He explained that:

"Over the past two years, the authorities have made commendable strides in correcting serious macroeconomic imbalances based on their adjustment strategy. Tax measures and expenditure cuts have led to a sharp improvement in the central government's primary balance, which has moved from a deficit of 3% of GDP in FY2003/04 (April to March) to a surplus of 3% of GDP in FY2005/06."

The IMF chief continued:

"However, these efforts alone will not be sufficient to bring the economy back onto a sustainable path, and for this reason, the authorities are undertaking further adjustment efforts during FY2006/07 and beyond."

He observed that:

"Even with this additional adjustment effort, as well as the additional official financing that is being provided by multilateral and bilateral lenders, large fiscal and balance of payments financing gaps would remain in 2007 and beyond. It is against this background that Belize has sought to engage with its external private creditors to achieve an orderly and cooperative debt restructuring."

The Government of Belize last week made an offer to exchange the country's outstanding commercial indebtedness in return for new US dollar bonds to be issued by Belize.

The new bonds mature in 2029, with principal payments starting in 2019. The bonds will bear interest in the first three years after issuance at a fixed per annum rate of 4.25%. In years four to five, the rate will step up to 6.00%, and thereafter through the maturity of the bonds the interest rate will level off at 8.50% per annum.

Mr De Rato concluded by announcing that:

"The International Monetary Fund has welcomed the progress the authorities have made in addressing Belize's serious macroeconomic imbalances in the context of a home-grown adjustment strategy. Nonetheless, Belize's situation will remain vulnerable for quite some time, allowing little room for slippage in implementing the policy framework."