
1979
4
..
66
2.0
2.0
2.0
2.0
1979
1989
1998
1999
72
0
0
145
14
a
338
41
0
361
44
0
1
0
0
18
1
0
46
5
0
42
7
0
15
10
1
0
0
4
14
-1
19
0
0
0
0
0
0
0
0
5
1
5
1
4
.
..
Currentaccountbalanceto GDP(%)
0
l*l
l
EXTERNALDEBTand RESOURCE
FLOWS
(US$millions)
Totaldebtoutstanding
anddisbursed
IBRD
IDA
Totaldebtservice
IBRD
IDA
of net resourceflows
Composition
Officialgrants
Officialcreditors
Privatecreditors
Foreigndirectinvestment
Portfolioequity
WorldBankprogram
Commitments
Disbursements
Principalrepayments
Nettlows
Interestpayments
Nettransfers
Development
Economics
Composltlon
of 1999debt(US$mill.)
G:56
A 44
F- 7:
D 86
7_
5
7
3
3
E: 99
0
4
3
1
2
-1
0
6
4
2
3
-2
A - IBRD
B - IDA
c - IMF
D - Other multilateral
E - Bilateral
F - Private
G - Short-term
8/4/00
Diagnosis
estimatesthat
TheGovernment
Five-YearGeneral
Development
andBenchmarks
Actions
Country
** BankGroupBenchmarks
I
Partners
I
StrategicDirections
Over-archingobjective: Red ce poverty from 33, of population in 1999 to 28% by 2004
capacityfor
Poverty * Institutionalize
. Developpovertymonitoring . CDB-DFID
targeting
tofacilitate
lived system
l population
in 1999,33 ofthe
belowthepovertyline
I of7
BELIZE CAS: Country ProgramMatrix,FYOl-FY05
ANNEXAl
Assessment
thepoorest
WorldBankGroup
Instruments
FY01-05NLS:
in2000
monitoring
poverty
support
tothe
Proposed
** Povertyupdatein 2001and
2003
Povertyto be reducedto 30%by 2002,
inpoverty
Government
(withCDB)
monitoring
and 28% by 2004
1. Enhancing Economic Growth
Fiscal Management
public
. Expensive
programand
investment
highlevelof tax andduty
haveresulted
exemptions
infiscaldeficits,puttinga strain
onnominalexchangerate
additional
andnecessitated
borrowing
VATreplacedby 8% salestax in 1999
DFIDFinancial
Project
Management
exemptions
* Reducediscretionary
in 2000and beyond
IMFarticleIV
* CentralGovtsavingsof 3% of GDP
consultations
eachyear
Improveplanningandbudgeting Commonwealth ** Extemaldebtservice/Government
currentrevenuesnotto be higherthan
functionsanddebtmanagement DebtInitiative
25%eachyear
StreamlinePSIPand
tax administration
strengthen
to generateadequatefiscal
surpluseson a consistent
basis
NLSReviewof
Completed
IncentiveRegime
. NLSYearlyReviewof Macro
and PSIP(withCDB)- Joint
missionswithIMF
NLSSupportfor MTESPs
andpossiblePERupdate
in FY02
programbudgetingby 2001
. Govemment-wide
revenue,expenditure
. ImproveGovernment
anddebtmanagement
.Appropriate
FinancialSector
. Needto undertakea
assessment
comprehensive
of thefinancialsystem
reserverequirements
. Differential
(RR)for banksand non-banks
is distortionary
. Needto generatehigherlevel
of savingsandinvestment
. Lendingratesare relatively
highat 16-18%per year
and
Upgraderegulatory
systemsfor
supervisory
and
banksand non-banks,
trainCentralBankinspectors
supervision. IMF
. Ensureconsolidated
IDBTA
of largeconglomerates
. Reviewof RRof all
financialinstitutions
training in the new budget system
TheBanksand FinancialInstitutionsAct was
enactedin 1996
to includebuilding
. ReviseLegislation
in 2000-2001
societies,insurancecompanies
supervisionfocusedon
. Strengthen
moneylaunderingactivities,2000-2004
. Facilitateentryof a newbankby 2001
Developa frameworkfor microcredits
Iby 2002
FY01- NLS- IBRDNew
FinancialProductsto help
manageassets& liabilitiesof
CentralBank
2 of 7
BELIZE CAS: Country Program Matrix, FYOI-FY05
ANNEX Al
Diagnosis
F~~~ive-Yea Ieea
teeopmntCourt#*
andBnhaksWrdBn
Actions
for Private
Framework
SectorParticipation
** InviteprivatesectorIn waterand
sanitaton, investin basicinfrastructure
ongoing
Continue
of utilities,seaport,
privatization
andairportactivities,andby contractingoutpublicservices,road
project
maintenance,
and auditing
management,
pricingin utilities
Monopolistic
regulatory IDB
. Strengthen/establish
CDB
intelecommunication,
frameworks
DFID
power,waterandsanitation,
ports,wastemanagement
in preferential
. Uncertainty
marketsanddeclinein real
sugar
pricesfor bananas,
garmentexports
Workwithprivatesector
bananaand
in restructuring
to be
sugarproduction
competitive
intemationally
environment
ina post-Lome
EU,CDB-IFAD
Projects
. Lackof landzoningand slow
paceof landtitlingis
agricultural
constraining
production
self-employment
. Encourage
throughlandtenuresecurity,
bettercreditfacilitiesto farmers,
of Land
formulation
PolicyandUtilization
IDB LandProject
IDBTrade
Project
Promotion
I iDBprivatesector
Investment
needsto be
. Tourismexpansion
continued
draftnational
Implement
policyfor tourismwith
privatesectorcollaboration
IDB-CDB
TourismProject
needsto
diversification
. Economic
be accelerated
of
production
. Facilitate
textiles,shrimps,fishing,
. EUTradeRegime
Project
Promotion
foodprocessing
PublicUtilitiesCommission
Strengthen
regulatoryframeworks
Strengthen
Saleof BELshares;Telecomsharesby 2000
Group*
FY00Lending:Roadsand
MunicipalDrainageProject
FY01:NLSregulatory
frameworkinwaterand
sanitation
techniquesinbanana(ongoing. FY04:SocialProtection
Improveirrigation
Project
sugarrefineryin Libertaad(ongoing)
Restructure
leasesby 2001
Clearbacklogof unsurveyed
publiclands,unifythelandtitling
SelVllease
system,improvethelandregistrysystem,and
systemby 2000-2004
initiatea landadjudication
established
. LandAdvisoryCommittee
in 1999
ANNEXAl
Diagnosis
3 of 7
BELIZE CAS: Country ProgramMatrix, FYOl-FY05
Five-YearGeneral
.__________________________Strategic Direttions
Development
Partners
CountryActionsandBenchmarks
BankGroup Benchmarks
World Bank Group
Instruments
to strengthen
Continue
frameworkfor banking,
services;
information
approvalprocess
investment
and
needsto be overhauled
spedup andstrategiesdevised
to attractforeigninvestment
. Tradeneedsto befurther
liberalized
distortionsand
Eliminate
integratein CentralAmerica
CARICOM
26 QRs
Eliminate
ReduceCommonExternalTariffto 20%in 2000,
_
Iregionaltrade and CARICOM
2. Improving Access and Quality of Services
Education
BelizeNational
TrustFund
. Accessto andqualityof
servicesto thepooris low
reformto identify
Educational
to dealwith
mechanisms
languageissue
is multilingual,
. As population
anddrop-outrates
repetition
speakers
amongnon-English
is veryhigh
IDBSecondary
Increasecoverageat alllevels, EducationProject
especiallyfor poorstudents,and
. DFIDEducation
in ruraland marginalareas
SectorImprovement
Improvequalityand relevance and PrimaryEducaof tionProjects
of learningandeffectiveness
teaching
schoolcoverage
. Secondary
is 34%
. Schoolfinancingis inequitable
as poorareasreceivea lower
per student
budgetallocation
educationand
. Vocational
trainingsystemis ineffective
Mgmt
. Strengtheninstitutional
. Reformpublicfinancingof
educationto makeit more
equitableandcost-efficient
. DFIDEducation
SectorStrategy
. CDB
UNICEF
. Commonwealth
Privatesectorwouldbe
education DebtRelief
Involvedin vocational
Increasepreschoolcoverage
in
* Increasenetenrollment
primaryschoolto 95%by 2004
in
* Increasenetenrollment
schoolto 50%by 2004
secondary
IncreaseIn proportion of
secondaryschoolgraduatesfrom
disadvantagefamilies
reform
Continuecurriculum
schoolfinancereform
Implement
Improveteachertraining
trainingfor youthand adults
. Employment
2000-2004
FY02:EducationSector
Project
Improvement
Health
. Low qualityof services by
public health units and hospitals
. High maternaland pernatal
mortality
Strengthencapacityof Public
Sectorto deliver health services
. Improvecoverageand quality
of servicesfor the poor
. Developan equitable and
sustainablesystemof sector
financing
.
________________________
.
IDB HealthSector
Reform
. WHO-PAHO/
UNICEF School
feeding Programs
EU Nutrient Project
Commonwealth
Formulatea NationalHealth Reform
Programby 2001
. Strengthenthe organizationalcapacityof the
public sector to plan and deliver high quality
services,2001-2005
. Achievean equitable and sustainable system
of financingby setting up a NationalInsurance
Debt Relief
Scheme by 2004
** Increase In access by the poor to
healthservices (benchmarksto be
establishedwith IDB)
* Reductionin perinataland inant
mortalityrates (benchmarksto be
establishedunder IDB program)
UNAIDS,CARICOM, Formulatestrategy to identify and
Improveaccessto housing
financefor the poor
StrengthenSafety Nets
. SouthemBelize characterized
by high levelsof poverty
and unemployment
PSIP reviewsto focus on
appropriatesector allocation
. Germany
. Private agencies:
DFC, Habitatfor
Humanity
Work with privatesector to complete 10,000
new houses by 2004
. Allocationof public land for use as collateral,
2001-2005
. Facilitatecommunity-basedapproachesto
financing
. Civic organizations
.
Taiwan, China
. CDB
. CDB BNTF
. DFID Provisionof
Basic Needs
. IMF Soc. Security
SystemReview
Improveregionalinfrastructure . IDB ESTAP
. IDB-DFIDSouthem
and develop humanresources
RegionalDev. Plan
through increasededucation
and training
. Trainingfor effective use of
.
land resources in the region
PossibleRegional Project
on HIV-AIDS
.
. Overallsafety net inadequate
. Improveefficiency and
effectivenessin terms of cost,
outreachand targeting
PSIP reviewsto focus on
sector allocation
.
contain the number HIV-AIDS victims
WHO-PAHO
Housing
Lack of housing finance
4 of 7
BELIZE CAS: Country Program Matrix, FYO1-FY05
ANNEX Al
.
Exploringfeasibilityof including self-employed . FY03: Review of Social
Safety Nets
in NIS
. Reviewof pension and Social Securityby 2002 . Ongoing Social Investment
Fund
. Social Protectionprojection
in FY04
FinalizeRegional DevelopmentPlan and
implementthe IDB projects,2000-2004
.
ANNEX Al
Diagnosis
BELIZE CAS: Country Program Matrix, FYOI-FY05
Five-YearGeneral
StrategicDirections
CountryActionsandBenchmarks
Development |
J
**BankGroupBenchmarks
Partners
3. Modernizingthe State
and ImprovingGovernance
5 of 7
WorldBankGroup
Instruments
andEfficient
Transparent
Financial
andPersonnel
Management
in budgeting,
revenue,anddebt
. Improvement
Tax
. DFID:Financial
Strengthen
Revenue,
Dvpt
management
Administrations Management
andCustoms
(Budget
Management)
Revenue
Administration
. Needto reformPublicService
foreffectivedeliveryof services
Introduce
a systemof executive. UNDP:Public
ServiceReform
agencies
withperformance
benchmarks
andsomedegree
of
. Strengthening
of autonomy
. Reduced
rolefor Govtin
Ministryof Rural
utilitiesandhealthsector
Development
Cabinetdecisionon publicservicereformplanin
early2000
. Establisha reformunitin2000
and introduce
a CEO
. Rationalize
functions
ineachMinistry,2000
. Weakcapacityto enforcelaws
pertaining
to corruption,
moneylaunderingand drug
Createmechanisms
to minimize. U.S.Govt
for corruption,
. UKGovt
opportunities
anddrug
moneylaundering
trafficking
to
. Contractor
generalappointed
overseetenderingand bidding
to investigate
. Ombudsman
abuseby publicofficials
. Betterdefinition
of initial
base
corruption
NLSFinancial
Management
of Corruption
Act,Money
Prevention
underBank
Laundering
Act,and Misuseof DrugsActpassed Assessment
Projects
inthe 1990s
. Complete
auditsof publicaccountsby mid-2000
trafficking
. Lackof popularpartiapation
indecision-making
and
. Lackof transparency
in Govemment
accountability
activities
. Improve
accountability
and
in publicresource
transparency
management
for
. Reduceopportunities
corruption
an actionplanto engagecivicsociety
. Develop
by 2002
capacitywithextemal
. Strengthen
enforcement
support,2001-2005
. PoliticalReform
Committee
established
In 1999
Act for "mattersof national
Referendum
in 1999
importance'
. Establish
a framework
for community
andstrengthen
thefinancialand
participation
technicalcapacityof localgovemments,
2000-2004
.
ANNEX Al
Diagnosis
^00
BELIZE CAS: Country Program Matrix, FYOl-FY05
- Fiear
General
Development-Country
4. Environmentally
Deforestation,
dueto rapid
expansionof agriculture
Implement
NEAPrecommen- . IDBSouthern
dations
RegionalDvptand
TourismDvptPlans
. Ensureparticipation
of local
IDBEnvironmental
NGOsand CBOs
andSocialTechnical
AssistanceProject
. Formulate
and implement
a
. IDBSouthern
landzoningsystemandCZM
Highway
ActionsandBenchmarks
. Inadequate
sanitationand
wastedisposalfacilities
. Contamination
and
degradation
of waterresources
. Furtherexpansionof tourism
is constrained
by inadequate
infrastructure
- problems
includewaterpollution,coastal
zonedegradation,
deforestation
and inadequate
wastedisposal
. Collaborate
withthe Private
Sectorin addressing
these
problems
World,BankGroup
SustainableDevelopment
Raiseuserchargesin environment-related
activities,2000-2004
Decentralize
and involvelocalcommnunities
andNGOsinprojectsand feecollection,
2000-2004
GEFsmallgrantprograms
Facilitatelandzoning
Providetechnicalassistance
to Mayan
communities
to improvetheir land productivity
and protecthistoricalsites
. Implement
TropicalForestry
ActionPlan
6 of 7
OngoingIDFfor capacity
buildingof indigenouspeople
DFIDTFAP
.UNDP/GEF:
Protection
and
regeneration
of the
environment
Identifyclearresponsibilities
for each
environment
relatedMinistrylDept,
2000-2001
. IDB SolidWaste
Management
Plan
Investin potablewaterandsanitation
inruralareas,withfocuson ruralpoor,2000-2004
** Increasein accessto safewater (GOB
In the processof identHfying
benchmarks)
. EstablishSolidWasteManagement
Authority
by 2000
. WithprivatesectorGovemment
OngoingGEF:
prepareda TourismActionPlan,2001-2004
Meso-American
Biological
Developed
a nationalbio-diversity
plan
Corridorprojectsand
Increasein visitorarrivalsandforeign
NorthemBelizeBiological
exchangeearningsfromtourism
Corridorprojects
Seekingextemal
assistance
to
implement
biodiversityplan
Depletionof naturalspecies
. Belizeis in thehurricanebelt
andthecoastallandis below
sealevel
. Reducevulnerabilities
by
IDB Hurricane
and
improvingDisasterManagementDisasterPreparedand Emergency
Preparedness ness
. IDB Supportfor
NEMO
. Strengthen
the Emergency
Management
Organization
and
rehabilitate
hurricaneshelters,1999-2001
Reducepotentialflooding in six
ruralareasby Implementing
drainageworks,2000-2004
.____________________________________
. FY01:LendingRoadsand
Municipal
DrainageProject
FY01NLSongoingregional
Studieson Catastrophic
Reinsurance
and Risk
Management
Diagnoss
DIagnosis
I
Five-YearGeneral
StrategicDirections
CountryActionsandBenchmarks
BankGroupBenchmarks
Development
Partners
Regional Agenda
Theregionhad identified
and
Governance,
Education,
issuesas
Tourism-environment
prioritiesfor thenext3 years
Hurricanerelateddisasters
arecommonto theCaribbean.
7 of 7
BELIZE CAS: Country Program Matrix, FYOl-FY05
ANNEX Al
Enhancehumandevelopment
to deal
ImproveGovernance
withcrimeandviolence,and
to
. Protectenvironment
improvetourism
competitiveness
DisasterPreparedStrengthen
ness
EU,IDB,CDB,
UNDP,UK,DFID,
CIDA,and
severalother
bilateraland
to reacha
agendies * Caribbeancountries
multilateral
World BankGroup
Instruments
FYOIO- NLSOngoing
regionalreportson Small
Vision
States,Caribbean
2020,Risk-Management
CGCEDmeetingsin June
actionplans
andprepare
consensus
2000,June2002,and
afterthe2000JuneCGCEDmeetings
June2004
FY02:PossibleCaribbean
Facility
Reinsurance
CAS Annex B1 -
SelectedIndicatorsof BankPortfolioPerformanceandManagement
Indicator
Portfolio Assessment
a
Number of Projects Under Implementation
Average Implementation Period (years) b
Percent of Problem Projects by Number I c
Percent of Problem Projects by Amount a,c
Percent of Projects at Risk by Number 8 d
Percent of Projects at Risk by Amount a,d
Disbursement Ratio (%) e
1997
1998
1999
2000
4
3.1
0
0
0
0
37
3
4.0
67
72
67
72
48
1
2.3
0
0
0
0
36
1
2.8
0
0
0
0
5
No
120
30
No
122.4
40.8
No
26.7
26.7
No
57
57
Portfolio Management
CPPR during the year (yes/no)
Supervision Resources (total US$)
Average Supervision (US$/project)
Memorandum Item
Since FY 80 Last Five FYs
Proj Eval by OED by Number
5
2
Proj Eval by OED by Amt (US$ millions)
41.8
23.4
% of OED Projects Rated U or HU by Number
20.0
50.0
% of OED Projects Rated U or HU by Amt
8.2
14.7
a.
b.
c.
d.
e.
As shown in the Annual Report on Portfolio Performance (except for current FY).
Average age of projects in the Bank's country portfolio.
Percent of projects rated U or HU on development objectives (DO) and/or implementation progress (IP).
As defined under the Portfolio Improvement Program.
Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the
beginning of the year: Investment projects only.
CAS Annex B2 - Bank Group ProgramSummary
Belize
ProposedIBRDIIDABase-CaseLending Program'
Fiscalyear
Project
2001
US$(M)
StrategicRewardsb
(HiMiL)
Implementation
b
Risks(HIWML)
ROADS
ANDMUNICIPAL
DRAINAGE
PROJECT 13.0
M
M
2002
BELIZE
EDUCATION
SECTOR
IMPROVEMENT
F 8.0
H
M
2004
SOCIAL
INVESTMENT
FUND
7.0
H
L
Total,FY2000-2004
28.0
a. Thistable presentsthe proposedprogramfor the nextthreefiscalyears.
b. For eachproject,indicatewhetherthe strategicrewardsand implementationrisksare expectedto be high(H), moderate
(M),or low(L).
Templatecreatedon 8/4100.
CAS Annex B3 (IFC & MIGA) for Belize
Belize - IFC and MIGA Program, FY 1997-2000
1997 1998 1999 2000
IFC approvals (US$m)
5.50
10.00
FOOD & AGRO-BUSINESS
100
100
Total
100
100
Loans
Equity
Quasi-Equity
Other
100
100
Total
100
100
Sector (%)
Investment instrument(%)
MIGA guarantees (US$m)
Annex B4
CASAnnex B4 - Summaryof Nonlending ServicesProduct
Completion FY
Cost (US$000)
Audience"
Objectiveb
Recent compleftons
Review of the Tax and Duty Exemptions
Macro Update - PSIP Review
FY98
FY99
40,000
25,000
Govemment
Gov./Donors
Problem-Solving
Prob.Solving/
Public Debate
Underway
Capacity Building & Institutional Dev
Strengthening of Indigenous People
FY00
IDF
Gov.Donors
Problem Solving
FY02
FYOO-04
FY02
30,000
10,000
20,000
Govemment
Govemment
Govemment
FYOO-04
FY03
100,000
50,000
Gov/Pub Diss.
Govemment
Problem Solving
Problem Solving
Prob. Solving/
Public Debate
Knowledge Gen
Problem Solving
Proposed
Regulatory Framework for Water
and Sanitation
Yearly Review of PSIP (with CDB)
Support for MTES Paper
Just-in-Time NLS (Topics
to be determined on demand)
CPPR/CPAR
a. Govemment, donor, Bank, public dissemination.
b. Knowledge generation, public debate, problem-solving.
CASAnnexB5 - Belize
Belize Social Indicators
Latestsingleyear
Sameregion/lncome
group
LatinAmerica & Lower-middl-
1970-75
1980-85
1992-98
Caribbean
Income
POPULATION
Totalpopulation,mid-year(millions)
Growthrate(%annualaverage)
Urbanpopulation(%of population)
Totalfertilityrate(birthsper woman)
0.1
1.4
50.2
6.4
0.2
2.6
48.5
5.4
0.2
2.7
4.65
3.7
502
1.6
75
2.7
886
1.1
58
2.2
870
1,180
80
2,610
122
3,860
123
1,740
116
7.1
2.8
2.6
3.8
4.7
2.1
5.8
5.1
,,
3.7
7.4
87
89
85
85
91
99
67
99
38
75
99
69
75
83
36
71
49
59
98
86
93
82
93
93
B
6
8
17
59
57
61
71
70
73
75
73
76
70
68
73
68,
67
71
77
35
70
26
31
31
41
35
44
170
90
12
189
200
142
POVERTY
(%of population)
National headcount index
Urban headcount index
Rural headcount index
INCOME
GNPper capita(USS)
Consumerpriceindex(1990=100)
Food price index (1990=100)
INCOMEICONSUMPTION DISTRIBUTION
Gini index
Lowestquintile(%of incomeor consumption)
Highestquintile(%of incomeor consumption)
SOCIALINDICATORS
Public expenditure
Health (% of GDP)
Education(%of GNP)
Social security and welfare (% of GDP)
Net primary school enrollment rate
(%of agegroup)
Total
Male
Female
Access to safe water
(% of population)
Total
Urban
Rural
Immunizationrate
(%under 12months)
Measles
DPT
Childmalnutrition(%under5 years)
Life expectancyat birth
83
(years)
Total
Male
Female
Mortality
Infant(perthousandlive births)
Under5 (perthousandlive births)
Adult (15-59)
Male (per 1,000population)
Female (per 1,000population)
Matemal (per 100,000 live births)
1999WorldDevelopment
IndicatorsCD-ROM,Word Bank
116
Annex B6
Page1 of 2
Belize - Key Economic Indicators
Indicator
National accounts (as % of GDP)
Gross domestic product'
Agriculture
Industry
Services
1995
1996
Estimate
1998
1997
1999
Projected
2001
2002
2000
2003
100
20.3
26.3
53.3
100
20.8
25.6
53.5
100
19.6
25.6
54.8
100
17.8
24.0
58.2
100
17.7
23.9
58.3
100
17.7
23.8
58.5
100
17.8
23.9
58.3
100
17.5
23.7
58.8
100
17.5
23.6
58.9
Total Consumption
Gross domestic fixed investment
Government investment
Private investment
(includes increase in stocks)
Exports (GNFS)b
Imports (GNFS)
83.6
20.6
7.9
12.1
82.6
18.8
6.6
12.8
81.2
23.3
10.6
13.0
84.1
22.6
12.2
10.8
85.5
23.8
11.1
13.1
86.0
23.5
9.2
14.6
84.5
23.8
7.6
16.1
83.5
23.0
7.1
15.9
83.0
23.1
7.4
15.7
49.8
53.4
49.0
50.9
52.6
57.0
49.9
57.2
48.8
58.5
48.3
58.2
49.3
57.6
50.6
57.1
50.6
56.7
Gross domestic savings
Gross national savings'
16.4
18.4
17.4
18.2
18.8
20.2
15.9
17.0
14.5
16.2
14.0
16.1
15.5
16.2
16.5
17.1
17.0
17.4
592.0
630.9
648.6
675.7
730.5
789.2
836.9
887.5
941.2
2650
2700
2670
2610
2730
3113
3211
3260
3388
3.6%
3.6%
4.5%
4.5%
4.5%
4.4%
6.0%
5.5%
5.0%
5.5%
5.0%
5.6%
5.0%
5.5%
Real annual per capita growth rates (%, calculated from 1984 prices)
Gross domestic product at market prices
0.5%
-0.6%
0.4%
Total consumption
5.3%
-1.8%
-1.8%
0.9%
-2.0%
-2.0%
Private consumption
1.8%
6.3%
7.7%
1.8%
3.1%
5.0%
3.7%
3.8%
5.2%
2.7%
1.6%
0.4%
2.6%
2.1%
2.0%
2.5%
2.7%
2.7%
Memorandum items
Gross domestic product
(US$ million at current prices)
GNP per capita (US$, Atlas method)
Real annual growth rates (%, calculated from 1984 prices)
Gross domestic product at market prices
3.3%
2.0%
Gross Domestic Income
3.3%
2.00/o
Balance of Payments (US$ millions)
Exports (GNFS)b
Merchandise FOB
Imports (GNFS)b
Merchandise FOB
Resource balance
Net current transfers
Current account balance
295
164
316
238
-22
33
-10
309
171
321
232
-12
29
-7
341
200
373
281
-32
32
-23
338
194
386
294
-48
36
-42
357
208
427
330
-71
43
-58
382
226
459
356
-77
49
-61
413
250
482
375
-69
41
-63
449
280
506
395
-57
42
-52
476
300
533
417
-57
42
-53
Net private foreign direct investment
Long-term loans (net)
Official
Private
12
7
9
-2
17
33
27
6
8
23
21
3
14
11
5
6
25
23
11
12
15
11
17
-6
23
19
31
-12
25
22
32
-10
28
23
34
-11
Other capital (net,incl. errors& ommissions)
-5
-22
-9
4
38
53
27
18
19
Change in reservesd
-3
-21
0
13
-28
-18
-7
-14
-17
-3.6
-1.9
-4.9
-7.2
-9.7
-9.8
-8.3
-6.4
-6.1
0.4
0.4
0.4
-8.5
6.8
6.8
6.8
-4.5
13.2
13.2
13.2
10.4
-1.8
-1.8
-1.8
1.6
8.7
9.5
-0.6
13.1
6.9
6.8
0.4
4.9
7.5
7.9
0.6
3.4
8.2
8.7
0.7
3.4
4.0
2.9
0.6
3.8
Memorandum items
Resource balance (% of GDP)
Real annual growth rates ( YR84 prices)
Merchandise exports (FOB)
Primary
Manufactures
Merchandise imports (CIF)
Annex B6
Page2 of 2
Belize - Key Economic Indicators
(Continued)
Indicator
1995
Public finance (as % of GDP at market prices)'
Current revenues
25.7
Current expenditures
21.5
Current account surplus (+) or deficit (.)
4.2
Capital expenditure
7.8
Foreign financing
0.2
Monetary indicators
M2/GDP
Growth of M2 (%)
Privatesectorcreditgrowthl
total credit growth (%)
Price indices( YR84 =100)
Merchandise exportprice index
Merchandise importprice index
Merchandise terms oftrade index
Real exchange rate (US$/LCU)f
Real interest rates
Consumer price index (% change)
GDP deflator (% change)
1996
1997
Estimate
1998
1999
2000
Projected
2001
2002
2003
26.1
21.8
4.4
8.2
6.6
27.4
20.5
6.9
12.0
3.8
27.1
21.3
5.9
13.3
3.3
25.9
20.8
5.1
11.2
3.0
25.2
19.7
5.5
9.4
1.6
24.6
19.9
4.7
8.1
2.7
24.9
20.4
4.5
7.5
3.0
25.1
20.6
4.5
7.6
2.9
51.5
15.3
65.8
51.0
5.5
-373.2
53.8
8.4
94.8
57.0
10.4
67.1
58.7
11.2
69.7
58.9
8.5
58.6
58.9
6.0
90.1
58.9
6.0
81.9
58.9
6.0
78.1
110.2
112.3
98.1
100.0
107.5
114.4
94.0
105.3
110.9
125.7
88.2
108.6
109.5
129.4
84.6
108.3
108.0
128.3
84.2
104.1
109.7
132.1
83.1
104.6
113.2
134.5
84.2
106.2
117.1
136.9
85.5
107.9
120.4
139.2
86.5
109.4
3.9
10.4
6.4
4.5
-0.6
-0.8
-0.8
-0.3
3.6
3.5
2.5
1.9
0.4
1.0
0.2
1.0
0.3
1.0
a. GDP at factor cost
b. "GNFS" denotes "goods and nonfactor services."
c. Includes net unrequited transfers excluding official capital grants.
d. Includes use of IMF resources.
e. Consolidated Non-Financial Public Sector
f. "LCU" denotes "local currency units." An increase in US$/LCU denotes appreciation.
Annex B7
Page3 of 3
Belize - Key Exposure Indicators
Indicator
Total debt outstanding and
disbursed (TDO) (US$m)a
1995
1996
Estimate
1998
1997
1999
Projected
2001
2002
2000
2003
261
287
455
338
362
373
391
412
437
5
33
23
12
21
10
18
.21
23
38
40
40
46
43
47
51
51
53
82.2
44.0
11.9
87.3
45.5
12.9
122.6
70.1
11.6
91.2
50.0
12.5
92.4
49.6
10.9
89.3
47.2
11.4
87.6
46.7
11.5
85.4
46.5
10.6
85.6
46.4
10.1
..
..
..
..
31.1
32.4
33.2
33.7
33.4
12.7
32.3
11.3
28.8
12.6
29.6
12.8
30.8
16.8
40.3
17.9
41.1
15.9
38.6
17.0
46.0
17.4
49.0
1.4
30
1.4
33
1.3
40
1.5
41
2.0
44
2.2
46
1.9
52
1.9
57
1.9
58
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Loans
..
..
..
5.5
..
10
Equity and quasi-equity/d
..
..
..
..
..
..
..
..
..
..
..
..
Net disbursements (US$m)a
Total debt service (TDS)
(US$m'a
Debt and debt service indicators
(%)
TDO,XGSb
TDO/GDP
TDS/XGS
Concessional/TDO
IBRD exposure indicators (%)
IBRD DS/publicDS
Preferred creditor DS/public
DS (%4.)
IBRD DS/XGS
IBRI) TDO (US$m)c
Of which present value of
guarantees (US$m)
Share of IBRD portfolio (%)
IDA TDO (US$m)c
IFC (US$m)
MIGA
MIGA guarantees (US$m)
a. Includes public and publicly guaranteed debt, private nonguaranteed, use of IMF credits and net shortterrn capital.
b. "XGS" denotes exports of goods and services, including workers' remittances.
c. Includes present value of guarantees.
d. Includes equity and quasi-equity types of both loan and equity instruments.
CAS Annex B8 - Belize
Status of Bank Group Operations (Operations Portfolio)
Closed 19
Projects
Difference Between
Board
Date
Fiscal
Year Active Projects
1997
P039292
SOCIALINVEST.FUND
Last PSR
Supervision Rating bI
DvlpetIpeetto
ObIective
Proress
S
S
a. Intended disbursements to date minus actual disbursements to date as projected at appraisal.
Expected and Actual
Disbursements'1
Original Amount in US$ Millions
IBRD
7
IDA
Cancel.
Undisb.
0
0
3.75
Orig. Frm Rev'd
3.25
0
CAS Annex B9 (IFC) for Belize
Belize
Statement of IFC's
Held and Disbursed Portfolio
As of 6/30/00
(In US Dollars Millions)
Held
Disbursed
FY Approval Company
Loan Equity Quasi Partic Loan Equity Quasi Partic
1993 BECOL
5.5
0
0
0 5.5
0
0
0
1998 Nova/Ambergris
5.5
0
0
0 5.5
0
0
0
Total Portfolio:
11
0
0
0
ApprovalsPendingCommitment
Loan Equity Quasi Partic
2000 BAL
10.0
11
0
0
0
CAS Annex B10 - Belize
CASSummaryof DevelopmentPriorities
Network area
Major Issues
Country
performance
Country
priority C
Bank priority c Reconciliationof
country and
Bank priorities d
Poverty Reduction & Economic Management
Poverty reduction
Poor
Economic policy
Poor
Rural Poverty
(especially Mayans and new
immigrants in Toledo and Cayo
Districts)
Fiscal Management
H
H
IMF assistance
to be agreed
upon
M
H
Policy dialogue
to be initiated
Export Sector Restructuring
& Diversification
Public sector
Fair
Regulatory Framework for
M
H
Utilities. Civil Service Reform
Gender
Fair
Equal Opportunity for Women
M
M
Fair
Quality, Equity & Sustainable
H
H
Health Reform (including National
Health Insurance)
Review of Social Safety Nets for the
Poorest
H
M
H
H
Human Development Department
Education
Financing
Health, nutrition & population
Fair
Social protection
Fair
Strong IDB
Involvement
Environmentally& Socially Sustainable Development
Rural development
Poor
Southern Regional Development
H
H
Environment
Fair
Land Use Management
H
H
Water Pollution
Fair
Capacity Building for Indigenous
People
H
H
Bank IDF
Grant
Financialsector
Poor
M
H
IMF T/A under
construction
Private sector
Fair
StrengtheningSupervision and
Enhancing Competition
Diversificationfor Growth
H
H
Fostering Potential Industries
M
M
Land Use
Management/Environment
Maintenance& Rehabilitation
M
M
H
H
Private Participation
M
M
Social development
Finance, Private Sector & Infrastructure
Energy & mining
Good
Infrastructure
Fair
Reduction of charges
a. Use "excellent," 'good," 'fair," or "poor."
b. Indicate principal country-specific problems (e.g., for poverty reduction, "rural poverty;" for education, 'female secondary completion;" for environment,
"urban air pollution").
c. To indicate priority, use 'low," 'moderate," or "high."
d. Give explanation, if priorities do not agree; for example, another MDB may have the lead on the issue, or there may be ongoing dialogue.
IBRD28036
89°00
tJ0:-:.-.
es88"3;0sol{
Choo~~~~~~~~~lo
18'30
zCo;
S.S
M
E X I C O
Che-
~~~~~
~~~~~
M
E
M
E I
I
potlc~cc
XC O 0
82xE
!L-y
g
Lo.w-11I
}
:
Fro
-::
-::
Son V ctojr
Doagto
Son Anton
6
P<rogtesso
/*
//
o i
COROZAL
DISTRICT
-
rSe
u
Ne"t.
I
~
<
(RneRdgf
~
~
Feipe
~~~~~Son
Necs'od
-f-
C A RI/B
=
SEA
e°
\
tf
fA N
/
-
Cotehito
7
.
0
/
\eR
Moskoll
Chicago
ORANEWALK
Cr
-
DISTRICT
-. c,
Do
/
BoonE
17i'3__90
Piy
DI STR
Oronge
~~~\C~~~~A0
R.cn'
-
t..
L-h-,nue
C,
A 'R
vv.1k~~~~~~~~~~~~~~~~~~~~~~S
'-
irX''-i'0
*(ZSan
ignoa/s
HBencauel
Pomono
P-na
leseX
C A YO DiS TRICT
177°0
J
Alko
ie'
t
Is
g
\
~~~~~~~~D
<
.
.
ln
- 1S1
.a
C RE E K _>°i
._
j
''
:
= 8; -
Kendoo1~,5
I ST R I C T }e--0-*,,<<
t
j
i-
-j
_
-
o
X
LI1
Z,E
}
Other Roods
t
P
Copitol
D~~~~~~~~~~~~~~~~~~~~~~0
fistricf
caplitals
itttt,i-t
h
--0-
Natipnal
-
/
*
_
I-
:-.|:
t4
/
S
:-.:--:
.
Towns:andVilloges
0
Mayon Ruins
.A
DistrictBoundaries
{ 3,
j
*"
2
Medino Bank
TOLEDO
Hlgote
- .-.-. -.wb -
* InternationalBoundories
vR . \ wiT.F;.- -
1
fK{tOMEThRS
:-:
-
2
3
0
5
DISTRICT
Bi Foi
*Son Antonio
9
USAN
'
OCA
t_tiLA,
C_Ayj
~ ~~~
St.t on
C,u A TE
M AL
69'00
~
~
~
~ ~ ~ ~ ~ ~ ~
?
A
~
$
8
HNUAS
AAO
O
Cnboo
RI. 0~~~~~~~~~~~~~~~~~~~T
jcoAs
gNDURA
MAY1996