S&P Keeps Belize at B-, Warns of Widening Deficits
S&P Global Ratings has affirmed Belize’s B-/B sovereign credit rating with a stable outlook, even as the agency projects the country’s fiscal and current account deficits will widen over the next two years due to volatile global oil prices.
In its assessment released Tuesday, S&P said Belize’s transfer and convertibility rating also remains unchanged at B-. The stable outlook reflects expectations of moderate economic growth close to the country’s potential, along with fiscal and current account deficits the agency considers manageable despite mounting pressure from higher oil prices.
S&P projects real GDP growth of 2.0 percent for 2026, a slowdown driven largely by moderation in the business process outsourcing and tourism sectors. The agency expects tourism specifically to soften this year amid rising travel costs tied to oil prices and a pullback in overnight stays, though it notes new air routes from BermudAir and Air Canada could offer upside by improving access to North American and European markets down the line.
The BPO sector, which the agency says accounts for roughly 9 percent of Belize’s total workforce, faces its own long-term headwind: the rapid adoption of AI, which S&P warns could automate routine business functions and reduce demand for outsourcing services over time.
On the fiscal side, Belize posted a near-balanced result in 2025, with a surplus of 0.03 percent of GDP, driven by moderate revenue growth and reduced capital spending. But S&P expects that to reverse, projecting a general government deficit of 2.5 percent of GDP in 2026, driven by rising imported energy costs, a cut to gasoline excise taxes, electricity rate caps, and increased payroll expenses. Payroll and pension costs alone account for 41 percent of total government expenditure, with additional wage increases of 4.0 percent scheduled for October 2026.
Net general government debt climbed to 66 percent of GDP in 2025, up from 64.5 percent the prior year, largely due to domestic borrowing tied to the nationalization of energy assets. S&P expects that figure to average around 67 percent of GDP through 2029. The agency also flagged rising debt servicing costs, noting the step-up coupon on Belize’s $364 million Blue Bond reaches its maximum rate of 6.04 percent in 2026, pushing debt servicing costs to just above 10 percent of government revenue for the forecast period.
Belize’s current account deficit widened to 2.8 percent of GDP in 2025 and is projected to widen further to 4.6 percent in 2026, driven by a larger trade deficit tied to rising fuel imports, continued electricity imports, and softer tourism receipts. S&P expects the deficit to average 2.8 percent of GDP through 2029, financed primarily by foreign direct investment directed toward tourism, real estate, and infrastructure.
The agency said it could lower Belize’s rating within the next 12 to 18 months if external or economic shocks strain fiscal performance or limit access to official financing. Conversely, a ratings upgrade in that same window would depend on concrete policy commitments to strengthen fiscal performance and sustained growth, or a moderation of external vulnerabilities alongside clear signs of policy progress.