1. Fiscal Principles or Rules (Institutional strength – Medium; Effectiveness – Low; Reform priority – Medium)

17. The Ministry of Finance (MOF) has a debt target but this has not been formalized and is far from being achieved in practice. The budget speech and fiscal strategy document contains the objective to reduce the central government gross debt to GDP ratio to 80 percent in the medium term and to 60 percent in the long term. However, the target has not been formalized in separate legislation or regulations and it is not binding. Municipal governments can borrow subject to a nominal debt ceiling with approval by the MOF. Public corporations can also borrow but this is not captured in public debt statistics in Belize. The Treasury Bills Act specifies a nominal ceiling for outstanding Treasury bills and notes. Debt sustainability has been a persistent challenge in Belize; its external debt was restructured three times over a 10-year period (2006–07 and in 2012–13, 2016–17). The debt level is currently about 90 percent (Figure 7).

18. Fiscal policy is currently guided by multi-year commitments on the primary balance, but these are not permanent rules and have been recently missed. Under the terms of the 2017 debt restructuring, which are aimed at improving debt sustainability, the government committed to maintain a primary balance of at least 2 percent of GDP. This commitment is restated in the budget speech and fiscal strategy document, which also includes a target floor for the overall balance (-1.5 percent of GDP) and public investment (5 percent of GDP). However, these commitments have not been formalized in legislation and are not binding (if the primary balance floor is missed, the government pays interest quarterly instead of semi-annually on the restructured bond). Provisional fiscal data indicate the primary balance target was attained in 2017/2018 but missed in 2018/2019.

19. Medium-term fiscal forecasts guide budget preparation, albeit with large deviations between forecasts and realizations. The budget preparation document (the budget call) includes information on the fiscal targets and contains disaggregated forecasts of expenditure 3 years ahead. The fiscal strategy document, attached to the budget law, also contains a medium fiscal framework (MTFF) with projections 5 years ahead, although the fiscal projections are at the aggregate level. In practice, the fiscal forecasts in budget suffer from a lack of credibility: there have been some large deviations between 1- and 2- year ahead forecasts of total expenditure and actual outcomes although accuracy has improved over time (Table 3).

^{Table 3.}

Budgetary Expenditure: 1- and 2- Year Ahead Forecasts and Outturns (% GDP)

Sources: Budget documents

^{Table 3.}

Budgetary Expenditure: 1- and 2- Year Ahead Forecasts and Outturns (% GDP)

	1- year ahead forecast			2- year ahead forecast
	Budget	Outturn	Deviation	Budget	Outturn	Deviation
Budget 2014–2015	26,5	38,4	11,9	26,6	36,3	9,7
Budget 2015–2016	30,2	35,0	4,8	30,8	33,7	2,9
Budget 2016–2017	34,5	32,7	-1,8	33,4	33,4	0,0
Budget 2017–2018	33,0	32,3	-0,7	N/A	N/A	N/A

Sources: Budget documents

View Table

^{Table 3.}

Budgetary Expenditure: 1- and 2- Year Ahead Forecasts and Outturns (% GDP)

	1- year ahead forecast			2- year ahead forecast
	Budget	Outturn	Deviation	Budget	Outturn	Deviation
Budget 2014–2015	26,5	38,4	11,9	26,6	36,3	9,7
Budget 2015–2016	30,2	35,0	4,8	30,8	33,7	2,9
Budget 2016–2017	34,5	32,7	-1,8	33,4	33,4	0,0
Budget 2017–2018	33,0	32,3	-0,7	N/A	N/A	N/A

Sources: Budget documents

20. Fiscal policy should be guided by a transparent rules-based fiscal framework based on a debt anchor. Belize could benefit from a fiscal responsibility law (FRL) with explicit rules designed to guide the debt reduction process in a transparent and predictable manner, while creating a mechanism for public oversight and accountability. The framework could combine a target for the debt ratio with an operational rule for the primary balance. An expenditure rule (possibly with explicit provision for capital spending) linked to long-run nominal GDP growth could help to avoid procyclical swings in public investment. Provisions for accountability and correction mechanisms should be included in the FRL to support enforceability and robustness of the framework.

2. National and Sectoral Planning (Institutional strength – Medium; Effectiveness – Medium; Reform priority – High)

21. National and sectoral development strategies are published with varying levels of detail on investment plans. Belize has a history of multi-year strategic planning with policy priorities articulated in numerous documents (Table 4 provides a summary). The current national development plans include two long-term plans covering a period of 20 years (Horizon 2030 and the National Development Framework for Belize 2010–2030) and a medium-term 4-year plan (Growth and Sustainable Development Strategy for Belize 2016–2019, GSDS), but these do not separately identify priorities for public investment. Development strategies also exist for each key sector (around 8 strategies), as well as for some cross-cutting areas such as climate change (the National Climate Resilience Investment Plan). The sectoral strategies vary regarding their level of detail on public investment and the extent to which they cross-reference the national development strategies, and some are also outdated (for example, the Education Strategy 2011–2016). The national and sectoral plans cover central government only and do not include public corporations or sub-national governments. The GSDS has been designated as the reference document for all sectoral strategies, and those published since the GSDS refer to it, although sectoral strategies prepared prior to the GSDS have not been updated.

^{Table 4.}

Sectoral Development Strategies

Note: NSTMP = National Sustainable Tourism Master Plan; CNTMP = Comprehensive National Transportation Master Plan; etc. etc. Source: GoB

^{Table 4.}

Sectoral Development Strategies

Sector	Name of strategy	Period covered	Costing estimates (Y/N)	Measurable targets (Y/N)
Tourism	NSTMP	2011–2030	Y	N
Transport	CNTMP	2018–2035	Y	Y
Agriculture	NAFP	2015–2030	N	N
Health	HSSP	2014–2024	N	Y
Education	ESS	2011–2016	Y	Y
Climate	NCRIP	2013-(no end date)	Y	Y
Energy	SES	2012–2033	N	N

Note: NSTMP = National Sustainable Tourism Master Plan; CNTMP = Comprehensive National Transportation Master Plan; etc. etc. Source: GoB

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^{Table 4.}

Sectoral Development Strategies

Sector	Name of strategy	Period covered	Costing estimates (Y/N)	Measurable targets (Y/N)
Tourism	NSTMP	2011–2030	Y	N
Transport	CNTMP	2018–2035	Y	Y
Agriculture	NAFP	2015–2030	N	N
Health	HSSP	2014–2024	N	Y
Education	ESS	2011–2016	Y	Y
Climate	NCRIP	2013-(no end date)	Y	Y
Energy	SES	2012–2033	N	N

Note: NSTMP = National Sustainable Tourism Master Plan; CNTMP = Comprehensive National Transportation Master Plan; etc. etc. Source: GoB

22. The national development strategy does not contain costing estimates, although some sectoral strategies are costed, and these costs are used for budget preparation purposes. Some sectoral plans (e.g. the Comprehensive National Transportation Master Plan) contain costing estimates for the implementation of the strategy as well as for major individual projects. Other sectoral strategies (e.g. the National Sustainable Tourism Masterplan) do not include any information on costing. The absence of costing estimates in the GSDS is a key weakness, however, and limits its impact on the prioritization and selection of public investment projects in the annual budget process.

23. Only a few sector strategies present measurable targets for the outputs and outcomes of programs or investment projects. Some sectoral strategies provide measurable indicators for both outcomes and outputs (e.g. Transport). However, there are no evaluation reports, or other specialized studies that assess performance against these targets. The MOF requires budget agencies to identify indicators at the program level for inclusion in the budget documents together with a progress report. However, the indicators are not consistent with those in the sectoral development strategies.

24. Greater harmonization between the national and sectoral development strategies and comprehensive costing estimates would improve the credibility and relevance of the investment planning process. The GSDS being prepared should provide costing allocations for public investment in each sector or priority area; sectoral strategies should be updated to be consistent with the new GSDS and investment plans of public corporations and sub-national government should be included in the strategies. There should be greater consistency in the format and content of sectoral strategies, each of which should include measurable indicators and targets that are reported against in the budget documents. Preparation and dissemination of guidelines and templates for sectoral strategies would greatly improve the quality and consistency of the various strategies.

3. Coordination between entities (institutional strength – Low; effectiveness – Low; priority of reforms – High)

25. Municipal governments prepare development strategies containing capital spending plans that are discussed with the Ministry of Labor, Local Government and Rural Development (MLLGRD) but are not integrated into the wider national investment planning process. Belize has two administrative levels of subnational government: municipalities (comprised of 7 towns and 2 cities) and rural communities (comprised of 194 communities, each with a Village/Community Council (VCC)). Revenue raising powers and expenditure responsibilities of the municipalities are laid out in legislation (City or Town Council Act) and guided by the National Policy of Local Government (2009). Capital expenditure responsibilities typically relate to construction and maintenance of minor roads, bridges, sporting facilities, and parks, as well as maintenance of infrastructure built by central government in their jurisdiction. Each municipality must publish a strategic development plan covering a five-year period, aligned with the Growth and Sustainable Development Strategy (GSDS) and relevant sectoral plans.⁸ These development plans inform priority investments and are submitted to, and discussed with, the MLLGRD (although there is no formal process for discussing capital expenditure). However, the plans are not submitted to the MOF or MED and are not coordinated with central government investment decisions.

26. The central government does not have a clear rule-based system for making fiscal transfers to municipalities and rural communities. Fixed annual subventions to each municipality and village council are included in the budget and disbursed monthly. The amount of the transfer is typically fixed in nominal terms and is not calculated by a formula.⁹ SNG entities are notified of the transfers at the beginning of the fiscal year. Transfers to municipalities are not specifically earmarked and can be used for either capital or current expenditure. They remain a relatively small portion of the municipalities’ revenue since they also have authority to raise some revenues (e.g. trade licenses, traffic fines).

27. There is no systematic reporting to central government of contingent liabilities arising from major investment projects of SNGs, PCs or PPPs. Guarantees are subject to approval by the MOF or the Parliament but guarantees and other contingent liabilities are not systematically monitored and reported, neither by the Central Bank nor the MOF, irrespective of the government entity concerned (line ministries and departments, SNGs, state-owned enterprises (SOEs) and statutory bodies) or the type of contract involved (such as concessions or public-private partnerships (PPP)). The MOF does not produce a fiscal risk statement. There have been instances of materialized contingent liabilities. In November 2017, the Caribbean Court of Justice ordered the Government of Belize to pay a guaranteed debt contracted by Universal Health Services to a commercial bank creditor. This ruling implied an increase of 2.5 percent of GDP in government debt. In 2015, the Belize government settled a claim with investors for $67 million related to its renationalization of the electricity and telecoms companies.

28. Greater disclosure of contingent liabilities of SNGs, PCs and PPPs would provide a more stable climate for investment planning. Publication of individual SNG budgets and inclusion of a consolidated statement of contingent liabilities in the central government budget would allow for a more comprehensive assessment of the total fiscal space available for public investment, as well as informing better the planning and budgeting process.

4. Project Appraisal (Institutional strength – Low; Effectiveness – Low; Reform priority – High)

29. There is no requirement for major projects to undergo appraisal prior to funding being sought. Projects funded by development partners (DPs), which represented on average 56% percent of capital investment over 2016–2018 as shown in Figure 9, carry out their own appraisals with limited involvement by the Ministry of Economic Development or line ministries, and these appraisals are financed by the respective DP. DP appraisal methodologies are not harmonized, vary in depth and comprehensiveness, and are not always explicitly aligned with government strategy . Domestically-funded projects are not subject to any formalized appraisal requirement, although in practice some major domestic projects (for example, in the Ministry of Works) undergo some limited form of appraisal. The lack of appraisal appears to largely reflect capacity issues within the Ministry of Economic Development and individual line ministries, both in terms of resources and expertise.

30. The national development strategy outlines an appraisal framework though it has not been operationalized. There is a ‘Prioritization Framework’ in the GSDS for the appraisal and selection of projects¹⁰ with four criteria: urgency, impact, funding availability and net systemic contribution. There are no guidelines or manuals to support the operationalization of this framework, however. More generally, there are no guidelines for the preparation of feasibility studies (including pre-feasibility) nor for appraisal of such studies at either the central or line ministry level. The MOF/MED also do not provide any technical support to line ministries on these matters. Externally-funded projects are appraised using methodologies established by the respective DPs but while these generally check consistency with the government’s development strategies, they do not systematically assess alternative options for delivering the relevant facilities or services.

31. Risks are not systematically assessed. A key part of the project appraisal process is the identification of uncertainties relating to underlying market, technical, financial, economic and distributional outcomes. Mitigation measures can then be included in the appraisal document, project implementation plan, financial plan, or operating plan and, if necessary, include provisioning for unexpected costs. There is currently no systematic risk-assessment of project proposals undertaken by the MOF/MED or by the line ministries, those appraisals undertaken by development partners will often include risk assessment.

32. MOF/MED should strengthen pre-investment planning, such that projects can be appraised prior to seeking funding by development partners. The MOF/MED should prepare detailed guidance on project preparation, in line with international practices. Guidance should cover the preparation process as well as the methodology for feasibility studies and appraisals, covering: (i) whether the project is consistent with national and sectoral policy priorities; (ii) whether there are other options for delivering the relevant facilities or services; (iii) whether the design and procurement plans provide value for money; and (v) an assessment of risks and possible mitigation measures. This will require increased resources and expertise as well as reconsidering the whole PIM process. Some guidance is outlined in Appendix 3.

5. Alternative Infrastructure Finance (Institutional strength – Low; Effectiveness – Low; Reform priority – High)

33. PCs play a dominant role in major infrastructure markets but there is competition in some sectors. The main PCs in Belize are Belize Electricity Limited (BEL), Belize Water Services (BWS) and Belize Telecommunications Limited (BTL). All were previously private companies before being renationalized, most recently BTL in 2009 and BEL in 2011, although there are private minority shareholdings. BEL and BWS operate as state monopolies in the electricity distribution and water supply sectors respectively, while there is one other competitor in telecommunications alongside BTL. Competition also exists in the electricity generation sub-sector (6 companies). The national water, electricity and telecommunications sectors are regulated by a single independent Public Utilities Commission (PUC), according to the 2001 PUC Act and individual industry Acts. The PUC has the authority to grant licenses to individual companies and domestic and foreign firms are legally allowed to enter utilities markets. Other regulators exist for civil aviation (Ministry of Transport) and water supply at the local level (MLLGRD). Table 6 in the following chapter illustrates the level of investment undertaken by PCs.

^{Table 5.}

Budget 2019/20 (Thousand BZ $)

Source: MOF budget estimates 2019/20

^{Table 5.}

Budget 2019/20 (Thousand BZ $)

	Actual 2016/17	Actual 2017/18	Budget 2018/19	Expected 2018/19	Budget 2019/20	Estimate 2020/211	Estimate 2021/22
Total capital	250,721	152,022	155,065	149,197	170,910	183,121	185,436
Capital II	1 13,677	59,176	61,921	61,343	74,778	72,650	80,985
Capital III	137,043	92,846	93,144	87,854	96,132	110,471	104,451
Current	952,823	1,006,598	1,051,354	1,028,400	1,077	1,086,498	1,107,774
Total budget	1,203,544	1,158,620	1,206,419	1,177,596	171,987	1,269,619	1,293,210

Source: MOF budget estimates 2019/20

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^{Table 5.}

Budget 2019/20 (Thousand BZ $)

	Actual 2016/17	Actual 2017/18	Budget 2018/19	Expected 2018/19	Budget 2019/20	Estimate 2020/211	Estimate 2021/22
Total capital	250,721	152,022	155,065	149,197	170,910	183,121	185,436
Capital II	1 13,677	59,176	61,921	61,343	74,778	72,650	80,985
Capital III	137,043	92,846	93,144	87,854	96,132	110,471	104,451
Current	952,823	1,006,598	1,051,354	1,028,400	1,077	1,086,498	1,107,774
Total budget	1,203,544	1,158,620	1,206,419	1,177,596	171,987	1,269,619	1,293,210

Source: MOF budget estimates 2019/20

^{Table 6.}

Extrabudgetary and PC Capital Spending

(Thousand BZ $)

Source: Budget estimates 2016–2020, annual reports DIGI, BEL, BSW and BSIF.

^{Table 6.}

Extrabudgetary and PC Capital Spending

(Thousand BZ $)

	Budget	BSIF	BSIF/Budget	Telemedia	Electricity	Water	PCs/budget
2015/16	283,775	11,179	3.9%	40,307	27,700	21,041	31.4%
2016/17	250,721	23,171	9.2%	72,175	38,900	12,008	49.1%
2017/18	152,022	18,147	11.9%	78,178	33,600	17,544	85.1%
2018/19	149,197	8,555	5.7%	82,890	30,600	21,551	90.5%
Total 2015–2019	835,715	61,052	7.3%	273,550	130,800	72,144	57.0%

Source: Budget estimates 2016–2020, annual reports DIGI, BEL, BSW and BSIF.

View Table

^{Table 6.}

Extrabudgetary and PC Capital Spending

(Thousand BZ $)

	Budget	BSIF	BSIF/Budget	Telemedia	Electricity	Water	PCs/budget
2015/16	283,775	11,179	3.9%	40,307	27,700	21,041	31.4%
2016/17	250,721	23,171	9.2%	72,175	38,900	12,008	49.1%
2017/18	152,022	18,147	11.9%	78,178	33,600	17,544	85.1%
2018/19	149,197	8,555	5.7%	82,890	30,600	21,551	90.5%
Total 2015–2019	835,715	61,052	7.3%	273,550	130,800	72,144	57.0%

Source: Budget estimates 2016–2020, annual reports DIGI, BEL, BSW and BSIF.

34. Some PPP projects have been undertaken but there is no PPP policy or legal framework in place even though potentially large projects are under discussion. Existing PPP projects include a build-operate-transfer hydroelectricity project and concession agreements for operation of the international airport, municipal waste collection, and the Belize City civic center. Information on existing PPP projects is not systematically collected by the Ministry of Finance, nor disclosed in budget documents. Belize Infrastructure Limited (BIL), a publicly-owned company established in 2013 with a mandate for implementing major priority infrastructure projects and reporting directly to the Office of the Prime Minister, has been designated as the government’s PPP unit and intends to undertake several new PPP projects in the tourism sector. BIL has limited in-house expertise on PPPs and hires consultants to advise on individual projects. The government has no oversight or governance arrangements in place for PPPs, nor any guidelines on their preparation, though it is currently preparing a draft PPP policy.

35. The investment plans of public corporations and most statutory bodies are not coordinated with central government. There is no centralized oversight of public corporations (PCs), either on a formal (e.g. a dedicated unit or process) or informal basis. There is a government representative on the Board of each PC, but investment plans are not reported to the MOF/MED. As such, the information is not compiled and incorporated into the public investment planning process, while investments undertaken by PCs are not included in national or sectoral planning documents, the PSIP or the budget despite their economic importance (3.7 percent of GDP in 2018). Some capital expenditure is also carried out by statutory bodies, although with the exception of the Belize Social Investment Fund (BSIF), this investment is also not coordinated with central government or included in the PSIP.

36. Oversight of PPPs and public corporations needs to be urgently strengthened to ensure the efficiency and quality of public investments and to guard against fiscal risks. In the absence of adequate financial and governance arrangements, there is a high risk that PPPs will not improve value for money, while exposing the government to substantial fiscal risk. Given the government’s plans to explore new PPP opportunities, a PPP policy and subsequently a legal framework and supporting regulations, in line with international best practices and consistent with PIM and procurement legislations, is needed (Box 2 provides some key considerations). These desirable legislation on PPP will have to be consistent with other PIM and procurement legislations. Even with a framework in place, however, the government should proceed cautiously, since many of the essential preconditions for establishing a well-regulated regime for managing PPPs—for example, a rigorous system for appraising and selecting capital investment projects—have not yet been established in Belize. Similarly, centralized oversight of PCs is also needed, to mitigate fiscal risks and improve public investment planning in key infrastructure sectors (Appendix 2 outlines best practices in this area). An important first step in this area would be the collection of financial information (including contingent liabilities) of existing PPPs and PCs in databases that can be regularly monitored.

6. Multiyear budgeting (Institutional Strength —Medium; Effectiveness —Medium; Reform Priority — Low)

40. The budget includes medium-term projections by ministry and program, but approved budgets and actual outturns may deviate significantly from these estimates. Forward estimates have limited accuracy, and, in some years, the final outturn of the capital budget is significantly higher than initial estimates. Figure 17 provides a comparison of budget estimates and actuals in different budget documents. Each group of bars shows how the estimates for capital spending in a specific fiscal year (horizontal axis) has varied between different budget documents (different bars within each group). For instance, for 2016/17 (the second group of bars), the forward estimate in the 2015/16 budget was 157 million BZ $, the approved capital budget in the 2016/17 budget was 189 million, the expected outturn in the 2017/18 budget was 241 million and the final outturn shown in the 2018/19 and 2019/20 budgets was 251 million.

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Comparison of Budget Estimates in Subsequent Budget Years

(BZ $)

Citation: IMF Staff Country Reports 2020, 221; 10.5089/9781513550954.002.A001

Source: Belize budget documents 2015 – 2020

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41. The annual budget call provides three-year ceilings for domestically funded capital spending (capital II) but the ceilings are only indicative. The approved budget will often be higher than the indicative ceilings, as discussed under institution 1. For externally funded capital spending (capital III), there are no ceilings in the budget call.

42. The published PSIP provides total project cost estimates for ongoing major projects, but there are no total cost projections in budget documents and PSIP reports have no annual breakdown. The PSIP database is maintained by the MED. It includes all capital projects that involve external funding, which is the case for most major capital projects. The PSIP contains comprehensive information for ongoing projects, including total cost estimates, funding from different sources, expected cash flow and actual cash flow, as well as information regarding physical project implementation. The PSIP also comprises summary information for projects that are proposed for external funding (pipeline projects) and possible project concepts. The MED publishes regular reports drawing on the PSIP database, but these will usually not include the breakdown of expected project costs by years. The PSIP does not use the budget classification and neither the PSIP nor the budget document contains an explicit reconciliation with one other.

43. The budget process includes medium-term projections and indicative capital spending ceilings, but the link to the PSIP is not fully transparent and should be strengthened. The PSIP should use the budget classification, and reports should include an overview of how PSIP projects are reflected in the budget. The budget should incorporate total cost projections for major projects and should provide a reconciliation with the PSIP.

7. Budget Comprehensiveness and Unity (Institutional strength — High; Effectiveness — High; Reform Priority — Low)

44. There is little capital spending by extrabudgetary entities. There is some extra-budgetary investment spending through the BSIF, but this is generally less than 10 % of total capital budget. BSIF investments provide infrastructure for rural development and are well regulated and transparent. It is funded by external grants and loans, which are disclosed in the PSIP. The funds are channeled to the BSIF through the budget, which shows the source of the funds but provides no information on the specific projects that will be financed. The priority areas for investment are decided by the Cabinet. Selection of specific projects for implementation is done by the BSIF board, comprised of the CEOs of the key ministries involved in rural development issues. The BSIF website provides detailed disclosure of priorities, projects and financing arrangements.

45. Domestically and externally financed capital spending are included in the budget, but public corporation (PCs) and PPP investments are not disclosed in budget documents. The capital investment of the three main PCs (Belize Telemedia (DIGI), Belize Electricity (BEL) and Belize Water Services (BWS)) is equivalent to much more than 50 percent of the government capital budget and amounted about 3.7 percent of GDP in 2018. BWS receives a capital transfer from the budget and indirect support through tax exemptions and deferred dividends. The total value of this support, which amounts to about 7 million BZ $ per year, is listed in BWS’ annual reports, but only the capital transfer is disclosed in budget documents. The concession for the international airport in Belize City, which was contracted in 2003, is currently the only PPP at the central government level and is not recorded in the budget documentation. This PPP is discussed under institution 5. Table 6 provides an overview of extrabudgetary capital spending and capital spending by PCs during 2015 – 2019, compared to the annual capital budgets.

46. Capital and current budgets are prepared by MOF and presented together in the budget, using organizational and program classifications. The budget includes a comprehensive overview of current and capital spending under each ministry, organization and program, further broken down by economic classification. The program classification is largely a mixture of sub-functions and organizational units. There is also information about program objectives, priorities, targets and results, as well as a listing of staff complements.

47. Budget documents provide comprehensive information on capital spending, including externally financed projects, but should be extended to disclose capital spending through extrabudgetary funds (EBFs), PCs and PPPs. The current budget documents include the financing flows to the BSIF but do not provide information about the use of this financing. There should be an appendix that gives an overview of BSIF-funded projects. This appendix should also give information about capital spending by the major public corporations. The budget documents should describe the governments PPP program, including current PPPs as well as PPPs under consideration, giving information about the investments involved and the explicit and implicit liabilities these might entail.

8. Budgeting for Investment (Institutional Strength — Low; Effectiveness — Medium; Reform Priority — Medium)

48. Capital spending is appropriated annually, but medium-term budget estimates and the total cost estimates in the PSIP give some predictability for future funding. The budget provides three-year forward estimates for capital projects, as well as information about spending the last three years. For many projects, this provides substantial information about the incurred and planned costs related to each project. However, there is no specification of total project costs in the budget documents, so it is usually not possible to ascertain whether the funds allocated in the budget are sufficient to complete a project. Estimates of full project costs are provided in the PSIP, but it is not always easy to reconcile the project information in the PSIP and the budget, as mentioned under institution 5.

49. The MOF can approve virement from capital to current spending for budget-funded capital projects but the net volume of virements is low in most years. Virement is regulated in chapter IV of the Expenditure Control Regulation.¹⁴ According to this regulation, MOF can approve reallocation between different sub-heads (programs) under a budget head (department). The authority to reallocate is subject to several limitations in the regulation, including that it cannot be used to finance new positions or policies. Virement from capital to current spending is generally not possible for externally financed (capital III) projects. Budget reports do not provide information about aggregate virement, but the expected budget outturn should include any net reallocation from capital to current spending. Figure 18 compares revised budgets and budget outturns to the approved budgets for the Ministry of Works the last three years. This Ministry is typically responsible for 25 – 30 percent of capital spending. The figure shows that there have been quite significant adjustments in capital spending during the year. In 2016–2017 both capital II and capital III were adjusted upwards. In 2017–2018 and 2018–2019 capital II has been adjusted downwards. Current spending has also been marginally reduced during the budget year, so there are no indications that funds are reallocated from capital to current spending.

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Ministry of Works – Adjusted Budgets and Outturns 2016 – 2019 (Percentage change compared to approved budget)

Citation: IMF Staff Country Reports 2020, 221; 10.5089/9781513550954.002.A001

Source: MOF budget documents 2016 – 2019

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50. There are no formal mechanisms to protect on-going projects, but several sources indicated that there is a clear practice to ensure sufficient funding of these projects before introducing new ones. The budget call specifies that new projects must be described and justified separately in budget submissions, but there is no formal rule that ongoing projects have priority. Table 8 under institution 10 shows an example from the 2019–2020 budget for the Ministry of Works, where the allocation to new projects was less than 10 percent of the capital budget. This appears to be very common.

^{Table 7.}

Maintenance and Capital Repairs 2016 – 2020

(Million BZ $)

Source: MOF budgets 2016 – 2020

^{Table 7.}

Maintenance and Capital Repairs 2016 – 2020

(Million BZ $)

	Capital stock	Current maintenance	Share	Capital repairs	Share
2016–2017	3,478	21.760	0.63%	1.654	0.05%
2017–2018	3,216	29.485	0.92%	0.820	0.03%
2018–2019	3,277	31.555	0.96%	2.999	0.09%
2019–2020	3,277	33.162	1.01%	3.578	0.11%
Average			0.88%		0.07%

Source: MOF budgets 2016 – 2020

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^{Table 7.}

Maintenance and Capital Repairs 2016 – 2020

(Million BZ $)

	Capital stock	Current maintenance	Share	Capital repairs	Share
2016–2017	3,478	21.760	0.63%	1.654	0.05%
2017–2018	3,216	29.485	0.92%	0.820	0.03%
2018–2019	3,277	31.555	0.96%	2.999	0.09%
2019–2020	3,277	33.162	1.01%	3.578	0.11%
Average			0.88%		0.07%

Source: MOF budgets 2016 – 2020

^{Table 8.}

New Capital Projects in 2019 – 2020 Budget for Ministry of Works (BZ $)

Source: MOF budget estimates 2019–2020, PSIP 2018–2019

^{Table 8.}

New Capital Projects in 2019 – 2020 Budget for Ministry of Works (BZ $)

	Estimate 2019–2020	From PSIP pipeline?	Total capital	Share new
Capital II	1,127,000		13,162,000	8.56%
1773 Rehabilitation Western Highway	500,000	No
1936 Haulover bridge	350,000	No
1962 Climate Vulnerability Reduction	277,000	Yes
Capital III	3,100,000		39,550,000	7.84%
1571 Corozal – Sarteneja Upgrading	100,000	No
1962 Climate Vulnerability Reduction	3,000,000	Yes

Source: MOF budget estimates 2019–2020, PSIP 2018–2019

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^{Table 8.}

New Capital Projects in 2019 – 2020 Budget for Ministry of Works (BZ $)

	Estimate 2019–2020	From PSIP pipeline?	Total capital	Share new
Capital II	1,127,000		13,162,000	8.56%
1773 Rehabilitation Western Highway	500,000	No
1936 Haulover bridge	350,000	No
1962 Climate Vulnerability Reduction	277,000	Yes
Capital III	3,100,000		39,550,000	7.84%
1571 Corozal – Sarteneja Upgrading	100,000	No
1962 Climate Vulnerability Reduction	3,000,000	Yes

Source: MOF budget estimates 2019–2020, PSIP 2018–2019

51. Under-funding of ongoing capital projects is not a significant issue, but there are few formal rules to protect capital projects during implementation and a modernized legal framework for public investment should strengthen formal protection. Virements from capital to current spending require MOF approval, but there is no other formal protection of capital projects during budget implementation. In addition, the status of the 1966 Expenditure Control Regulation is unclear and there is considerable scope for interpretation of its provisions. The new public investment legal framework recommended in this report should clarify the rules for virement from capital to current spending and give explicit funding priority to ongoing projects. Including total project costs in budget documents and explicit reconciliation between the budget and the PSIP, as recommended under institution 6, will enhance transparency and also improve protection of ongoing projects.

9. Maintenance Funding (Institutional Strength — Low; Effectiveness — Medium; Reform Priority — High)

52. There are no general, standardized methodologies for estimation of current maintenance needs. There is no government-wide regulatory framework for maintenance of capital assets and the government has not set any specific policies in this area. None of the ministries apply comprehensive, formalized maintenance systems. However, some line ministries have ad-hoc methodologies for current maintenance estimates, including regular visual inspections. The Ministry of Works is planning to develop a more structured maintenance system for its road assets. Table 7 shows that current maintenance budgets amounted to 0.88 percent of estimated public capital stock on average over the last four budget years.

53. There are no general, standardized methodologies for assessing capital repairs and major improvements. Capital repairs needs are identified through ad-hoc assessment and capital repairs programs may be structured as specific projects, which are included in the PSIP and submitted to external financing sources for funding consideration. These may be classified as construction projects in the budget, rather than as capital repairs. The PSIP includes several major rehabilitation projects which are classified this way. The needs for capital repairs are generally not included in national and sectoral strategies, which tend to be quite general. However, the Transport Master Plan does provide summary information about road conditions and needs for future maintenance. Table 7 shows that capital repairs budgets amounted to 0.07 percent of estimated public capital stock during the last four budget years. This is very low by international standards and may be partly due to the practice mentioned above of defining capital repairs as construction.

54. Maintenance and capital improvements are separate categories in the budget classification and current maintenance is reported in the budget. Current maintenance is aggregated and presented in summary budget tables according to the economic classification. There is no consolidated budget report on capital repairs. The data can in principle be aggregated from the capital budgets of different ministries and agencies, but this would take significant effort and be very difficult for anyone without expert knowledge of the budget classification. Aggregated data for capital repairs is available internally in the MOF but are not published. In the absence of a register of public non-financial assets, we use the estimated capital stock to assess the adequacy of maintenance spending. Current maintenance is slightly below 1 percent of public capital stock.¹⁵ Box 3 provides an example of recommendations for current maintenance and capital repairs allocations from South Africa.

^{Box 3.}

Maintenance Guidelines for Public Infrastructure in South Africa

Source: Infrastructure Maintenance Budgeting Guideline, South Africa, 2009.

Type of Infrastructure	Average Annual Maintenance Budget as % of Replacement Cost	Key Assumptions	Replacement or Major Rehabilitation over and above the Annual Maintenance Budget requiring specific capital budget
Bulk water storage	4-8%	Mostly for periodic repair of electrical and mechanical worts, storm damage repair, routine maintenance and periodic maintenance	every 30 to 50 years
Water treatment works	4–8%	Mostly (or electrical and mechanical equipment	every 20 to 30 years
Water reservoirs	2–3%	Generally law maintenance mostly of telemetry and electrical equipment, storm damage repair, pipe work repair, safely and security, routine maintenance and periodic maintenance	every 20 to 30 years
Water reticulation	4–8%	Mostly for telemetry and pumping equipment. emergency leak repair and ongoing leak repair due to degradation, storm damage repair	every 20 to 30 yea is
Sewage treatment works	4–8%	Mostly for electrical and mechanical equipment, storm damage and periodic maintenance	every 20 to 30 years
Sewer reticulation	4–8%	Mostly for pumping equipment, emergency leak repair and ongoing leak repair due to degradation. blockage removal, storm damage repair.	every 20 to 30 years
Roads and storm water	5–10%	Mostly for emergency repair, storm damage repair, and periodic maintenance (resurfacing every 7 to 10 years)	every 20 to 30 years
Electricity reticulation	10–15%	Mostly for emergency repair, storm damage repair, salary and security, routine maintenance, and periodic maintenance.	every 20 to 30 years
Public buildings	4–6%	Mostly for emergency repair, storm damage repair, and periodic maintenance (e.g. repainting and cosmetic upgrades every 5 to 10 years).	every 30 to 50 years
Hospitals	5–8%	Mostly for emergency repair, storm damage repair, and periodic maintenance (e.g. repainting every 3 to 5 years, and cosmetic and Operational upgrades every 7 to 10 years)	every 20 to 30 years
Schools	4–6%	Mostly for emergency repair, storm damage repair, and periodic maintenance (e.g. repainting every 5 to 7 years, I	every 30 to 50 years
Elect nary generation	5-8%	Mostly for electrical end mechanical equipment and dependent on age and technology of works	every 30 to 50 years
Electricity reticulation	10–15*	Mostly (or emergency repair, storm damage repair, safely and security, routine maintenance end periodic maintenance (e.g. every 7 to 10 years).	every 20 to 30 years

Source: Infrastructure Maintenance Budgeting Guideline, South Africa, 2009.

View Table

Type of Infrastructure	Average Annual Maintenance Budget as % of Replacement Cost	Key Assumptions	Replacement or Major Rehabilitation over and above the Annual Maintenance Budget requiring specific capital budget
Bulk water storage	4-8%	Mostly for periodic repair of electrical and mechanical worts, storm damage repair, routine maintenance and periodic maintenance	every 30 to 50 years
Water treatment works	4–8%	Mostly (or electrical and mechanical equipment	every 20 to 30 years
Water reservoirs	2–3%	Generally law maintenance mostly of telemetry and electrical equipment, storm damage repair, pipe work repair, safely and security, routine maintenance and periodic maintenance	every 20 to 30 years
Water reticulation	4–8%	Mostly for telemetry and pumping equipment. emergency leak repair and ongoing leak repair due to degradation, storm damage repair	every 20 to 30 yea is
Sewage treatment works	4–8%	Mostly for electrical and mechanical equipment, storm damage and periodic maintenance	every 20 to 30 years
Sewer reticulation	4–8%	Mostly for pumping equipment, emergency leak repair and ongoing leak repair due to degradation. blockage removal, storm damage repair.	every 20 to 30 years
Roads and storm water	5–10%	Mostly for emergency repair, storm damage repair, and periodic maintenance (resurfacing every 7 to 10 years)	every 20 to 30 years
Electricity reticulation	10–15%	Mostly for emergency repair, storm damage repair, salary and security, routine maintenance, and periodic maintenance.	every 20 to 30 years
Public buildings	4–6%	Mostly for emergency repair, storm damage repair, and periodic maintenance (e.g. repainting and cosmetic upgrades every 5 to 10 years).	every 30 to 50 years
Hospitals	5–8%	Mostly for emergency repair, storm damage repair, and periodic maintenance (e.g. repainting every 3 to 5 years, and cosmetic and Operational upgrades every 7 to 10 years)	every 20 to 30 years
Schools	4–6%	Mostly for emergency repair, storm damage repair, and periodic maintenance (e.g. repainting every 5 to 7 years, I	every 30 to 50 years
Elect nary generation	5-8%	Mostly for electrical end mechanical equipment and dependent on age and technology of works	every 30 to 50 years
Electricity reticulation	10–15*	Mostly (or emergency repair, storm damage repair, safely and security, routine maintenance end periodic maintenance (e.g. every 7 to 10 years).	every 20 to 30 years

Source: Infrastructure Maintenance Budgeting Guideline, South Africa, 2009.

55. The level of maintenance spending in Belize is quite low, and maintenance planning is based on ad-hoc methods and should be strengthened considerably. In addition, budget documents should report total capital repairs in the same way as current maintenance is reported, and the fiscal strategy should provide an explicit discussion of maintenance needs and priorities compared to available funding. Standardized maintenance systems and methodologies are used in many countries and industries and are readily available. They cover identification of and planning for annual maintenance, as well as major capital repairs. It will, however, take some time to introduce and fully apply such systems across the government. The Ministry of Works is currently working to introduce standardized maintenance methodologies. This can serve as a pilot for introduction of similar systems across government.

10. Project Selection (Institutional Strength — Medium; Effectiveness — Low; Reform Priority — High)

56. MED is responsible for scrutiny of major projects prior to funding decisions, but there is no systematic use of external experts, the assessment is largely qualitative, and it is not documented. The 2016–2019 GSDS provides a set of objectives and targets (necessary conditions) as well as a priority framework. According to the MED, these mechanisms are rarely applied in practice and are not effective. No project has been rejected as a result of this assessment.

57. The GSDS contains criteria for selection and prioritization of projects, but these are quite general, do not include criteria for project preparation quality or implementation preparedness and projects may be selected without being assessed against these criteria. According to this priority framework, project selection should be based on four criteria:

• Level of Urgency: The degree to which an action is required in order to avoid near-term, system-critical disruptions or missed opportunities.

• Level of Impact: The degree to which an action leads to visible and measurable improvements in quality of life for Belizeans in the medium term.

• Availability of Resources: The extent to which resources (either internally or externally generated) have already been or can be easily committed to the action. “Resources” includes financial as well as human resources necessary to implement the policy. Actions linked to existing or easily mobilized resources receive higher priority.

• Net Systemic Contribution: The extent to which an action contributes, over time, to the integrated or systemic achievement of the Critical Success Factors.

58. MED maintains a pipeline of projects for budget consideration, but projects may be selected for implementation from outside this pipeline, and the projects have not been subject to rigorous appraisal. The PSIP database includes projects under implementation, projects under development (project pipeline) and project concepts. The projects in the pipeline have in principle been subject to assessment in accordance with GSDS criteria, but as mentioned above this assessment is quite limited and does not constitute a systematic appraisal. In addition, it is rarely applied in practice. Table 8 gives an example from the 2019–2020 capital budget for the Ministry of Works. There were only five new projects added to the budget this year, constituting about 8 percent of total capital spending, and three of the five projects had not been identified in the PSIP pipeline.

59. On paper, there are some mechanisms in place to guide project selection, but guidelines are rarely applied in practice and the selection process requires significant strengthening. Project selection criteria should be more comprehensive and provide a stringent framework for prioritization decisions. Selection criteria should cover the quality of project appraisal documents and the project’s readiness for implementation, as well as the strategic considerations in the current framework. Selection criteria should cover all major projects, regardless of funding source. There should be a pre-selection mechanism to include projects in the PSIP pipeline, as well as a final selection of projects for implementation. The selection mechanisms should be clearly defined in updated public investment legislation, regulations and manuals. Appendix 3 also provide some recommendation for the revamping the whole PIM processes, including a stronger focus on selection.

11. Procurement (Strength—Low; Effectiveness—Low; Priority of reforms – High)

62. Many major projects, especially those externally-financed, are tendered in a competitive manner,¹⁶ but a significant number of projects still use direct award, and the information provided to the public remains limited. The regulatory framework for procurement¹⁷ incorporates competitive procedures but is incomplete¹⁸ and provides limited information on the type of information and timetable for publishing procurement information.¹⁹ Despite some progress, ministries and public entities are more likely to publish bidding opportunities and contract awards if they are implementing projects funded by DPs, as this is a requirement of DPs. For externally-financed projects, the DP’s procurement procedures are followed. For domestically-financed projects, the ministries and public entities²⁰ use their own tendering rules. SNGs use the central government’s procurement regulations. Direct award still represents 33 percent in number and 47 percent in value in 2018. Table 9 presents information on contracts issued during fiscal year 2018 by tender procedure. The procurement system is decentralized, each ministry and public entity has procurement responsibility for its projects. A CARICOM Procurement Protocol and related Draft Procurement Act, as well as a relevant Public Procurement Procedure Handbook, are expected to be adopted in 2020. ²¹

^{Table 9.}

Belize – Number and Value (BZ $) of Contracts for Central Government by Tender Procedure (fiscal year 2018)

Source: MOF Procurement Unit Database

^{Table 9.}

Belize – Number and Value (BZ $) of Contracts for Central Government by Tender Procedure (fiscal year 2018)

Type of expenditure	Open tender procedure		Selective tender procedure		Limited tender procedure		Total		%	%
	Number	Value (million)	Number	Value (million)	Number	Value (million)	Number	Value (million)	Number	Value
Goods	84	40,443	2	210	7	1,016	93	41,669	58%	41%
Services	7	1,051	0	0	27	7,665	34	8,716	21%	9%
Works	12	10,652	2	352	12	28,527	26	39,531	16%	39%
Consultancy	1	910	0	0	6	10,298	7	11,208	4%	11%
Total	104	53,056	4	562	52	47,506	160	101,124	100%	100%
%	65%	52%	3%	1%	33%	47%	100%	100%

Source: MOF Procurement Unit Database

View Table

^{Table 9.}

Belize – Number and Value (BZ $) of Contracts for Central Government by Tender Procedure (fiscal year 2018)

Type of expenditure	Open tender procedure		Selective tender procedure		Limited tender procedure		Total		%	%
	Number	Value (million)	Number	Value (million)	Number	Value (million)	Number	Value (million)	Number	Value
Goods	84	40,443	2	210	7	1,016	93	41,669	58%	41%
Services	7	1,051	0	0	27	7,665	34	8,716	21%	9%
Works	12	10,652	2	352	12	28,527	26	39,531	16%	39%
Consultancy	1	910	0	0	6	10,298	7	11,208	4%	11%
Total	104	53,056	4	562	52	47,506	160	101,124	100%	100%
%	65%	52%	3%	1%	33%	47%	100%	100%

Source: MOF Procurement Unit Database

63. There is no comprehensive database with information on what has been procured, the value of procurement, and who has been awarded the contracts. The Procurement Unit (PU) of the MOF has developed a database (Excel) to register tenders for the central government, but the information is incomplete and not published. There are no reports produced from the database to provide an overall of the procurement situation and thus no follow-up actions to improve procurement. The MOF plans to develop a more comprehensive and reliable automated database to manage and control the procurement process and, produce and publish reports.

64. A procedure for the submission and resolution of procurement complaints exists but does not follow processes that are clearly defined and publicly available, and procurement control is weak. The Contractor General (CG) is an independent body²² that is legally in charge of reviewing procurement complaints. In practice, no complaint has been formally submitted in the last two years and, in any case, the CG²³ does not have the capacity to investigate them. His decisions have been rarely enforced in the past, and data on resolution of procurement complaints are not generally published. The institutional framework for the control, monitoring and auditing of procurement is not fully operational²⁴ and only a few rejections have been made by the CG.²⁵

65. The institutional framework for procurement remains weak and its effectiveness mainly relies on the rules of development partners for externally-financed projects. The adoption of a new legal and regulatory framework, consistent with international standards; the development of a comprehensive and accurate procurement database providing information on every procurement phase for major tenders; and the clarification and strengthening of the respective roles, coordination procedures and capacities of the CG, BIL and the Procurement Unit (PU) of the MOF would ensure a better control and monitoring of public procurement. Tenders should be more transparent and provide clear information on bidding procedures and how the interested parties could process a complaint and how it should be solved. Using the CARICOM website could be an option for implementing these changes (see Box 4). ²⁶ In the longer term, e-procurement capabilities and a Framework Agreement, especially for emergency response purchasing cases (i.e. climate change resilience), could be developed.

12. Availability of Funding (Strength- Medium; Effectiveness—Medium; Priority of reforms -High)

66. Cash management remains weak and ministries and public entities are not provided with commitment ceilings in a timely manner. Even though revenue management follows a clear and structured process, overall cash flow forecasting and management remains weak. There is no adherence to a formal forecasting calendar, and no evidence of active cash management: (1) no cash flow plans or commitment plans are provided by the Ministries and public entities;²⁷ (2) no consolidated forecasts are submitted (or reviewed, or periodically updated)and hence are not used in determining quarterly spending authorizations; and (3) there is limited coordination with the international and domestic borrowing program. A Cash Management Unit has just been created in the Treasury Department (TD)²⁸ but is not yet fully operational.

67. The financing of project outlays is not subject to cash rationing or delays, despite weakness in cash management practices and reliance on unorthodox practices. Budget releases are made monthly for recurrent and goods and services expenditures, but releases for the domestic PSIP expenditures are only made on request or when commitment or invoices are received for payment.²⁹ Daily cash balances of revenue accounts are obtained every morning and amounts set aside for essential payments like salaries, pensions, transfers and subventions, and debt servicing. The balance is used by the TD to make payments in principle in two/three days based on outstanding invoices and urgent requirements. There is no evidence of unforeseen budget cuts imposed on line ministries, arrears or delays in the availability of funds (including for the Government’s counterpart funding related to externally-financed/major projects). The efficacy of this system mostly relies however on expensive liquidity facilities with the CBB, including overdraft and securities rolled over at the end of the year and ad-hoc issuance of treasury bills.³⁰ The commitments are not based on a forecast of cash resources available; and commitments, certifications of goods and services, payment orders and invoices are not always registered in a timely manner in the financial management information system SmartStream (SS) by the ministries and public entities, to enable more efficient cash management, public investment project management and internal control.³¹ The banking reconciliation process is not efficient.³²

68. While most external financing is processed through a TSA, some government accounts are held in commercial accounts on which information is not available. The Treasury maintains one main account (Consolidated Revenue Fund) and two sub-accounts at the CBB: the revenue account which consolidates revenues collected daily from transit accounts in commercial banks; and the disbursement account from which payments are cleared through SS.³³ Most of the accounts for externally-financed projects are held in special accounts at the CBB and the TD receives information on transactions from the special accounts for accounting purposes. However, some of the ministries and public entities hold an unknown number of accounts in commercial banks that are not under TD control, into which they deposit their own revenues as well as grants from development partners and transfers from the Government. TD and CBB do not maintain a list of all government accounts opened in commercial banks, even though these accounts are in principle authorized by the MOF, and do not receive any information on the balances on these accounts that are possibly used for investment or another purpose than initially approved.³⁴

69. Reforms are needed to improve cash management and extend the coverage of the TSA system, to better manage and control transactions related to capital projects. The TD should prepare an annual cash flow plan to be annexed to the 2020/2021 budget, presenting how the central government budget is expected to be financed and executed during the fiscal year. The main ministries and public entities should then be requested to prepare annual cash flow plans and procurement plans starting with the implementation of the 2020/21 budget. The list of government accounts should be comprehensive and updated, and the CBB and the MOF should receive information on the balances of all these accounts. This should greatly assist in the process of managing and controlling commitments and effectiveness of the spending; to capture as much transaction data as possible through the accounting system; and to minimize the costs related to cash management. Regulation and guidelines still need to be developed, and capacities strengthened, for cash management and commitment control and the use of SS modules, both at ministries and public entities’ levels.

13. Portfolio Management and Oversight (Strength—Medium; Effectiveness—Low; Priority of reforms – Medium)

70. The monitoring of central government capital projects is effective even though the comprehensiveness, timeliness, and quality of the information could be improved. Ministries and public entities are requested by the MED to report quarterly on the financial and physical implementation of the domestic and foreign-financed capital projects during project implementation. The information is consolidated in the PSIP which provides a detailed and coherent overview on the progress made in implementing the central government’s major capital projects at various stages of maturity (under implementation, under development and project concepts).³⁵ However, the PSIP does not cover the projects implemented by public entities using their own resources (domestically or externally financed). Analysis and reports on the performance and risks related to project implementation are not systematic and provided on time.

71. In-year reallocation of funds between capital projects under a specific ministry or public entity, are possible for domestically-financed projects but are prohibited for externally-financed projects. The Ministries and public entities must submit their requests for reallocation to the MOF for approval.³⁶ But they are not always using standardized and transparent procedures, But major projects are financed by DPs from which reallocations are not permitted. and the MOF has limited capacity to review and control reallocations made by public entities for domestically-financed projects.

72. Ex-post reviews focusing on project costs, deliverables and outputs and outcomes are required and conducted under DPs’ rules, but there are no national and harmonized guidelines on this matter. In practice, DPs perform ex-post reviews of the major projects they finance, using their own methodologies. Ministries and public entities have limited capacity and guidelines to undertake ex-post reviews on their own after the completion of capital projects. There are no regular ex-post reviews which focus on the overall project costs, deliverables or outputs of domestically-financed projects or an evaluation of the expected social or economic outcomes that were originally used to justify a project. Box 5 presents Chile’s experience regarding ex-post reviews.

73. Portfolio management and oversight of public investment projects need to be strengthened. The PSIP should be progressively extended to cover all projects implemented by ministries and public entities. Oversight of these entities through the analysis of standardized documentation, and reports on the performance and risks related to project implementation, should be regularly and timely produced. The PSIP Monitoring Information System (MIS) that should become operational in June 2020, should help the MED to improve central monitoring of projects. Guidelines and internal capacity to undertake ex-post reviews should be developed. This would provide an important opportunity to hold project managers accountable for achieving planned outcomes and to learn from experiences that could inform future investment decisions.

14. Management of Project Implementation (Strength—Low; Effectiveness—Low; Priority of reforms – Medium)

74. The quality of project management varies considerably both within and across ministries. Projects financed externally follow development partner rules and procedures and most require the establishment of a project implementation unit (PIU). Ministries and public entities employ in-house and/or outsourced technical staff for monitoring and managing projects, but capacity remains limited in most entities. ³⁷ In principle, implementation plans are developed but their quality varies. Details submitted with the original project prior to budget approval are sometimes not respected because of complex and numerous DP procedures, lack of funding and project delays. Important indicators such as the quality and consistency with implementation plans of public investment projects are not systematically monitored.

75. There are no standardized rules, procedures or guidelines for management of project implementation and adjustments. DP rules are used for externally-financed projects. Additionally, there is no formal requirement for, or practice of, reappraising projects following proposed adjustments to determine whether their business cases continues to be valid in terms of expected outcomes. This implies projects that generate a negative return could potentially continue to be executed.

76. External ex-post audits of capital projects are not routinely undertaken. Government financial statements have not been produced since 2014, preventing the Auditor General Office (AGO) to perform financial audits on the execution of the public investment projects.³⁸ The AGO has limited capacity to perform performance and on-site audits of capital projects.³⁹ The AGO’s reports are submitted to Parliament, but have not been routinely scrutinized, leading to limited action from the Legislature to address the main weaknesses of the public investment management process. The internal audit function and framework is not yet in place in the GoB.

77. Monitoring and ex-post audits of project implementation mainly relies on the DPs’ rules and requirements. The lack of internal capacity to manage public investment project implementation remains an issue. The Government should develop harmonized project monitoring procedures and guidelines for ex-post evaluations; strengthen managerial capacities; and make the project manager position more attractive in order to recruit relevant local or international expertise, ensure accountability and improve quality of public investment delivery and outcomes.⁴⁰ The internal audit function should be progressively introduced in the MOF and main ministries and public entities involved in public investment.

15. Monitoring of Public Assets (Strength—Low; Effectiveness—Low; Priority of reforms -Medium)

78. The scope and procedures for the management of non-financial assets are not clearly defined and detailed in the legal and regulatory framework, and an up-to-date and comprehensive registry of fixed assets is not available for the entire Government. Financial Orders (FOs) and Stores Orders (SOs) prescribe the management of non-financial assets by ministries and public entities, requiring them to maintain a register of assets; document all purchases, sales and movements in assets, but there are no clear and standardized provisions and policies on asset recognition thresholds, asset classification, depreciation method, valuation methods, standard useful economic lives for common government assets, data to be maintained for each asset, and timeline for updating the register. In general, only asset registers for moveable assets are maintained manually in excel sheets by most of the ministries and public entities and are not consolidated by the MOF.⁴¹ A module for asset management exists in SS but is not used.

79. The value of fixed assets is not included in the Government’s financial statements. In practice, among the sector ministries interviewed by the mission, asset records are neither complete nor regularly updated, and they do not consistently include asset values, and so the information is not available for inclusion in the financial statements. In addition, the absence of audited government financial statements since 2012 undermines the capacity of the Government and Parliament to assess the quality and performance of public investment and asset management.

80. Accounting rules on the depreciation of nonfinancial public assets have not yet been implemented. Cash-basis International Public Sector Accounting Standards (IPSAS) that are applied in Belize include the requirement to restructure the chart of accounts (COA) to capture the accumulated depreciation or revaluation of public assets (see Box 6). However. this requirement is not implemented in the GoB.

81. The absence of comprehensive information on the Government’s assets prevents the development of an optimal maintenance program or assessment of annual changes in public wealth as a result of investment expenditure. The TD should prepare a provisional government financial statement for fiscal year 2019/20 to assess the implementation of public investment, then progressively produce financial statements for previous years to reestablish entry balances. Box 6 summarizes the requirements of cash-basis IPSAS in preparing financial statements. The adoption of a Government Asset Management Policy (GAMP), and the existence of a centralized inventory of fixed assets within the MOF using the related SS module, would provide a significant “head-start” for any future efforts to begin to record assets, develop a government balance sheet, and make provision for the depreciation of assets. As mentioned in institution 6, the chart of account (COA) needs to be reviewed to better track public investment spending.

IT Systems and Data Management

84. The integrated financial management information system SmartStream (SS) is the backbone of the financial, accounting and reporting process (Table 10). Smart Stream is used for key back-office operations such as general ledger, human resources and the procurement of good and services. However, the project management and fixed assets modules offered by SmartStream are not in use. The Treasury and Budget Departments are the main users of SS for processing financial transactions including accounts payable and payroll, but some requests are processed without using the funds control module, which is designed to restrict unbudgeted payments. The Treasury also uses SS as the main source of information for preparing annual financial reports, which were last presented to Parliament for the 2014 fiscal year. Line ministries use SS to prepare purchase orders and request payments for vendors and the approved budget is uploaded into SS for in-year budget execution purposes.

^{Table 10.}

SmartStream Modules Currently Being Used

Source: MOF, Central IT Office.

^{Table 10.}

SmartStream Modules Currently Being Used

SmartStream Modules Used by GoB
Financials	Human Resources	Procurement	Access for SmartStream
Ledger	Payroll	Payables	E-Portal
Payables	Personnel	Purchasing	Procurement – PO Approvals
Funds Control			E-Invoice Approval

Source: MOF, Central IT Office.

View Table

^{Table 10.}

SmartStream Modules Currently Being Used

SmartStream Modules Used by GoB
Financials	Human Resources	Procurement	Access for SmartStream
Ledger	Payroll	Payables	E-Portal
Payables	Personnel	Purchasing	Procurement – PO Approvals
Funds Control			E-Invoice Approval

Source: MOF, Central IT Office.

85. Corporate Performance Management (CPM 10) software is used for budget data management but could also be used for strategic planning and forecasting. CPM 10 is used by all government ministries and agencies to prepare the annual budget, which is then interfaced with SS for in-year budget execution. CPM 10 is not currently used to create and implement methodologies and processes that would allow for tracking of performance indicators reflecting the government’s public investment objectives. The system could also be used to align the financial and operational plans of line ministries with the public investment objectives and perform financial and predictive analysis.

86. There is currently no automated system for PIM. The PSIP is comprised of all investment or development projects being implemented by the Central Government. As part of its mandate for national development coordination, the MED monitors and reports on the financial and physical progress of ongoing PSIP projects, but these actions are currently conducted through an Excel document, which is not integrated with SS. The MED periodically collects information from line ministries to update the Excel document, however, it appears cumbersome to produce periodic reports and the Excel document does not support further analysis.

87. The MED is testing a new management information system (MIS) that is designed to serve as a project management tool and facilitate the consolidation of information on projects in the PSIP. The PSIP-MIS is being piloted in six government ministries, namely, Agriculture, Economic Development, Education, Finance, Health, and Works. It is expected to be rolled out across the Public Service once all customization is completed, after the pilot phase ends in July 2020. Staff in MED and other line ministries will need to be trained to optimize the use of this new management tool. Since the pilot program is in progress, a final assessment of expected long-term benefits and improved efficiency has not yet been performed.

88. There is a need to develop an IT Master Plan that meets the need of the revamped PIM process, including the requirements from the draft PFM, PIM, procurement and other relevant legislation. The IT Master Plan should establish a fresh and modern vision for the future through the engagement of key industry leaders, benchmarking and the involvement of key staff in planning and delivering government services. The plan should also address the changing demands of consumer-driven technology, rapid changes in technology and highly engaged and mobile citizens and staff who require easy access to information and services anywhere. The plan could have the following areas of focus:

• Foster open and direct access to government services, information on public investment and procurement, financial and nonfinancial reports and analysis in a manner that is convenient and efficient.

• Enable improved decision-making through research and analysis, by building broader awareness of IT tools and capabilities for analytics and establish dashboards that display key performance indicators and trends, including through the connectivity of SmartStream financials, CPM10 current and capital budget data and the PSIP MIS project management and capital procurement information.

• Foster adoption of fast and agile technology that permits regular software upgrades and updates to the latest versions and provides for the requisite capacity development of the IT staff and other users.

• Create a more connected and engaged workplace environment for all staff, with seamless and secure connections between all GoB IT systems; anywhere, anytime, on any device, whether they are in the office, in the field or halfway around the world, to support better delivery of public services and more efficient government operations.

Legal Framework

89. The legal framework that supports PIM program in Belize is outdated and incomplete. The current legal framework is supported by several laws, regulations and guidelines dating back to the 1960, as outlined in Table 11. The legal framework therefore needs to be updated, including by finalizing and enacting the draft PFM, PIM and Procurement Bills and related regulations, to create a more coordinated approached to PIM.

^{Table 11.}

The Legal Framework for Public Investment Management in Belize

Source: MOF

^{Table 11.}

The Legal Framework for Public Investment Management in Belize

Current Legal Framework for PIM in Belize
The Belize Constitution	Control of Public Expenditure Handbook 1966
Finance and Audit (FAA Reform) Act 2010	Fiscal Transparency and Responsibility Regulations 2010
Financial Orders 1965	Annual Budget Appropriation Act
Stores Orders 1962	Other guidelines provided by the Auditor General.

Source: MOF

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^{Table 11.}

The Legal Framework for Public Investment Management in Belize

Current Legal Framework for PIM in Belize
The Belize Constitution	Control of Public Expenditure Handbook 1966
Finance and Audit (FAA Reform) Act 2010	Fiscal Transparency and Responsibility Regulations 2010
Financial Orders 1965	Annual Budget Appropriation Act
Stores Orders 1962	Other guidelines provided by the Auditor General.

Source: MOF

90. Effective implementation of the reforms proposed in the draft legislations would improve the public investment management process and enhance transparency. Over the past decade, several pieces of draft legislation have been prepared, sometimes with the support of DPs, such as a new draft legal framework for public procurement and public investment management. However, most are still pending and have not yet been submitted to Parliament for adoption. There are also some features of the draft PIM legislation that require further consideration and possible amendment, described in Box 7 below.

91. The draft PFM and PIM bills and regulations contain several useful features that should improve the governance and accountability of the existing PIM process. The PFM bill was drafted in harmony with the provisions of the Constitution. The bill also provides for enhancement to the procurement provisions contained in the FARA; the replacement of existing orders with new financial regulations, a requirement for new guidelines and procedure manuals; a requirement that plans for the approval of new PPP contracts are disclosed in the annual budget documents and the requirement that information on major public investments should be included in the budget document for the forthcoming budget year and two additional years. The PIM bill provides guidance on the main elements of a transparent modern public investment system and places significant emphasis on proper preparation and appraisal of public investment projects. It also introduces the use of the systematic cost/benefit analysis and formalizes and regulates the maintenance of a public sector investment program (PSIP). It also establishes a gate-keeping function to govern the inclusion of projects in the PSIP and provides guidance on the criteria for project selection for the PSIP.

92. There should be a comprehensive review of the draft PFM, PIM, Procurement and other legislation and regulations with careful attention paid to strengthening the public investment management framework and enact suggested amendments. The GoB needs to undertake this review and ensure that the proposed legislation is consistent and consistent with other laws including the Constitution and the current strategic policies regarding governance and accountability in the public investment management process. The review should carefully consider the amendments suggested in this report, such as assigning monitoring and evaluation roles to the MOF and MED, clearly defining the PSIP process; and reexamine and redefine thе roles of the Central Bank and the Statistic Institute in public investment management.

Staff Capacity

93. Efforts to control the wage bill may have impacted the size of the PIM units, creating a capacity gap for which there is no capacity development strategy. There are six staff members in the PIM unit of the MED, and it has been a challenge to retain this group, according to MED management. There is some analytical capacity within the MOF and the MED, but it is not enough to provide full-cycle project management and reporting for the PSIP program. Partly due to the capacity constraints, projects are not properly appraised and selected using financial analytics. Projects implemented by PCs, are not monitored and evaluated by the MOF or the MED. There is no capacity to negotiate, implement and manage PPPs.

94. Some of the capacity gaps identified are being met through use of external consultants and experts, as is currently the case for most externally financed projects. These external consultants and experts do in many cases set high standards for assessment, selection, planning, and project preparation, but the transfer of knowledge and expertise to local counterparts is not taking place, therefore very little is being done to increase local capacity.

95. A review of the current human resource program should be conducted to identify medium-term capacity gaps and needs, and a strategic development action plan designed and implemented. The strategy should be based on an assessment of the mix of skills required to implement the PIM program, including improvement in the quality of major project proposals at the preparation stage, a full-cycle project management function, which could include appraisals, selection, financial management, and monitoring and evaluation process. Based on these findings and the prospective skills required, a sustainable capacity building strategy could be developed that would focus on the current critical PIM functions and other future needs, such as building the capacity to manage PPPs. The strategy could include a program to engage external experts to assist in some of the PIM functions, and one of their main deliverables should be to assist with executing a strategic mentoring and apprenticeship program for local staff development.