Weak Opposition Will Allow PUP To Continue Fiscal Consolidation In Belize

• Belize’s opposition United Democratic Party has seen a number of internal fights in recent weeks, weakening its already fragile political position. As a result, the ruling People’s United Party (PUP) faces few formal constraints on its ability to address Belize’s poor fiscal situation. That being said, the risk of social unrest will limit the pace of consolidation. 
• Belize’s fiscal deficit is expected to narrow to 9.7% of GDP in FY2021/22, from 11.7% in FY2020/21, while total government debt will reach 129.5% in FY2021/22 before declining thereafter. 
• While talks with creditors around reducing the principal owed for the 2034 ‘superbond’ are ongoing, the government is unlikely to meet its target of reducing public debt to 85.0% of GDP by 2025. On May 20, the country defaulted on a scheduled coupon payment given the critical state of the public finances, the severe impacts of the pandemic and the consequent rigid budget recently approved by this Parliament.

(Source: Fitch Solutions)