BELIZE

COUNTRY OVERVIEW

LOCATION AND SIZE.

Formerly known as British Honduras, Belize is a Central American nation roughly the size of Massachusetts. Belize shares borders with Guatemala and Mexico, to the west and the northwest, respectively. To the east it borders the Caribbean Sea, with a coastline of 240 miles. It has an area of 22,966 square kilometers (8,867 square miles). The capital, Belmopan, is located in the center of the country.

POPULATION.

Belize, with an estimated 249,183 people in 2000, is the most sparsely populated nation in Central America. The population has been growing at about 2.86 percent a year since 1995, when the population stood at 216,500.

The Belizean population is ethnically diverse, with the majority of the inhabitants being of multiracial descent. Approximately 46 percent of the people are mestizo (of mixed Mayan and European descent), 30 percent are African and Afro-European (Creole), 10 percent are Mayan, and 6 percent are Afro-Amerindian (Garifuna). The remainder are European, Chinese, East Indian, Middle Eastern, and North American.

The Belizean population is young, with 43 percent below the age of 15 in 2000. Life expectancy is 71 years. In 2000, only 3 percent of the population was over 64. The birth rate in 2000 was 32.29 per 1,000, while the death rate was 4.81 per 1,000.

Over half of Belizeans live in rural areas. About 25 percent live in Belize City, the former capital which is also the principal port and commercial center.

OVERVIEW OF ECONOMY

In 1999, Belize's GDP grew at a quick pace, reaching to US$740 million. The per capita income (at PPP) was approximately US$3,100 a year (1999 est.). Economic figures for 2000 were expected to drop due to damage stemming from Hurricane Keith, which caused massive damage to the primary agricultural sector. In addition, the country had US$244 million in foreign debt .

Well into the 1900s, Belize depended on forestry to sustain its economy. When timber supplies began to dwindle, cane sugar emerged as the main source of foreign exchange. Although a majority of the arable land in Belize had still not been cultivated in 1999, agriculture was one of the most vibrant sectors of the economy, contributing 13.4 percent of GDP. Sugar was the leading export earner, bringing in approximately 50 percent of all domestic export revenues and accounting for half of all farmland in Belize.

While sugar production remained a staple in the last half of the 1990s, agricultural performance was accentuated by the production of citrus fruits (primarily oranges and grapefruits), which nearly doubled between 1995 and 1999. Bananas, the second most important crop, accounted for 16 percent of total exports in 1999.

The performance of agricultural products was enhanced by preferential access to U.S. and European markets. Under the Caribbean Basin Initiative (CBI), which was launched in August of 1990, products derived from citrus fruits, such as frozen concentrated juices, enjoyed duty -free access to American markets. Sugar and banana producers also relied on favorable quotas to maintain high export levels to the European Union. This preferential access was called into question in 1995 when the World Trade Organization (WTO) ruled that the European Union (EU) went against free trade legislation by giving preference to Caribbean banana exports. In preparation for the potential loss of this particular market, Belize began to diversify its exports, increasing the farming of nontraditional crops such as chili peppers, papayas, and vegetables.

The manufacturing base in Belize is fairly limited, accounting for only 9 percent of the employed labor force ; however, initiatives have been taken to stimulate growth in the sector. An Export Processing Zone (EPZ) allowing for the duty-free import of equipment and machinery was established near the international airport at Belize City, and a commercial free zone providing similar tax exemptions was set up at Corozal, along the Mexican border. The government in Belize took significant steps to shore up the country's infrastructure , promoting tourism and attracting foreign investment. In 1999, some 185 U.S. companies had operations in Belize. Tourism has risen steadily, and was the fastest growing sector of the Belizean economy in 2000.

POLITICS, GOVERNMENT, AND TAXATION

The first settlement in Belize was established by a shipwrecked British seaman in 1638. The British government began administering the territory in 1786 and made it a crown colony in 1871. Self government in Belize was first granted by the British in 1964, when the country was still known as British Honduras. In 1973 the country's name was changed to Belize, and by 1974 a 2-party political system had emerged. This system continued after Belize gained independence from Britain on 21 September 1981. At the time of independence, Guatemala claimed a portion of territory on the western border of Belize. This border continues to be a point of contention between the countries, even after Guatemala formally recognized Belize's independence in 1991.

Under the independence constitution of 1981, the executive branch of the government is made up of the prime minister and the cabinet. Cabinet ministers are members of the majority political party in the Parliament, or National Assembly, which is made up of 2 houses: a 29-member House of Representatives, and a Senate of 8 appointed members.

A parliamentary democracy, Belize is a member of the British Commonwealth. The head of state is Queen Elizabeth II. She is represented in Belize by a governor-general, whose role is largely ceremonial. In 2000, Sir Colville Young held the post. Chief administrative duties fall to the prime minister, a position held by Said Musa, elected in August 1998.

The country's 2 main political parties are the People's United Party (PUP), established in 1950, and the United Democratic Party (UDP), which was established in 1974. The UDP is considered the more conservative of the 2 parties. It has a strong following in the urban Creole population. The PUP grew out of the trade union movement and has traditionally drawn support from the mestizo population. Both parties have curbed government spending to lower the deficit and they have financed this deficit with foreign aid. Both parties have sought to expand the manufacturing base, and have tried to diversify trade. The 2 parties differ on tax policy.

The UDP, after winning elections in 1993 for only the second time in history, levied a 15 percent value-added tax (VAT) on goods and services. This VAT was instituted to offset revenue losses stemming from Belize's entry into the Caribbean Community (CARICOM) in 1974, which had lowered import and export tariffs . The move was strongly criticized by the PUP, and during the run up to the 1998 election, the PUP vowed to repeal the tax. The PUP won the 1998 election, taking 26 of the 29 seats in the House of Representatives, and Said Musa became the country's prime minister.

Musa's administration made good on election promises. The VAT was abolished and replaced by an 8 percent sales tax. Taxes on the purchase of petroleum products, alcohol, and tobacco increased. Foods and medicines, as well as basic utilities such as water and electricity, were exempted from the tax, as were small businesses. The personal income tax was reduced to a maximum level of 25 percent. PUP officials hoped the tax policy would stimulate business activity and raise consumer spending so that government revenues would increase despite lower tax rates. The PUP also promised to decentralize government power, build 10,000 new houses, and create 15,000 new jobs.

INFRASTRUCTURE, POWER, AND COMMUNICATIONS

There are 1,594 miles of roads in Belize, 303 of which are paved. Of the 4 main highways in Belize, 2 provide border crossings into Mexico and Guatemala. All the main towns and villages are linked to the capital, Belmopan, and to Belize City. Some roads, including major sections of highway, are vulnerable to damage or closure during the rainy season. The road network in Belize was improved in the 1980s, but not enough to support a significant growth in travel, tourism, and manufacturing. A US$14.7 million renovation of the Southern Highway began in 1998. Another US$8.5 million was allocated for the construction of a bypass road and 2 bridges in northern Belize. Funds from the United States Agency for International Development (USAID) were used to improve rural access roads. There is regular bus service to and from all main towns.

Belize has 10 ports of entry, the largest of which is at Belize City. Nine major shipping lines run cargo services in and out of Belize City. The main southern ports are at Punta Gorda and Big Creek. The Philip Goldson International Airport, 9 miles from Belize City, handles a majority of the country's commercial air traffic. The airport is served by 3 international carriers: American Airlines, Continental Airlines, and Grupo Taca. From Belize, direct flights are available to Miami, Houston, Dallas, and San Salvador.

The communications network in Belize is extensive. Belize Telecommunications, which was privatized between 1988 and 1992, operates the network and provides modern service to the entire country. The number of subscribers grew from over 3,300 in 1995 to over 30,000 in 1999. Cell phone and Internet use are on the rise. There are no daily papers published in Belize, but there are 2 main weeklies: the Belize Times, which is sympathetic to the PUP, and the Guardian, which favors the UDP. The Broadcasting Corporation of Belize ran only 2 radio stations before it was privatized in 1998. As of 2000 there were 15 radio stations. Television viewers have access to a number of local television stations as well as cable television, which provides up to 50 international channels.

Residents in Belize receive their energy from Belize Electricity (BEL), which, after power sector reforms in 1992, emerged as the single producer and distributor of electric power. In 1999 the government gave up majority control of the company, selling a portion of its shares to the public and the rest to Fortis of Canada, boosting Fortis's ownership to 62.96 percent. The majority of Belize's fuel needs are met through the import of oil from the United States.

ECONOMIC SECTORS

While efforts to diversify the Belizean economy are underway, the leading economic sector is still agriculture, leaving the country's economic performance vulnerable to fluctuations in international demand and shifts in commodity prices. To bolster economic stability and increase foreign investment, the Belizean government targeted tourism as its primary growth sector. An intensive marketing campaign was launched on U.S. television in the late 1990s to attract visitors, and loans were secured for the restoration of archeological sites. Manufacturing is another sector that has been targeted for growth. Manufacturing proceeds made a solid contribution to the GDP, but in 1998 industry employed only 32 percent of the labor force, less than the 38 percent employed in the agricultural sector. Mining is limited because of a lack of extensive resources. Construction activity increased in 2000 due to reconstruction from Hurricane Keith, but contracts for major projects are often awarded to overseas firms who generally have more building experience and wider access to skilled labor.

AGRICULTURE

Agriculture, which employs over one-third of Belize's labor force, is vital to the country's economy, accounting for nearly 22 percent of the GDP in 1999 and about 68 percent of export earnings.

Sugar is produced in the north of the country and is the nation's largest agricultural export, accounting for 50 percent of domestic export revenues and half of all arable land use. Preferential quotas and tax rates on sugar exports granted by the United States and the European Union have kept sugar revenues high. The United States bought 16,772 tons and the European Union bought 39,400 tons of sugar from Belize in 1999.

Fruits, such as bananas, oranges, and grapefruits, are the country's second largest agricultural export. Fruit production, which occurs in the Stann Creek Valley, is affected by weather and international market conditions. For example, Hurricane Keith caused great setbacks in the agricultural sector in 2000. Also, export revenues rose to record levels in 1995-96, but as international prices fell, earnings slumped. Citrus concentrate and bananas enter the United States duty free under the Caribbean Basin Initiative (CBI). Recent developments in the industry could make the citrus sector more competitive against the banana market. In 1998-99, 2 citrus companies were purchased by the Commonwealth Development Corporation (CDC). The company wants to increase citrus production by making factories more efficient and by rehabilitating existing groves.

Banana production is significant, accounting for 16 percent of total exports in 1999. Production was controlled by the state-run Banana Control Board until 1991. It was then taken over by a growers' association which, through efficient management, raised banana production to record levels by the mid-1990s. Other export crops include assorted vegetables and tropical fruits, chili peppers, papayas, and organic cocoa.

Increased rearing of livestock has helped Belize become self-sufficient for fresh meat and poultry products. Belizean slaughter houses produced 3.3 million pounds of beef in 1999, along with 1.9 million pounds of pork. Some of this output was exported to Honduras and Guatemala. Despite increased production, processed meats were still imported from the United States. Fishing is an important component of the economy, providing food for domestic consumption as well as an important source of foreign exchange. Belize exported over 5,200 tons of marine products in 1999, most of it lobster and shrimp.

The timber industry, which once dominated the economy, has continued to struggle, contracting 6.9 percent in 1999. While 79 percent of Belize is covered by forest and woodlands, only 15 percent is suitable for timber production. Sawnwood exports earned only US$2.1 million in 1999, approximately 1.3 percent of total export revenue.

Most farms in Belize are small, less than 20 hectares. Government financing has generally favored large export-producing farms, making it difficult for small farmers to obtain capital for improvements. To help remedy the situation, the government (in November of 1998) created the Small Farmers and Business Bank to meet small farmers' needs.

INDUSTRY

MINING.

While gold, bauxite, barytes, and cassiterite do exist in Belize, they are not found in sufficient quantities to render them commercially viable. Dolomite limestone, which is used as road ballast and agricultural fertilizer, was the only mineral exploited in 2000. Agricultural-grade dolomite is sold on the domestic market to banana and citrus producers. It is also exported to the Windward Islands and Jamaica. Belize Minerals, the main local producer of dolomite, has sought new export markets in Central and South America, and has tried to produce a different grade of dolomite for use in the steel industry.

MANUFACTURING.

The manufacturing sector in Belize was targeted for growth, but in 1999 was still fairly small. Most manufacturing is done for domestic consumption. Export production generally involves the processing of agricultural products or the assembly of garments from imported fabric for re-export to the United States under the CBI. The assembly sector in Belize has had trouble competing with low-cost producers, especially those in Mexico. Between 1993 and 1995 earnings in the sector dropped 50 percent.

CONSTRUCTION.

The government pledge to build 10,000 new houses, along with commitments to improve the infrastructure, stimulated increased activity in the construction sector, but contracts were primarily awarded to foreign firms that had more highly skilled workers and more building experience. Reconstruction after Hurricane Keith in 2000 was expected to produce a leap in construction activity.

SERVICES

TOURISM.

Belize has all the ingredients of an attractive holiday destination. It has a mild climate, calm blue waters, and a large barrier reef that is ideal for scuba diving. It is also home to jungle ecosystems and ancient ruins. The government, wishing to capitalize on these attractions, targeted the tourist industry for expansion.

In 1996, Belize ratified the Munda Maya agreement with Honduras, Guatemala, El Salvador, and Mexico, pledging cooperation in the management of Mayan archeological sites. In 1997 Belize launched a marketing campaign to attract visitors, producing commercials for American television and putting ads in U.S. magazines. And in 1999, the country obtained a US$11.4 million loan from the Inter-American Development Bank (IDB) to further advance the sector's development. That same year, the government was planning to build a tourist village in Belize City which would cater primarily to cruise ship passengers who come to shore for brief periods of time.

In 1995, 121,270 people visited Belize. By 1999, that number had increased to 167,096, a majority of which were Americans. Cruise ship arrivals, which numbered 7,953 in 1995, had risen to 34,130 by 1999. By the end of the decade, tourists were contributing over US$100 million a year to Belize's economy. In 1999, 1,365 jobs (over 30 percent of the jobs created that year) were added in the services sector.

FINANCIAL SERVICES.

There are 4 commercial banks in Belize. Belize Bank is owned by Carlisle Holdings. The other 3 banks are subsidiaries of larger foreign banks: Barclays Bank (UK), the Bank of Nova Scotia (Canada), and the Atlantic Bank (Honduras).

There are 2 development banks: the Small Farmers and Business Bank, which was established to help meet the needs of small farmers and businessmen, and the Development Finance Corporation (DFC), which caters to the needs of large-scale producers. The DFC typically directs institutional funds from other agencies such as the Caribbean Development Bank (CDB) to meet the government's development priorities.

Small enterprise owners who are in need of credit or technical assistance can also receive help from the National Development Foundation of Belize, a lending institution that was established from grant funds from the U.S. Agency for International Development (USAID).

INTERNATIONAL TRADE

Belize is highly dependent on the United States and Great Britain for trade. These 2 countries alone bought 80 percent of Belize's exports in 1999. That same year, the United States supplied Belize with over half its imported goods.

Due to its limited export base and high degree of dependence on imported goods for much of its domestic consumption, Belize has run persistent trade deficits . In 1999, export receipts amounted to US$182.7 million. This was less than half the import bill of US$374.4 million, resulting in a trade deficit of about US$192 million.

Trade with the United States has been stimulated by Belize's participation in the Caribbean Basin Initiative (CBI), a U.S.-sponsored program to increase investment in Caribbean nations. The initiative allows member countries duty-free access to American markets. Other major trading partners include the European Union, Canada, Mexico, and CARICOM member states.

MONEY

The Central Bank of Belize regulates the primary financial mechanisms of the country, setting liquidity and cash reserve requirements and determining the interest rate structure. The Central Bank also regulates most forms of foreign exchange in the country. At the end of September 1996, after receiving a US$20 million loan from Taiwan and issuing a US$10 million regional bond, international reserves in Belize reached an all-time high of US$79 million. Budget controls and high reserves in the early 1990s gave way to increased spending and

widening government deficits in 1997-98, putting pressure on Belize's fixed exchange rate with the United States. Reserves fell sharply, dwindling to US$43 million by 1998. The declines were reversed in 1999 due to increased borrowing and larger inflows of foreign exchange stemming mainly from the sale of home mortgages to the Royal Merchant Bank of Trinidad. By the end of 1999 monetary reserves had rebounded to US$70.2 million.

POVERTY AND WEALTH

According to a census carried out in 1991, 38,000 people, or about 23 percent of the population, fell below the World Bank Poverty Threshold (meaning they made less than US$740 a year). The same census showed that 7 percent of the population was extremely poor (lacking the sufficient food and rudimentary services to ensure good health). Belize City has traditionally received a disproportionate share of government revenues because of the population representation system. Money is channeled directly into the Belizean Central Bank, and the resulting distorted spending has accelerated population growth in the port city, exacerbating poverty and social problems. The rural populations, particularly in the poorer districts of Toledo, Cayo, and Stann Creek have limited access to basic education, health care, safe drinking water, and sanitation. In 2001, 7 percent of the population was illiterate and 17 percent of the population did

not have access to safe drinking water. Life expectancy for both men and women was 71 years and the infant mortality rate was high, at 28 deaths per 1,000 live births.

WORKING CONDITIONS

Unemployment was estimated at 14.3 percent in 1998, among a total workforce of 71,000. Workers in Belize have the right to organize unions, and the law bars discrimination against employees on the basis of union affiliation. However, it is not uncommon for union sympathizers to be fired on grounds purportedly unrelated to their union activities. Effective redress for workers in this situation is difficult. They can file complaints with the Labor Department, but their cases are often difficult to prove. There were 11 unions in Belize in 2000 whose members comprised about 11 percent of the workforce. While officially the unions are independent of the political parties, most hold strong sympathies for either the UDP or the PUP.

Forced labor in Belize is forbidden by law, as is child labor. Children under the age of 14 are not permitted to enter the workforce, and those under 17 are not allowed to operate dangerous machinery. Children between 5 and 14 years old are required to attend school, although truancy and dropout rates are significant.

There is a minimum wage in Belize which applies to all full-time workers. The wage is generally set at US$1.10 per hour but fluctuates depending on the field of work. Those in the export industries receive at least US$1.00 per hour. Domestic workers in private homes and shop assistants are paid an hourly minimum rate of US$0.87. The minimum wage, as a sole source of income, is not enough to provide a decent standard of living. Most workers are paid more than the minimum. The standard workweek is 45 hours over 6 days. Anything more is considered overtime. Over the course of a year workers are given 13 public holidays and 2 weeks vacation.

Working conditions for documented workers are fairly good. For undocumented workers, especially the Hispanic laborers who make their livings on the banana farms, things can be more difficult. Worker housing on banana farms often lacks running water and electricity. Many times this housing is placed close to the fields, where exposure to pesticides is high. There are health and safety regulations in Belize covering numerous industries. However, enforcement and inspection are generally limited to urban areas or accessible rural areas where violations have been reported.

COUNTRY HISTORY AND ECONOMIC DEVELOPMENT

1502. Christopher Columbus sails along the coast of what is now Belize.

1638. The first recorded settlement is established by a shipwrecked English seaman.

1871. Belize becomes a Crown Colony of the British Empire. The territory is known as British Honduras.

1950. The PUP is founded.

1954. Universal suffrage is introduced.

1961. A ministerial system is established.

1964. The British grant the colony self government.

1973. British Honduras becomes Belize.

1974. The UDP is founded. Belize joins CARICOM.

1981. Belize gains independence and drafts a new constitution. Guatemala claims part of Belizean territory.

1984. The UDP wins elections.

1989. The PUP wins elections.

1991. Belize is admitted to the Organization of American States (OAS). Guatemala recognizes independence.

1992. Belize joins the Inter-American Development Bank (IDB).

1993. The UDP takes over once again, instituting a 15 percent VAT.

1994. Britain withdraws its garrison of 1,200 army and 300 air force personnel.

1998. The PUP comes to power; the 15 percent VAT is abolished and replaced with an 8 percent sales tax.

FUTURE TRENDS

Belizean development was set back by Hurricane Keith, which swept through the country in October 2000. The damage, concentrated primarily in the north, amounted to US$280 million according to the U.N. Economic Commission for Latin America. Promoting recovery in the agricultural sector, the infrastructure, and livestock will require a sustained, massive investment. Increased activity in construction resulting from damages caused by the hurricane was expected to boost the economy by 7 percent in 2001, but inflation was also expected to rise due to lowered agricultural production and a rise in the cost of food. The tourism sector will probably suffer until reconstruction is completed, but tourism has been touted as the most optimistic sector of the Belizean economy.

DEPENDENCIES

Belize has no territories or colonies.

BIBLIOGRAPHY

Economist Intelligence Unit. Country Profile: Belize. London: Economist Intelligence Unit, 2000.

U.S. Central Intelligence Agency. CIA World Factbook. <http://www.odci.gov/cia/publications/factbook/geos/bh.html>. Accessed July 2001.

U.S. Department of State: Bureau of Democracy, Human Rights, and Labor. 1999 Country Reports on Human Rights Practices: Belize. <http://www.state, gov/global/human_rights/1999_hrp_report/belize.html>. Accessed July 2001.

U.S. Department of State: Bureau of Western Hemisphere Affairs. Background Notes: Belize. <http//www.tradeport.org/ts/countries/belize/bnotes.html>. Accessed July 2001.

U.S. Department of State. FY 2001 Country Commercial Guide: Belize. <http://www.state.gov/www/about_state/business/com_guides/2001/wha/index.html>. Accessed July 2001.

World Bank. <http://www.worldbank.org/bz>. Accessed July 2001.

—John Mazor

CAPITAL:

Belmopan.

MONETARY UNIT:

The Belize dollar, which is pegged to the U.S. dollar at a rate of 2:1. One Belize dollar (Bz$) is equal to 100 cents. Belizean currency comes in 100-, 50-, 20-, 10-, 5-, and 2-dollar bills with the occasional 1-dollar bill. Coins come in 1-dollar, 50, 25, 10, 5, and 1 Belizean cent units. The 25-cent piece is called a shilling.

CHIEF EXPORTS:

Sugar, bananas, citrus fruits, clothing, fish products.

CHIEF IMPORTS:

Food, consumer goods, building materials, vehicles, machinery, petroleum products.

GROSS DOMESTIC PRODUCT:

US$740 million (purchasing power parity, 1999 est.).

BALANCE OF TRADE:

Exports: US$150 million (1998 est.). Imports: US$320 million (1998 est.).