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Belize: Country and Foreign Investment

Executive Summary

Belize is centrally located in the Americas

Belize is an independent country within the Commonwealth bordered by Mexico, the Caribbean and Guatemala to the east and south. It is 24,000 sq km in size, with a population of just over 334,000. The country is, or was, heavily forested. The climate is nearly tropical, and there can be hurricanes. The extremely mixed population is racially harmonious. English is the official language and the main religion is Christianity. The currency is the Belizean dollar, fixed at BZD2 = USD1.

Sugar and bananas represent a difficulty for the centrist Government . . .

In Belize's bi-cameral Westminster-style government, the lower house was most recently elected in 2012 and the government is tackling economic problems caused by reduced access to privileged markets for sugar and bananas, by encouraging foreign investment in manufacturing and the development of mass tourism. The country's structural deficit can only be financed by overseas borrowing, but the Government has been able to renegotiate the terms of repayment for the 'super bonds'. GDP growth was 2.7% in 2010, 1.9% in 2011 and 5.3% in 2012.

In October 2004, the government began implementing a significant tightening of fiscal policy. This resulted in a reduction in the country’s overall deficit to 3.1% in fiscal year 2005/2006. A deficit of 3.2% is estimated for 2012, slightly lower than 3.4% for 2011, up from 1.5% in 2010.

In August 2006, former Prime Minister Said Musa announced that the servicing of the country's debt, which accounted for 90% of its GDP, was "no longer a viable option" on existing terms, leading to a rearrangement of Belize’s external debt stock.

. . . and foreign pressure may hold back offshore development.

Internal Belizean taxes are moderate, with a small turnover-based tax in addition to 25% corporation tax. Employees pay a flat tax of 25% tax on income plus social contributions. There is a variety of offshore schemes, including IBC legislation, a modern trusts law, and an array of free zones and investment incentive schemes. Belize offered 'economic citizenship' until the program was cancelled in 2002, and there is a retired persons regime. International pressure on Belize to moderate its offshore regime in exchange for debt relief seemed to have slackened in 2003.

The business environment is quite good, but e-commerce lags.

Telecommunications are state-of-the-art, but too expensive because of the telecommunications monopoly which is holding back development. Recent moves to open up an e-commerce free zone may have come too late for Belize to catch up with more advanced jurisdictions. Air and sea communications are both good, and it may be that Belize's immediate offshore future lies more in expanding its effective and popular free zones than in other directions.

 

 

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