14 Sep Interview with Christopher Coye, Minister of State Ministry of Finance, Economic Development, and Investment
What are the main drivers of Belize’s economy today and what are the challenges confronting your ministry?
Belize has three primary areas that drive the economy. When we look at the history of our country, we have historically been an agricultural economy with traditional commodities like sugar, citrus and bananas. Over the past few decades, tourism has risen to be a major component of our economy. The prospects for tourism remain tremendous. The growth has been significant over the past few years. The future looks very bright for the tourism sector in Belize, especially in the overnight component of the tourism sector—as opposed to the cruise sector—which generates a lot for the economy compared to the cruise tourism industry. We do see, given the natural resources that we have, the geographical and ethnic diversity that we enjoy, the culture and the food, all of these contribute to what Belize’s tourism product offering is and enhance the opportunity for what tourism can and will bring for us in the future.
Over the past few years, while we focused on supporting tourism and agriculture, we’ve looked at how we can diversify the economy. We don’t want to be dependent on just a couple of sectors, so we’ve spent a lot of effort trying to develop the BPO sector. The BPO sector provides nearshoring services, call centers and other types of services whether it is accounting services or software development services, from Belize for businesses in North America. That was largely nonexistent five years ago, and now that represents a significant component of our economy generating substantial foreign exchange and employment for roughly 10% of our workforce.
Looking at that and then looking ahead as to what are other opportunities for us to further diversify our economy, enhance and elevate the growth path of our economy, one sector we see, as much as we have had challenges with it in the current period, is the opportunity for energy as an important sector of our economy. We have been importing close to 50% of our energy from southern Mexico. At the same time, we’ve determined the feasibility of renewable energy generation, in particular solar energy generation as we look towards achieving energy security. Solar energy will represent an important component of that, so much so that we had the government jumpstart that effort. The government has secured funding to finance the first 60 megawatts of solar energy for the country, which is in its process of implementation at this point and should be completed within the next 12 to 18 months. That will take us on that path to energy security.
But in the production of energy, we see, in the future, the ability, not just for domestic production, but export potential, now reversing the flow and exporting into Mexico and even possibly Guatemala, our neighbors. That now becomes an important sector of our economy and represents further diversification. In doing that, at the same time, we’re able to manage the cost of power, even reduce the cost of power going forward, which opens up the opportunity for new sectors to develop. What we envision as the future for Belize is to be a hub for our region, a hub for Central America, Guatemala, and Mexico, but also connecting to the Caribbean. That hub can be in the form of providing logistical services, whether it’s port services or even enabling light manufacturing to occur in Belize, that allows for the export from within Belize to our Caribbean single market and economy members in the Caribbean so that then enables businesses to come and set up within country and do product manufacturing for export.
A focus area for our government, from a policy standpoint, is to increase and enhance market access. Our prime minister has been quite strategic in pivoting our historical relationship with the Caribbean to one looking closer to our immediate neighbors, including Mexico and Guatemala and seeing how we can enhance market access with our neighbors. These markets have over 120 million people, as opposed to the Caribbean being maybe 12 to 15 million. Just looking at that market, we have an immense opportunity to benefit from seeing how we can, not only enhance market access but supply to these markets and enable their supply to other markets to which we have market access.
IMF’s recent economic review of Belize is favorable and puts growth projections at 3.5 percent for 2024 and 2.5 percent for 2025. How is your ministry working alongside other key ministries to sustain this momentum and what key strategies are being deployed for this growth?
You have organic growth and then you have engineered growth. Just from organic growth alone, I believe that we will outperform those projections of the IMF. We will do better than 3.5 percent. We have outperformed the projections of the IMF for the last three consecutive years and not by marginal amounts, but by doubling some of those projections that have been made. In terms of our growth rate, in the past three years, we are now over 17 percent in real terms above where we were in 2019. We fully recovered from the fallout of covid in a little over one year. We are one of the fastest-growing economies in the entire Western Hemisphere; it’s probably the third or fourth in the entire Western Hemisphere.
In terms of engineered growth to elevate our growth trajectory, the government has to focus on areas with more of a long-term benefit; areas including investment in infrastructure. We have ramped up our investment infrastructure over the past several years to ensure that, from a logistics standpoint, we are enabling our productive sectors. We’ve invested quite a bit in road infrastructure. The port of Belize City will present an investment opportunity, perhaps with strategic domestic or foreign private sector partners to expand and modernize that port into a bulk shipping cargo port. Mexico recently decided to make their Chetumal area a free zone. They will need to transship their products as there are no ports near Chetumal. Belize and the port services Belize can offer will effectively be where those goods can be shipped in and out. The Belize City port now becomes an opportunity, not just for Belize, but for southern Mexico.
In the area of tourism, we’ve focused organically on the island of Ambergris Caye which has become the most popular tourism destination in the country by far. Together, San Pedro and Caye Caulker represent between 60 percent and 70 percent of all overnight tourists coming to Belize. Yet, in the case of Ambergris Caye, San Pedro sits more to the south of the island and the entire north of the island is underdeveloped. The prime minister set up a task force for the recommendations on the development in the north of Ambergris Caye. We’ve just about completed that master plan. That master plan, once finalized, will be the basis upon which now we will invest, both by way of a combination of the public sector and private sector, to take our tourism product in the north Ambergris Caye to a wholly different level. That will mean substantial road network infrastructure, utility infrastructure and also port and airport infrastructure. That is one of those key areas for development that can enhance our country’s growth path.
Similarly as we are looking at north Ambergris Caye, there are those other black canvas opportunities in other parts of the country. In the southern part of the country, the district of Toledo is one area that has tremendous opportunity. In that area, you have miles of pristine beachfront property that can be developed in not a dissimilar way to Cancun or Punta Cana.
Could you provide us with an update on the impact of your blue bonds on the economy?
The blue bond did not represent the be-all and end-all of our turnaround, but it represented a critical catalyst to the turnaround for our debt position. It enabled us to reduce our debt by roughly 12% overnight. It also enabled us to have substantial cash flow relief in terms of public finances because the servicing of our pre-existing external debt was becoming more and more significant, especially when we were in the economic contraction caused by covid. For that specific period, it was a significant reprieve that helped us to get breathing room to adjust and focus on the challenges that we were facing from a public financing standpoint. We already had a low debt servicing obligation, but it was likely to go up. The blue bond helped us to reduce that obligation.
What it served us more than anything was allow us to rebrand ourselves. In the past, within the international capital markets Belize was seen as a serial defaulter in its external debt. This restructuring cleaned that up for us on one end. At the same time, it also put us out there as a conservation-oriented country focused on preserving our natural resources, whether on the mainland or in the sea. We have always been like that, but what the blue bond allowed us to do was to leverage that approach to conservation to favorably restructure our debt. Having done that and having that tied into that transaction, we could now promote that conservation-oriented approach of our country. In that way, we gained a lot of positive press for what Belize stands for. In that sense, there has been a lot of new interest in Belize because of its conservation-led agenda. We’ve not only had the experience of the favorable debt restructuring, but we’ve had interest from many charitable organizations looking at Belize to see how they can support our efforts in conservation, both in our forestry and in the blue economy.
How are you working to create an environment in the economy for SMEs and entrepreneurs to grow and diversify the economy?
One area in particular that we focused on is to try and incentivize the formalization of SMEs by creating incentive-based legislation for it. When we passed a new fiscal incentives act, it had two main components to it. One was to provide for the formalization of a lot of small businesses, because we have many small businesses all over the country, but they’re not formally participating in the economy. They’re not registered for taxes. Some of them don’t realise that when you file for your taxes, you might pay on your inputs, but you can claim back and get refunds for those. Formalizing has its benefits: it also enables you to easily access credit from the financial institution as well as from sources we have been able to secure from multilateral banks. We have added a benefit that we introduced legislatively, that if you formalize and register your company and you file your tax returns, you will be exempted from any tax liability that may have accrued in the past and for a year going forward. Once we have MSMEs coming into the economy, being able to take advantage of the credit access opportunities, they have the opportunity to grow and employ others.
Secondly, we also provide concessions, especially in priority areas. We simplified the process to gain those concessions so that it’s not costly, whether in terms of time or terms of cash, to apply for and gain those concessions. In that legislation, we laid out a number of the priority areas for which you could gain a concession. In that way, there was a lot of support given to the MSMEs.
From the finance side, we’ve spent a lot of time and effort in securing funding from some of the multilateral banks; the Inter American Development Bank for example, which was then directed to our development finance institution to specifically support MSMEs and women-led MSMEs. That was supplemented by bilateral funding support that we got from Taiwan as well. With the World Bank, we also developed a Matching Grant Program for small businesses in the areas of tourism and agriculture—eligible beneficiaries will be able to get a matching grant of up to $10,000 provided that they are bankable.
Do you have any final messages for the readers of Newsweek about choosing Belize as their next business and investment or even a tourism destination?
Belize is like that hidden gem that is finally being revealed. It certainly provides a tremendous opportunity for investors in numerous sectors of our economy. We’re the only English-speaking country in Central America. We are only two hours away from the U.S. We have many different direct flights to many parts of the US and to Canada. Our laws are familiar to those from the US and those from historical English-law based countries. It’s easy to do business here. We have our currency, the Belize dollar, which has been fixed to the US dollar for roughly 50 years at two Belize dollars to one U.S. dollar. That provides a level of stability and certainty, for those who wish to invest in our country.
When you look at Belize, you look at the opportunity far more than just what our country has. We only have 400,000 people, but we have market access to millions of people that are within our neighborhood, including Mexico, Central America, the Caribbean and even North America. It’s certainly an opportunity that you don’t want to miss out on when you look at investments.
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