Belize Economic Recovery Plan: A Working Document

By John Saldivar MSc (Econ)


Since March 2020, the Belize economy has come to almost a grinding halt as a consequence of the worldwide pandemic COVID-19. Tourism, the mainstay of the economy, collapsed immediately after the closing of the international airport and with it has gone over fifteen thousand jobs and millions in foreign exchange. The subsequent lockdown of the entire country with State of Emergency movement and business opening restrictions has resulted in a region-leading successful fight against the pandemic. However, this has precipitated further massive loss of jobs and government revenue. Public finances have collapsed to ten percent of projections the last two months and COVID-19 relief efforts have prompted massive local borrowing with the anticipation of even more international borrowing as multilateral assistance comes on stream. With major debt servicing obligations falling due shortly, a debt crisis is looming. And with tens of thousands already out of a job and more to come, social collapse is staring the country in its face unless urgent economic recovery measures are implemented to stimulate the economy, create new industries, buttress existing ones, and create new jobs. We must now focus on the economic recovery of our country. People need help, jobs need to be created, industries need to be established, our economy needs to be rebuilt.


Depending on which timeline is followed, the world and more importantly our major trading partners can expect to be safely out of this pandemic in anywhere between six to eighteen months by which time hopefully a vaccine will be developed. With public health experts predicting second and third waves of the virus in major economies like China and the United States, it might be safe to assume the outer limits for our trading partners to bring this pandemic under control.

The International Monetary Fund in its April World Global Report acknowledges that “the pandemic is inflicting high and rising human costs worldwide, and the necessary protection measures are severely impacting economic activity.” According to this Report, the global economy is projected to contract sharply by three percent in 2020 but return to grow by five point eight percent in 2021 “assuming that the pandemic fades in the second half of 2020 and containment efforts can be gradually unwound.” The Report identifies the need for policymakers to “implement substantial targeted fiscal, monetary, and financial market measures to support affected households and businesses domestically.” It goes on to acknowledge, quite introspectively, that “strong multilateral cooperation is essential to overcome the effects of the pandemic, including to help financially constrained countries facing twin health and funding shocks, and for channeling aid to countries with weak health care systems.” It is therefore anticipated that the convening of a forum to discuss the contribution of the multi-laterals to the economic recovery of member developing nations is imminent. We must be ready with our Plan already long underway.


One thing is for certain, even if Belize is able to control the spread of the virus within our borders as we appear to be doing, it is clear that our neighbors especially the two to the north who are our major trading partners, are a ways off from bringing this virus under control. This means that even as we try to return to some normalcy in Belize, it will be some time before we can safely open our borders for visitors. Economic recovery at least for the next twelve months will therefore have to be mostly internally driven. Agriculture, infrastructure and construction, industry expansion, digitization, and tourism can be the five pillars of our economic recovery plan.


Belize with its large land mass compared to other countries in the region especially the Caribbean, enjoys an advantage in agricultural production that has been brought into focus by the Covid-19 pandemic. Agriculture can ensure national food security, alleviate rural poverty, and earn foreign exchange. Designing new agricultural policies to stimulate production must focus on the inputs, the methods, the marketing and the financing of agriculture.

We must eliminate the systemic biases and fetters against agricultural production. Agricultural inputs from seeds to fertilizers, pesticides, insecticides, machinery and equipment for earthmoving, planting and harvesting must be brought under more favorable taxation policies, where this is not already the case. The idea is to reduce or eliminate all pre-production taxation on agriculture.

We must expand and improve research, marketing and extension services for farmers both large and small. Farmers need assistance to help to improve know-how, efficiency, productivity, and profitability of production. This will contribute to the good of their family, community, and society. To this end the Belize Marketing and Development Corporation (BMDC) must be reconfigured and repurposed to serve as the national market research institute for the agricultural sector to link farmers with markets, local, regional, and international. The Agriculture Department Extension Services Division must be revitalized and refocused to provide greater assistance to an expanded number of farmers.

As the number of small farmers grow, we must encourage a return to cooperative management of agriculture. Small farming does not have to mean small management. The cooperative movement is an opportunity for many to become one and enjoy the benefits of economies of scale enjoyed by large firms by coming under one management in certain aspects. The Department of Cooperatives in close collaboration with the Department of Agriculture and the BMDC must begin again to work with farmers to re-establish the cooperative movement in the agricultural sector.

The Lands Department in conjunction with the Department of Agriculture must identify arable tracts of land across the country for a new Small Farmers Development Program which will see a hundred families co-located on a thousand acres of land parceled into five-acre plots. The extension department will provide extension services and the hundred plots will be managed cooperatively, from land clearing and preparation to planting, harvesting, and marketing. Financing will be sought from multilateral institutions under Covid-19 relief programs. It is anticipated that at least fifty thousand acres of land across the country can be identified and earmarked for this program which will benefit at least five thousand families and put ten thousand persons back to work, this time in agriculture.

We must also connect agriculture with digital technology. Farmers must be put in direct contact with consumers using available technology. This will enable farmers with the assistance of the extension department and the BMDC to start predicting demand and make proper production plans thereby increasing efficiency and profitability.


For any economy undergoing structural change a major challenge is skills training. Until the workforce can be retrained or skill sets can be matched with employers, the best candidates for immediate impact on job creation are those industries that require minimal or no training. Road infrastructure and housing construction investments are therefore very good candidates for rapid job creation.

Already government has programmed a couple hundred million for various highway construction projects including the Coastal Highway, the Caracol Road, the Sarteneja Road, the George Price Highway (already underway), and the Philip Goldson Highway (also already underway). These projects should be fast tracked to rapidly create up to three thousand new jobs.

A feasibility study should also be taken to determine the appropriateness of tolling all or portions of these roads to provide the financial stability for their maintenance which if not provided for will put additional strain on public finance.

A dialogue must be started between Government and private contractors and investors to explore public private partnerships and build, operate transfer models to finance the construction of other vital roads in the national road network as well as the construction of new public buildings across the country to reduce government’s office rental bill. These partnerships will reduce government dependence on public borrowing to spur the construction boom and has the potential to provide another five thousand jobs.

A housing construction boom will similarly be timely in absorbing some of the unskilled labor dislodged from the tourism industry. Simultaneously, housing construction is in line with reaching our millennium goal of lifting our people out of poverty and providing adequate shelter for all. A roof over our head is a human right not a privilege.

Given the huge unplanned outlays already taken on by government most of which have had to come from lending sources, it may be untenable at this time for public funds to be used to spark this boom. Creative incentives must therefore be found to direct private sector funding to a massive housing construction boom. The Central Bank can look at the classification of the mortgage portfolios of commercial banks, or even the deposit rate relating to such portfolios. This should incentivize banks to ramp up lending to housing construction.

As interest rates fall, those who can afford to borrow from the banks will do so, however, we must also explore a modest government rental subsidy and rent to own program for those who do not have access to commercial borrowing. The concept of starter housing must be adopted to reduce the initial cost of obtaining a roof over one’s head. Starter homes allow the family to have a basic shelter with an affordable monthly mortgage while completing the house as their economic situation allows. Private investors with funds to construct homes and apartment complexes can participate in a program where upon completion of the house and selection of qualified families, government can subsidize a portion of the rent and implement this program along the guidelines of the existing conditional cash transfer program. This rental subsidy program should therefore qualify for international funding from agencies concerned with poverty alleviation. This construction boom spurred by investments in roads, housing and public buildings should create another eight thousand construction jobs.


While undoubtedly there needs to be a renewed focus on identifying new industries for job creation and new sources of foreign exchange earnings, we must simultaneously look at traditional export industries such as sugar, citrus, banana, aquaculture, marine and others to find ways of boosting earnings.

In this regard, we must look further at the taxes that are applied to these industries through their various inputs with a view to minimizing production costs and increasing competitiveness and profitability. We must also identify current shortcomings that can be remedied by government intervention such as land issues, certification issues, security issues, permit issues and other such requirements that can slow down production.

A comprehensive review of customs duties that apply to industry inputs must be undertaken immediately and a new policy designed to minimize the disincentives to production should be crafted. Similarly, a review of the sales tax, business tax, excise tax, export tax and any other fees or taxes that apply to these industries must be done post haste. Dialogue between these industries at the highest levels of government must produce mutually beneficial outcomes that expand production, enhance foreign exchange earnings and create jobs.

New industries must be identified including looking at some fledgling industries that have so far not been maximized due to lack of the proper enabling environment. A similar review of the tax environment must be done to eliminate fetters on production. An immediate review of the recently enacted hemp legislation must be undertaken in collaboration with potential industry stakeholders to determine what is holding back the anticipated explosion in investments in this industry. Proper market research and economic feasibility studies must be done on coconut, pineapple, papaya and others that appear to have high export potential. The vegetable oil and other agro-processing industries must be explored as a means of providing value added to farmers who are unable to store their produce.

The Belize Electricity Limited and the Public Utilities Commission must fast track the implementation of the Solar Energy Household Generation Project to assist families with energy costs, allow the excess to be sold to the grid, and reduce dependency on foreign and non-renewable power sources.

A Business Innovation Task Force under the Economic Mobilization Council (EMC) needs to be established to oversee the transformation and transition of the Belize economy away from its dependence on tourism and other traditional industries. The full diversification of the Belizean economy is long overdue. The remit of this task force will include continuous review of the enabling environment for business, as well as providing policy and legislative recommendations to steadily maximize production.


We need to make a quantum leap forward into the digital age. Complete internet penetration is a must along with rates that encourage the establishment of digital workplaces. Electricity expansion must progress at a heightened rate to enable the digital, agricultural and industrial expansion to spread across the country without hindrance. We must continue to explore non-renewable sources of energy to reduce the cost of power and attract more investments in areas that utilize substantial amounts of power.

We must embrace Business Process Outsourcing companies in a big way. The potential for job creation in an industry which Belizeans seem to enjoy working in is untapped. We must set up a team under the EMC to look for and attract to Belize more data processing businesses such as call centers, and data entry services for inputting of records. The aim is to encourage greater entrepreneurship in this area that requires minimal investment in physical plant and has proven itself resilient to the pandemic.

Land should be identified across the country for the construction of technology zones where either private or public sector funds can be used to construct office spaces for rent to BPOs. The telecommunications companies need to offer packages that will enable Belize to be marketed as a BPO destination. Such packages along with government incentives should also encourage companies to establish Work from Home opportunities.

As we move our country and people into the digital age, we must encourage and facilitate Mobile Banking Digital Wallet to enable financial services to reach to all including those who are in rural areas and those who have not enjoyed traditional banking services. This will allow goods and service to be bought and sold using cell phones thereby reducing travel costs especially for distant rural communities.

Dr. Michael Witter, renowned Caribbean economist recently wrote “Digitization should support employment and income generation for those workers whose activities permit it; and facilitate learning for students at all levels. For others, whose jobs are hands-on, digitization should facilitate flows of relevant information and improve access and participation in input and output markets.”


There are conflicting views among tourism stakeholders on the way forward for the industry. There are some who believe that much of the talked about losses in the industry thus far can still be mitigated by a July reopening of international travel. This being because many hotels were able to rebook clients to the period starting this JuIy. Opening later than this some believe would result in irrecoverable losses. Others believe that already the industry has suffered catastrophic loss which will require new financing and major government intervention. Whatever the true situation, we must not allow tourism to die. Hundreds of millions have already been invested in thousands of hotel rooms. We need to fill them back as quickly as possible.

As with all sectors that are part of the recovery effort, tourism will need an injection of cash. The commercial banking system may be a bit more amenable to this industry than it is to agriculture and others. Central Bank policy may also be used to direct lending in this direction. Government may also consider soft loans to the industry or floating a Tourism Bond to be taken up by private liquidity. These special bond offerings can actually prove useful while a capital market develops. Top priority should be given by government oversight agencies to ongoing hotel expansion projects to remove impediments and expedite construction.

Jobs will come back once the tourists come. Our tourism sector knows what to do, they have been doing this a long time. So, we may be able to turn lemons into lemonade in a shorter than anticipated period if we adjust our market focus. Our Covid-19 setback can be turned into a tourism comeback. Our traditional tourism markets will take some time before they are declared Covid-free. Our tourism sector should not wait especially since there are some tourism destinations that will take longer than Belize to reach Covid-free status. Not all countries have the same recovery trajectory. Belize may have an advantage here. At the same time, some countries with huge tourism markets, such as some in Europe, may also achieve Covid-free status faster than our traditional markets. When this happens, it should create unique marketing opportunities for Belize as a Covid-free tourist destination while other rival destinations recover. We need to be ready.

We must therefore work swiftly to establish new market relationships and direct travel routes with emerging Covid-free countries. The destinations that prepare for reopening by identifying new clients in Covid-free countries will get ahead of other destinations struggling to control COVID-19. We must not wait until our traditional tourism markets are declared Covid-free. Let’s take our success in controlling this pandemic and turn it into a windfall for Belize tourism by getting ahead of the curve in preparation for the world reopening, one country at a time.

And while we work on strategies for the successful re-emergence of traditional tourism, there is a possible opportunity for a niche tourism market that can prove compatible with quarantine and social distancing restrictions which may stay with us as the new normal. Medical tourism by its very nature requires personal care for patients in a controlled environment which can be managed from the port of departure, to the port of entry, to the medical facility. We should quickly revisit the idea of allowing investments in facilities that combine medical services with tourism services. This industry has the potential to create thousands of jobs in the hospitality and medical field.

And as must be the new way forward, a Tourism Industry Recovery Task Force must be commissioned under the EMC to allow dialogue and exchange of ideas among industry stakeholders to advise government on critical policies to drive the rebound of the tourism sector. Some specific areas to be addressed by the task force include a review of the National Tourism Sector Master Plan, a
review of the training and certifications needs of the industry with special emphasis on new practices necessitated by the pandemic in the areas of waitering, bartending, and food preparation, a review of the status of the integration of cultural and environment tourism into the tourism product, and a review of safety and security standards and protocols for the industry.


Though not among the five proposed pillars for economic recovery, the sports industry is to be given special recognition. At its height between football and basketball a small but significant number of young athletes are gainful employment. Most, if not all, the investment in this fledgling industry comes from the private sector without any incentives from government. There needs to be a reversion to the old system of allowing tax deductions for contributions to sports. This time however it must be scrupulously managed and certified by the National Sports Council in close collaboration with sports federations who must register with the NSC and comply with its rules and regulations. Getting these two sports industries underway again and spawning the growth of others that have the potential to move to the semi-professional level such as softball and volleyball, will impact over five hundred other athletes who are out of a job due to COVID-19, and many more if other Federations are able to move to this level with the new incentives to sponsors. A sports lottery, though not of immediate impact to job creation, can provide a long term solution to the financing of sports which by all accounts, unites nations and builds character.


Any economic plan must be accompanied by a financial plan for implementation. Government finances are obviously strapped as a result of its very needed and proactive approach to investing in health care and social relief for citizens during this pandemic. There are differing views on the limits to sovereign debt which, suffice to say for now, may have to be tested. Government will have to keep a keen eye on the consequences as the national debt inevitably increases. It will have to weigh very carefully the opportunity cost of not incurring debt to address social relief and economic recovery. The commercial banking system is not designed to facilitate economic expansion and development. The current system is designed for the mercantile class and to expect it to adequately fund our economic recovery would be an impractical fantasy. The International Financial Institutions (IFIs) have also historically not adequately addressed development issues as many countries remain poor. There will have to be a complete rethink on the part of IFIs as their response to the collapse of public finances across economies resulting from this pandemic cannot be their usual arrangements punitive to the people. Of course, some may also say that this is wishful fantasy.

Nevertheless, some key areas already identified for collaboration with multilateral and bilateral partners include assistance with the Financial Administration and Modernization Program for the public service, including expansion of e-government, policy based loans for critical anti-corruption legislations and business development enabling environment, institutional strengthening of the health system for critical and effective response to new and emerging epidemics and pandemics. They can also assist by opening contingent lines of credit for impending emergencies such as pandemics, hurricanes, droughts and floods, enable exchange visits with countries to adopt best practices in digital transformation and agricultural initiatives, and expand relevant industry-based international scholarships for technology transfer.

The economic recovery will necessarily have to be financed from a combination of sources including public finance, private equity, commercial banking to the extent that terms are feasible, multilateral funding, and the development of a capital market where innovation can meet with venture. Government will need to carefully consider Public Private Partnerships, BOD models, direct investments in worthwhile industries even if limited to the start-up stages, as well as industry specific bonds. Where incentives for economic recovery will erode the already shrinking tax base and seen by some to be untenable, it must be considered that the investment will eventually, hopefully in the shortest possible time, result in expansion of the tax base. This really is a chicken and egg argument. Thinking outside the box may avoid us being buried in it.

THE WAY FORWARD: Public Sector Reform and Policies for Enabling the Business Environment

Digitizing Public Services and Education

For Belize to move forward out of this crisis not only the private sector needs to be ready, but the public sector needs to be retrained and reconfigured to provide services digitally. We must aggressively continue e-portal expansion to automate government services including setting up a call center for service delivery as well as automated collection centers. This will achieve greater efficiencies in all branches of government lessening operating expenses while increasing the speed and efficiency of service delivery to the public. The greater efficiency may eventually result in a permanent reduction in the required hours of work for public officers perhaps initially to six hours per day and eventually to a four-day work week using flex-time. The reduced working hours and increased work from home alternatives have already been proven entirely possible during this pandemic.

Even in the health sector we can embrace telemedicine as a means for doctors to stay in touch with patients and require less clinic time even after they have left the hospital or the country for that matter as we embrace medical tourism. The agriculture sector can also benefit from creating digitized videos accessible online to help our local farmers and even people with home gardens on how to plant, what to plant, when to plant.

The new normal and the structural changes that will inevitably take place in the economy will require a new approach to education. What we teach our children must be relevant to the changing times. We must revise our teaching curriculum at all levels to fill the needs of the new economy and society. We must complete the process of technological transformation of education. Digital delivery of education material must be fully embraced with teachers requiring retraining to facilitate this new mode. With digital delivery enhanced, the option of home schooling even for a few hours out of the week has to be given new consideration. Lesson planning can also now be digitized and banked thereby requiring less preparation time and cost for teachers. As with the public service, we can now explore a shorter workday and week for teachers. Teachers and other education actors must also be given their rightful place among the public policy decision makers. A direct seat on the Economic Mobilization Council is a must as teachers partner in leading the educational change required for the new economy.

Tax Reform

The aim of tax reform is to improve the efficiency and transparency of tax collection, ensure equity in the tax burden, and to encourage private sector investment while simultaneously broadening the tax base. The amalgamation of the tax services has been a positive step in setting the administrative platform for tax reform, but much more needs to be done. There is need for further changes in Sales Tax, Business Tax, Personal Income tax, and Customs Duties.

Among the many considerations for reform there are a few that need urgent attention to assist struggling families and businesses affected by the pandemic and to close the loopholes that exists for unscrupulous businesses to under-invoice, hide sales, and avoid paying taxes. We must undertake a review of the last three versions of the sales tax to adopt the most effective and efficient practices of all three. We need to also make the tax system fair and equitable especially for families with children and
struggling small businesses hardest hit by Covid-19.

For households, there has been an inherent bias against families with children which if removed can assist these families during these difficult times. Currently, families with children have the same tax liability on the same household income as a family without children.
The personal income tax law needs to be amended to return to the age-old practice of allowing families to claim for dependents especially children who bring additional expenses to the household whether through school, uniform, books, tuition, meals,
medical or clothing. It is only fair.

Currently, businesses pay the higher amount between tax calculated on gross revenues and tax calculated on profit. This has meant that even when a company suffers losses as many will this year due to Covid-19, they still have a tax liability. The law needs to be amended to allow calculation of tax liability based on the lower between the tax on gross and the tax on income. This would mean that if there is no profit from the operation of the business, then there would be no tax liability for that business. The current provision for losses does not provide immediate enough relieve and is therefore unreasonably burdensome on an already struggling business.

Land Reform

The finiteness of our land resources is indisputable. A substantial amount of these lands is under some form of protection which augers well for future generations and climate change. The remainder of lands are either crown land or privately held. The market should determine transactions involving private land and the Courts should protect the sanctity of these contracts and transactions. Government needs to design a fair and equitable policy for the distribution of the remaining crown lands. This policy must be based on a land use survey and resultant land use policy. Land must be put to its best use as determined by a land use survey for the progress and prosperity of the people of Belize. Land is not an ornament or treasure to be hoarded or put on a shelf for posterity or capital gains. Land is a factor of production and the primary source food, sustenance and shelter. Land that is titled to individuals bring with it a responsibility to maximize the output from that land for the progress of the nation. That was the purpose of issuing a lease prior to obtaining title. This purpose has been lost with titles issued before development.

Determining who gets title to the remaining crown land should be based on need in the cases of residential use and subsistence farming, and based on the ability, technological and financial, to maximize production in the case of large-scale commercial agriculture. Obviously then, there is a need to determine what is large scale and what is subsistence acreage. To acquire large tracts of land, perhaps above fifty acres, the prospective owner must demonstrate ability to develop. This policy is already in place but too often ignored. This process can happen before a special Large-Scale Farmers Lands Committee as a sub-committee of the Economic Mobilization Council with the necessary expertise in land use, business, and finance, and can transact its business in open public. Since the objective is to maximize agricultural production, multiple applications can be entertained.

To acquire residential land from government the prospective owner must be a first-time landowner. This principle has been violated too often and needs to stop. Second, third and multiple residential titleholders can look to the market for any further residential land acquisition. The land use survey should reveal the best lands for residential use and the survey department should use the latest digital survey technology to create virtual maps of subdivisions that will enable the Lands Department to issue title after minimal physical demarcation and without the traditional costly full surveys.

These residential titles should be issued by way of random lotteries with numbers issued to participants (first time owners) who would have attained the age of sixteen prior to January 1, 2020. There should be a criterion for prioritizing applicants including age, number in household, marital status, employment status, and date of application, so as not to prejudice those who have patiently waited in the queue. Successful participants will then be issued title to a residential lot in the virtual subdivision but will be responsible for the actual full physical survey of the land. However, this obligation by the landowner should not hinder access to the land with certain restrictions on proximity of permanent construction to virtual lines until full surveys are complete. These titles should be issued free of cost except for a minimal administrative fee. However, the land should be assigned a market value which will become relevant for tax purposes if the land is subsequently sold.

To acquire land for subsistence farming a similar process can be used for up to fifty acres after proper vetting by the Lands Department. Since the proposal is for subsistence farming, multiple applications will not be appropriate beyond fifty acres.

Once the land use and distribution policies are in place a new incremental land value tax system should be put in place to encourage production and discourage speculation. Land that remains idle does not contribute to progress and development.

Governance Reform

Covid-19 must not let us lose focus on our commitment to good governance and to eliminate corruption. We must accelerate the process of drafting and passing new laws to protect the country’s patrimony and wealth. Laws must be enacted within the next three months to amalgamate currently existing but fragmented and innocuous anti-corruption laws. The new legislation must clearly define violations of the public trust and levy stiff penalties for contraventions. It must strengthen the Integrity Commission and the Financial Intelligence Unit and create an independent anti-corruption unit to conduct covert surveillance, investigation and subsequent prosecution of corrupt officials. Campaign financing laws need to be enacted being careful not to discourage legitimate contributors who may fear political victimization.

Citizen Security

Economic progress cannot take please in an unsafe environment. Law enforcement and security must take a quantum leap into the digital age by employing the use of technology to help in the fight against crime. The security forces must be provided with state-of-the-art surveillance equipment including street camera systems, interception devices and drones. Adequate training must also be provided. Government should explore the possibility of a National Security Bond to finance these much need improvements for our security apparatus.


Citizen Involvement: Designing A Participatory Process

We must once and for all establish a meaningful medium for discussion with the various business, investment, and community stakeholders. Economic growth and development are continuous processes. Our move forward must be a collective effort. There is no monopoly on ideas. The new normal for government administration will be participatory with the citizenry. Technology now enables government leaders and public officials to interact more readily with the public facilitating constant dialogue, exchange of ideas, and canvassing of views and public sentiments towards policy proposals. This is change we must not resist. The Economic Mobilization Council needs to lead the charge for economic recovery. It must take greater responsibility for the development planning process as well as the capital expenditure allocation process. Government’s focus moving forward should be on building resiliency and sustainability and protection of the food supply all through agricultural diversification, green energy expansion, and shifting national consumption towards local produce.

Together we will build the second coming of the new Belize but to do so we must win back the trust of the Belizean people. We must make the development process more inclusive of the grassroots people. We must decentralize the decision-making process and put communities in charge of their future. Nation building is a task for giants. Let’s get building.


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