Public Debt Dynamics and Macroeconomic Stability in Belize: Post-Pandemic Recovery, IMF Insights, and Growth Prospects

The Belize economy registered impressive economic resilience after the COVID-19 pandemic, with a 13.9% contraction in 2020, followed by cumulative growth of over 30% between 2023 and 2024, and a further 8.1% in 2024, driven by tourism, trade, and business process outsourcing. The debt-to-GDP ratio rose to 103.3% in 2020, only to fall significantly to 61.1% by the end of 2024, driven by high nominal growth, expenditure control, debt-for-marine swaps, and Petro Caribe restructuring. The 2025 IMF report on the Article IV Consultation highlights a projected slow-down in economic growth to 1.5% in 2025, with the debt-to-GDP ratio stabilizing at 58% of GDP. This paper assesses the sustainability of Belize’s debt and analyses the implications of consolidation on sustainability and long-term economic growth. The empirical charts and simulation of the debt sustainability framework underscore the possibility of achieving the 50% debt target by 2030, provided the primary balance is raised to 2.0% of GDP. The risks associated with tourism capacity, climate change, and global interest rate risks remain, but with sound policies, there is a possibility of achieving greater stability in this small, open, and tourism-dependent economy.

Abbreviations: GDP – Gross Domestic Product, IMF – International Monetary Fund, FY – Fiscal Year, pb – primary balance, r – real interest rate, g – real growth rate