Research: Assessing Debt Sustainability in Belize

24 Nov 2017

This paper uses non-parametric methods to examine the relationship between real GDP growth and public debt between 1981 and 2016, with the objective of identifying a suitable public debt threshold for Belize. Then, debt dynamic equations are used to trace the outcome of extending the Government’s plan fiscal consolidation efforts over a 12-year period to determine the size of fiscal adjustment needed to reduce the debt-to-GDP ratio to the desired target.  The results show that average real GDP growth and median real GDP growth are highest when public debt is below 60% of GDP. Furthermore, Government would need to strengthen its fiscal consolidation efforts by maintaining a constant primary balance of 3.3% of GDP to achieve the goal. 

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