According to the March 1996 quarterly report from the Central Bank of Belize, real GDP growth in 1995 was 3.8% rather than the 4.2% reported by the prime minister, Manuel Esquivel, in his budget speech on March 25 (2nd quarter 1996). The 1994 figure was also adjusted downwards, from 1.7% to 1.5%, and the real increase in GDP per head was estimated at 0.2% in 1995, compared with a decline of 0.4% in 1994. The upturn in the economy in 1995 was attributed to the strong growth in agricultural exports, particularly of citrus and marine products.
--while government borrowing begins to fall
The heavy government borrowing requirement reported for 1995 (3rd quarter 1996) continued to rise sharply in the first quarter, reaching Bz$112.5m (US$56m) at the end of March, an increase of 10% on end-1995. Credit needs receded somewhat in the second quarter, with the level of borrowing falling by 3.3%. This reflects the additional fiscal income yielded by the new 15% value-added tax (VAT) imposed in April, which, the government hopes, will allow it to eliminate recurrent deficits. The tax is likely to have an adverse impact on inflation, however, which had already risen from 3.9% to 4.3% in the first quarter of 1996. It will also further depress domestic demand, already suffering due to the government's programme of fiscal austerity and the devaluation of the Mexican peso, which has led growing numbers of Belizeans to cross the border for their shopping. In response to the latter problem, the government is reported in the last month to have reduced the number of permits being issued for day trips over the border.