Our Economy

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Central Bank of Belize

UNDERSTANDING OUR ECONOMY

Central Bank of Belize

© Central Bank of Belize, 1999 P.O. Box 852 Belize City, Belize Central America Telephone: 501-223-6194 Facsimile: 501-223-6222 Email: govcenbank@btl.net

ISBN: 976-8111-44-5

TABLE OF CONTENTS
Preface and Acknowledgements 1 The Role of the Central Bank 2 The Financial System in Belize 3 The Banking Sector 4 The Offshore Sector 5 Development Finance Corporation 6 Supervision of the Financial System 7 International Financial Institutions 8 Money Supply 9 Government’s Budget and the Economy 10 Taxation 11 Measures of Economic Performance 12 Balance of Payments and Foreign Reserves 13 The Real Economy: A Historical Perspective 14 The Sugar Industry 15 The Banana and Citrus Industries 16 The Fisheries Industry 17 Aquaculture in Belize 18 The Tourism Industry Index 2 3 9 13 15 16 19 22 27 30 36 40 44 58 51 54 58 61 66 70

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Central Bank of Belize

PREFACE AND ACKNOWLEDGEMENTS
In 1995, the Central Bank of Belize sponsored a weekly radio programme series entitled "Understanding Our Economy". The programme formed part of the Bank's on-going effort to promote a greater understanding, by the general public, of economic and financial matters. The programme was aired on Tuesdays from 8:00-9:00 p.m. on Radio Belize Gold, during the period JuneDecember 1995. The topics raised in the programme formed the basis for the information contained in this publication. The Central Bank of Belize wishes to thank all those persons who contributed to the success of the radio programme. The following persons deserve a special mention: Mr. Dennis Jones for his role as moderator, Dr. Carla Barnett, the then Deputy Governor of the Bank, and Mrs. Yvette Alvarez, the then Senior Manager, at the Research Department of the Bank, for being regular panelists. Contributions by special guests on the programmes and the interest exhibited by the public were very much appreciated. They all helped to make the radio series a success. A word of thanks to Ms. Carolyn Lord for transcribing and editing the audiotapes into a working document. It was that working document that the editors, Ms. Patricia Mendoza and Mr. Marion Palacio, updated and formatted into this publication. A chapter on the Measures of Economic Performance and graphics were also added by the editors. Comments by staff of the Central Bank on earlier drafts of the publication were deeply appreciated. They were valuable in improving the final product. Finally, the Bank wishes to thank the Belize Information Service (BIS) and Messrs. Norman Smith and Marion Palacio for providing the photographs for the publication. Central Bank of Belize July 1999

Understanding Our Economy

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1

THE ROLE OF THE CENTRAL BANK

The Central Bank of Belize was established under the Central Bank Act of 1982. The Bank is the successor to the Monetary Authority of Belize which had previously replaced the Board of Commissioners of Currency in 1976. The Act defines the objectives of the Central Bank as follows: "Within the context of the economic policy of the Government the Bank shall be guided in all of its actions by the objectives of fostering monetary stability especially as regards stability of the exchange rate and promoting credit and exchange conditions conducive to the growth of the economy of Belize." It is clear from the above statement that all policies designed and implemented by the Central Bank must be within the framework of Government's overall economic policies. This means that the policies pursued by the Bank will be dependent on the type of policies pursued by the government of the day. For instance, persistent fiscal expansion on the part of government, while revenues are stagnant or declining, would need to be countered by contractionary monetary policies on the part of the Bank. On the other hand, a persistent government budget surplus enables the Central Bank to adopt a more relaxed monetary policy...
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