Belize – Rescued from the Dark Valley of Debt


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Posted: Sunday, October 17, 2021. 1:44 p.m. CST.

The views and opinions expressed in this article are those of the author and not of Breaking Belize News.

By Norris Hall: The Briceno administration has been saved for now, out of the dark and deep abyss of the Debt Valley. But he remains heavily strained and on the edge of a cliff with one foot on a banana peel.

But despite the dire dilemma the new government finds itself in after receiving a poisoned chalice from its predecessor, it has set to work to cope with such a terrible hand of overburdened debt and a dismal soup of endemic corruption that it inherited.

In September of this year, and nine months after taking office, the current administration struck an impressive deal with bondholders to pay off a long overdue debt that Barrow et al failed to honor, giving the country a massive black eye internationally as a serial defaulter. .

The new deal for this outstanding debt came at a discount rate of fifty-five cents on the dollar.

It would be reasonable to assume that this included a default discount on at least a portion of the accrued interest owed.

But whatever the quid pro quo that got Belize off its feet, the negotiations did not leave Belize unscathed and without holders of bitter bonds.

It also left Belize’s sovereign credit rating at a C- or just above a D.

In May this year, the Reuters news agency reported that “Belize’s offer for its fifth debt restructuring in 15 years threatens to turn sour as so-called ‘Super Bond’ holders urged Belize to accept an IMF program.

This would undoubtedly have been an IMF austerity program that the Briceno administration would not have found acceptable and resisted.

This would not have been politically acceptable or likely given the rigorous austerity program that would have been required and the traditional lack of fiscal discipline to enforce it.

It would not be necessary, the government retorted, saying they are capable of dealing with the crisis they have inherited.

The 8the In September of this year, Prime Minister John Briceno announced to the Legislature that an agreement had been reached with the bondholders to settle this massive debt. However, this announcement lacked details. It is still vague and no official has dug through the weeds.

However, this $ 1.2 billion (US $ 572 million) bond repayment agreement includes a subsequent deal with The Nature Conservancy that has yet to be finalized. TNC has committed to assume this debt through a debt-for-nature swap. It, when signed, will give this heavyweight environmental organization considerable control over Belize’s marine resources. This may limit the government’s power over what it can or cannot do or what it wants to do in the future development of tourism or other sea-related issues, including the protection of the sea barrier system. Belize coral and coastal mangrove forests.

The lack of transparency creates a certain skepticism about the management of savings for this small part of what represents only 12% of the national debt.

The government is discreet and gives no details. In one scenario, this could mean that Blue Bond debt is canceled in exchange for local investments in environmental conservation. We must assume that this is where the TNC comes in because there is no “local investment” for that!

This could have major implications for the further development of cruise ship facilities which are already being considered by the government. Along with the TNC, which is considered by some to be imperialist, this will mean that it will have control of the sovereign area of ​​Belize in the Caribbean Sea.

This is good news for environmental organizations that have opposed the development of three new cruise ship terminals within a small radius of a few miles from Belize City, including the Port of Belize, formerly known as Port Loyola. .

There are also concerns that some of the development plans will erode or further destroy the country’s natural beauty, once considered environmentally friendly.

The final agreement between the government of Belize and TNC is still under negotiation. Reports indicate that Credit Suisse, a Swiss bank with worldwide investment and influence, will sign the GoB / TNC deal.

Under this agreement, the government of Belize will have to accept rigorous management of marine resources by TNC.

TNC already controls over 236,000 acres of the Mayan Forest of Belize in northern Belize. It was as part of an agreement with the previous administration and which Briceno opposed. It was amended for the approval of this government and for “more benefit to the people of Belize,” the prime minister recently told the legislature.

It appears that TNC will pay the Belize government taxes on the revenues it receives from carbon sequestration.

Is GoB looking for a Gift Horse in the mouth? TNC is our new nanny !!!

But there remains a certain level of skepticism from some who have hinted that the deals have yet to be finalized and warned that the devil may be in the details.

Inside sources say these details are heavily guarded. This creates some level of concern as to how much of Belize’s sovereignty will we lose to pay off this small portion of what is only 12% of the national debt.

Officials have warned that we have had what may well be a temporary reprieve from the “Valley of Debt” and that the country is still under pressure with a huge debt burden hanging us off the edge of a cliff.

The country and the government continue to be strapped for cash and debt. A source said what happens next depends on how the government manages the savings of the now-Blue Bond Super Bond.

The Prime Minister said: “Our debt management efforts do not end there, as we are exploring other areas to restructure other government debt.”

Despite the previous disagreements the government has had with TNC, it will now help bear this enormous debt burden in the hope that with their “stick and their staff” they will help guide the country out of the valley. the debt.

There is absolutely no information available at the time of writing about the arrangement with the TNC. We hope that there will be, once the agreement with the government of Belize, TNC and Credit Suisse is finalized.

While it looks like Belize got out of the valley of debt with this particular loan, the negotiations did not leave Belize unscathed or without bitter bondholders.

There’s more – a lot more, including the outrageous purchase of Belize Telecom from Ashcroft for $ 1/2 billion in a secret deal. It is generally seen within the industry that this price far exceeded market value and that this debt should be renegotiated to halve in order to further reduce Belize’s massive debt.

The country’s national debt now stands at around Bz. $ 3.75 billion. Take off the 12% saved from the Super Bond and the remaining debt balance is still Bz $ 3.2 billion.

The origin of the Super Bond lies in the Musa administration when, at the end of 2006, the government restructured the national debt by consolidating its loans (the country’s external commercial public debt) under an agreement with the bondholders, including Venezuela.

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