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Boss Man IMF to Belize, Raise Your Taxes!

Article Summary:

Belize struggles with a high rate of poverty at 41% and despite a 5.7% spending on GDP for social protection, the country failed to show results. The International Monetary Fund recommends raising general taxes from 12.5% to 15% to fund more social programming.

Original Article Text From Channel 5 Belize:

IMF Report Solemn Recommendations

The IMF country report was released late last week. It follows consultations conducted in August with Belizean officials on economic developments and policies. There are two issues that stand out in respect of social indicators. The report recognizes the high poverty rate of forty-one percent and says that despite a five point seven percent spending on GDP for social protection, it has not translated into results and that poor families remain vulnerable.

One recommendation from the IMF mission that may not sit well with most Belizeans is to increase the general sales tax from twelve point five to fifteen percent to avoid a predicted twenty-two million dollar decrease in GST revenues in the coming year. The alternative, says the IMF team, is to phase out tax concessions that were implemented in 2010. In recent developments, the report notes that the nationalizations of B.E.L. and B.T.L. have affected an already weak investment climate.

The IMF projects that the economy will expand modestly for 2011 since inflation is up due to increased fuel and food prices and that the external current account deficit will remain at around three percent of GDP. It notes, however, that the current fiscal strategy is “insufficient to place the public debt ratio firmly on a downward trajectory and to address the large financing needs that are projected to emerge over the medium term.” The findings reveal that contingent liabilities are estimated at seventeen percent of GDP, which is around a half-a-billion dollars, but only zero point seven percent of GDP is recorded in the official debt statistics. The four main sources that contribute to the contingencies include nationalized assets, pending court judgments mainly associated with foreign investors, cancelled contracts—including with foreign investors—and loan guarantees to the private sector.

For an in depth look at the IMF report, you can view the complete findings at channel5belize.com.

Link to Original Article:

From Channel 5 Belize

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