Oil in Belize: New sector in a young country

Belize is a small and young state. In this context, Belize's short experience of oil activity has already highlighted several of the usual worrying concerns that surround the sudden onset of an extractive industry in a developing country. This paper asks whether the institutional setting of Belize allows for a financially sustainable oil sector. We will argue that the possibilities of a sustainable oil sector are tentative. There are areas of uncertainty and/or weakness that present difficult challenges for a sustainable sector. Clearly, a most critical element, in terms of uncertainty, are the prospects of reserves that are economically feasible for extraction. However, institutions also play a role. Existing constraints and problems in the policy making process and political system have affected the sector and will likely continue to do so. Moreover, key government institutions that oversee the sector have serious capacity limitations. Therefore, sound policy will be key for the development of an oil sector that is sustainable and benefits the country's long-term development.