Belize has the smallest economy in Central America with total gross domestic product (GDP) of USD 1.9 billion due primarily to continued increases in tourism. Though geographically located in Central America, the former British colony has deep cultural ties to the Caribbean. Due to mounting fiscal pressures and a need to diversify and expand its economy, the Government is open to, and actively seeks, foreign direct investment (FDI). However, the small population of the country (approximately 390,000 persons), high import duties, bureaucratic delays, corruption, and occasional political interference in private disputes constitute investment challenges.
Generally, Belize has no restrictions on foreign ownership or control of companies. However, foreign investors must adhere to Central Bank of Belize regulations relating to the inflow and outflow of investment. Small and medium sized enterprises (SMEs) and tour operators wishing to benefit from certain incentives must have 51 percent local ownership. The country also continues to fare poorly in international surveys of openness and ease of opening a business.
Key legislative reforms in 2018 advanced the intellectual property regime governing copyrights and industrial designs; strengthened the financial sector with regard to anti-money laundering and counterterrorism financing; sought to secure compliance with global regulations relating to taxation, and amended the operations of the offshore sector and export processing zones.
Overall, the economic and fiscal outlook will continue to face significant challenges. The country remains highly indebted with debt to GDP at approximately 94 percent. The government managed to gain some relief in the short term with the 2017 renegotiation of the country’s major external commercial debt—the so-called “Superbond 3.0”—totaling an estimated USD 554 million. Macroeconomic and fiscal vulnerabilities are expected to continue to relate to fiscal tightening, controlling the public sector wage bill, dealing with arbitration judgments, and advancing measures to stimulate private sector growth and economic development.
The financial system can be characterized as stable but fragile. While the domestic financial system continues to recover and improve performance ratios relating to non-performing loans and capital adequacy, correspondent banking relationships remain tenuous and tend to offer fewer services at higher costs. In the international banking sector, the Central Bank of Belize revoked the license of one international bank in June 2018 and another requested support in March 2019 to wind up voluntarily.
Despite the challenges, Belize remains attractive for some investors because of the beauty of its natural resources, the relative affordability of land, proximity to the United States, English language, and the cultural diversity and warmth of its people. Investors benefit from various incentive programs in key investment sectors including agriculture, agro-processing, aquaculture and fisheries, logistics and light manufacturing, offshore outsourcing, sustainable energy, and tourism and tourism-related industries.
Table 1: Key Metrics and Rankings
|TI Corruption Perceptions Index||2018||N/A||http://www.transparency.org/research/cpi/overview|
|World Bank’s Doing Business Report||2019||125 of 190||http://www.doingbusiness.org/en/rankings|
|Global Innovation Index||2018||N/A||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in partner country ($M USD, stock positions)||2017||$74 million||http://www.bea.gov/international/factsheet/|
|World Bank GNI per capita||2018||$4,060||http://data.worldbank.org/indicator/NY.GNP.PCAP.CD|
2. Bilateral Investment Agreements and Taxation Treaties
Belize has Bilateral Investment Treaties with Austria, Cuba, El Salvador, Italy, the Netherlands, Taiwan, United Arab Emirates, and the United Kingdom. It also has a Partial Scope Agreement (PSA) with Guatemala on a small number of goods.
The country does not have a bilateral investment treaty nor is it a party to a Free Trade Agreement with the United States. It is a qualifying country under the U.S. Generalized System of Preference (GSP) as well as the U.S.-Caribbean Basin Trade Partnership Act (CBTPA). For additional information on Belize’s Bilateral Investment Treaties, see
Belize has signed nineteen Tax Information Exchange Agreements (TIEA) with Australia, Belgium, Czech Republic, Denmark, Faroe Islands, Finland, France, Greenland, Iceland, India, Ireland, Netherlands, Norway, Poland, Portugal, South Africa, Sweden, Switzerland, and the United Kingdom. Belize has no bilateral taxation treaties with the United States. See .
6. Financial Sector
Capital Markets and Portfolio Investment
Belize’s financial system is small with limited to non-existent foreign portfolio investment transactions. It does not have its own stock market and capital market operations are rudimentary. Private sector participation as both suppliers and buyers of securities in the financial market is generally not significant.
Foreign investments must be registered at the Central Bank, but the government does not restrict payments for international transactions. Additionally, credit is made available on market terms with interest rates largely set by local market conditions prevailing within the commercial banks.
The Development Finance Corporation (DFC), a state owned development bank, offers loan financing services in various sectors. To qualify for a loan from DFC, an individual must be a Belizean resident or citizen, while a company must be majority 51 percent Belizean owned. The National Bank of Belize is a state owned bank that provides concessionary credit primarily to public officers, teachers, and low income Belizeans.
Money and Banking System
The Central Bank of Belize (CBB) (https://www.centralbank.org.bz) is responsible for formulating and implementing monetary policy focusing on the stability of the exchange rate and economic growth. Belize’s financial system remains underdeveloped with a banking sector may be characterized as stable but fragile.
Non-performing loans stood at 2.7 percent of total loans at the end of 2018, significantly below the 5.0 percent threshold. Additionally, the aggregate capital adequacy ratio of domestic banks improved to 24.6 percent, well above the 9.0 percent regulatory requirement. The CBB also registered a new credit union, which commenced operations in August 2018. In the international banking sector, the Central Bank revoked the license of one bank in June 2018 and another requested support in March 2019 to wind up voluntarily.
Persons seeking to open a bank account must comply with Central Bank regulations, which differ based on residency status and whether the individual is seeking to establish a local bank account or a foreign currency account. Like many countries with fixed currency rates, the Belize banking sector is split into two branches: onshore (domestic banks that cater only to residents) and offshore (international banks intended for non-residents of Belize to freely move foreign exchange in and out of the country). The Government asserts this design is to prevent disruptions of the local economy, to maintain the peg to the US dollar and avoid large foreign exchange fluctuations.
Foreign banks and branches are allowed to operate in the country with all banks subject to Central Bank measures and regulations. While all banks have current correspondent banking relations, there is still uncertainty with regard to the longevity of those relationships, delay in transactions, and fewer services offered at higher costs.
In the last few years, Belize has enacted a number of reforms to strengthen the anti-money laundering and counterterrorism-financing regime, including amendments to the Money Laundering and Terrorism (Prevention) Amendment Act and the International Business Companies (Amendment) Act. In addition, the National Anti-Money Laundering Committee (NAMLC) is headed by the Financial Intelligence Unit with inter-agency support from key financial and law enforcement authorities.
Foreign Exchange and Remittances
There are currency controls in Belize and foreign investors seeking to convert, transfer, or repatriate funds must comply with Central Bank regulations. Foreign investments must be registered at the Central Bank to facilitate inflows and outflows of foreign currency transactions. Foreign investors must register their inflow of funds to obtain an “Approved Status” for their investment and generally are approved for repatriation of funds thereafter. The Central Bank does, however, reserve the right to request evidence supporting applications for repatriation.
The Belize dollar has been pegged to the United States Dollar since May 1976 at a fixed exchange rate of BZ USD2.00 to the USD1.00. There are reports of shortages and delays in obtaining foreign exchange.
There are no changes to investment remittance policies. As mentioned above, foreign investors should obtain an “Approved Status” for their investment and register their inflow and outflow of funds with the Central Bank.
Sovereign Wealth Funds
Belize does not have a sovereign wealth fund.
8. Responsible Business Conduct
Belize generally lacks general awareness of the expectations and standards for responsible business conduct (RBC). However, many foreign and local companies engage in responsible corporate behaviors, particularly from a social perspective. Companies sponsor, inter alia, educational scholarships, sports related activities, community enhancement projects, or entrepreneurship activities. There are no formal government measures or policies to promote RBC.
Several civil society agencies seek to protect individuals and address human rights, labor rights, consumer protection, and environmental concerns. For example, the Office of the Ombudsman is responsible for investigating complaints of official corruption and abuse of power. As required by law, the Ombudsman is active in filing annual reports to the National Assembly and investigating incidents of alleged misconduct, particularly of police abuses. This Office continues to be constrained by the lack of enforcement powers, political pressure, and limited resources.
In the area of environment, certain projects require the Department of the Environment’s approval for Environmental Impact Assessments or Environmental Compliance Plans. The Department of Environment website, , has more information on the Environmental Protection Act, various regulations, applications and guidelines.
There are no government measures relating to corporate governance, accounting, and executive compensation standards and RBC policies are not factored into procurement decisions.
There have been no recent cases of private sector impact on human rights and no NGOs, investment funds, worker organizations/unions, or business associations specifically promoting or monitoring RBC. In recent years, labor unions and business associations have become actively engaged in advocating for stronger measures against corruption.
Belize does not have a highly developed mineral sector and is not a conflict or high-risk country. As such, it does not adhere to the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Afflicted and High-Risk Areas. Belize’s extractive/mining industry is not highly developed and it does not participate in the Extractive Industries Transparency Initiative (EITI) and/or the Voluntary Principles on Security and Human Rights.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
* Source for Host Country Data: Statistical Institute of Belize, Central Bank of Belize
Table 3: Sources and Destination of FDI
Statistics on foreign direct investments in Belize by country of origin is limited, including the total invested by U.S. investors. The Central Bank of Belize recorded total inflows of FDI at USD152.48 million in 2018 and outflows at USD32.933 million in the same period. Major sources of FDI include the United States, Canada and the United Kingdom. FDI inflows are traditionally concentrated primarily in real estate, construction, reinvested earnings and the agriculture sectors.
Table 4: Sources of Portfolio Investment
Data not available.