The heavy investment in Belize from 1988 to 1990 funded both private-sector and public-sector activity. Public-sector capital investments that were domestically financed, for example, increased from US$3.4 million in 1986-87 to a planned US$38.8 million in 1991-92. Although the domestically funded portion of capital expenditures was budgeted to decrease in 1992, an expected increase in funding from external sources was projected to cause a net gain in new capital expenditures.
Private-sector investment increased from approximately US$17.7 million in 1985 to US$63.7 in 1989 then declined in 1990. Helping make a high level of private-sector investment possible was the increased availability of domestic credit. Analysts estimate that net domestic credit extended to the private sector increased 15.3 percent in 1989, and 17.8 percent in 1990.
The improved health and apparent stability of the Belizean economy also encouraged a surge in foreign direct investment. In 1984 Belize had suffered an outflow of foreign direct investment in equity capital of US$7 million. During the period 1988-90, annual foreign direct investments averaged US$17 million. Contributing to this development was the government's decision to eliminate export biases through various legislative measures. The 1990 Fiscal Incentives Act provided tax holidays and duty exemptions for investments that would benefit the economy. The 1990 Income Tax Act granted tax relief to nontraditional exporters. The legislature in 1990 also approved the Export- Processing Zones Act, which exempted eligible firms from requirements concerning import licenses, quotas, import and export taxes, export licenses, price controls, and other regulatory mechanisms. The first export-processing zones (EPZs) were scheduled to become established in 1993. The concept required designation or development of a physical facility (the zone) similar to an industrial park. As part of the effort to provide a more favorable environment for investment, Prime Minister George Cadle Price also introduced legislation that would lower corporate taxes from 45 percent to 35 percent in fiscal year 1992.
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