Belize is one of the smallest consumer markets in Central America and the Caribbean and is not as competitive as its Central American neighbors. Belize’s high cost of inputs drive up the cost of goods, which has downstream impacts on market value and pricing of domestic goods. The relatively high cost of doing business is due in large part to the expense of inputs like utilities, fuel, and telecommunication services. Inflation rose from 0.1 percent in 2020 to 3.2 percent in 2021 due to higher global energy and food prices. Prices increased significantly in the transport (9.6 percent) and the food and non-alcoholic beverages (4.8 percent) categories despite a temporary reduction in local taxes for diesel and fuel subsidies for eligible operators.

Imported products are subject to a multitude of tariffs such as Import Duties; Cost, Insurance, plus Freight (CIF Value); Revenue Replacement Duties (if applicable); General Sales Tax; and Environmental Tax. Import duties range from zero to 45 percent. Luxury items like SUVs, alcohol, cosmetics, or items that compete with domestic industries face duties as high as 70 to 120 percent. Where applicable, Environmental Tax is 3 percent on imports, excluding some medicines and food items. Automobiles are charged the Environmental Tax of 5 percent. Most goods are subject to the 12.5 percent General Sales Tax.

The financial system continues to be categorized as stable but fragile due to limited correspondent banking relationships, high borrowing rates, and lack of financing mechanisms available to businesses. Relatively high borrowing rates constrain access to credit. The weighted average interest rate for January to December 2021 was 8.54 percent on loans and 2.16 percent on deposits. Belize does not yet have an export-import bank to facilitate transactions between exporters and importers, limiting the ability of domestic producers and businesses to access financing from U.S. suppliers. In 2021, new loans by domestic banks were channeled mainly to the tourism, construction, and agricultural sectors to support economic recovery. Domestic bank forbearance measures to reduce borrowers’ debt service costs continued throughout the year. In 2021, domestic banks granted creditors US $77.25 million in additional loan forbearances, raising the total forbearance granted to US $429.25 million since 2020.

Lengthy bureaucratic delays and corruption disincentivize foreign investments. Corruption is endemic within politics and government institutions. U.S. firms have identified challenges in participating and competing in areas related to the bidding, procurement, and dispute settlement processes, particular to state owned enterprises (SOEs). The courts are independent and impartial, but legal proceedings are often delayed for years due to significant case backlogs. While local courts are empowered to recognize and enforce foreign arbitration awards against the government, judgments are generally challenged up to the Caribbean Court of Justice, the country’s final appellate court. Investors are advised to perform due diligence when planning investments, as there have been highly publicized cases of fraud related to land title and other commercial ventures.