The ratings agency, Standard and Poor’s, has downgraded Belize's Credit
Rating from a “B” to a “B-.” The cut in the country's rating was announced
today. According to the Reuters News Agency, the rating cut is as a result
of government's takeover of Belize Electricity Limited. According to S&P,
the country's foreign-currency credit rating which now stands at a “B-“ is
because the BEL acquisition adds an additional burden to government
liabilities and in effect adds to Belize's fiscal problems. Standard and
Poor’s says that the outlook on the new rating is stable.


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Standard and Poors downgrades Belize

There’s dire economic news tonight. The warning came shortly after the nationalization of Belize Electricity Limited and today Standard and Poor’s officially decreased Belize’s credit rating. The foreign currency credit score was downgraded from a B to B minus. According to S&P, by acquiring a seventy percent stake in the financially distressed utility company, government added to the country’s fiscal problems. In making the announcement, the S&P said that “Belize’s general government debt as a portion of gross domestic product is already a high eighty-five percent, with the interest burden around fifteen percent of its revenues.” The acquisition of B.E.L. from Fortis raised red flags among several international business and finance specialist, who have also warned about the added weight to the country’s debt burden. Government is yet to pay compensation to the owners of Telemedia which was first nationalized in 2009 and then re-nationalized last month. Both acquisitions have soared the national debt which was put back in March at over a billion US dollars and that doesn’t include the debt from the acquisitions of the two utility companies. In June, Moody Investors has also lowered Belize’s credit rating to a B. The ratings heavily influence foreign investment and it also means that if Belize needs to borrow on the capital markets, it will have to pay higher rates.

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Standard & Poors downgrade Belize

On June twenty-first international financial services company Standard & Poor’s lowered Belize’s credit rating to a B minus following government’s acquisition of B.E.L. and its re-nationalization of Telemedia. Compensation to the Fortis Group, the previous owner of B.E.L. has not been paid, nor has government paid the previous owners of B.T.L. since acquiring the company in August 2009. Cumulatively, the national debt has swollen to approximately two billion dollars. This morning, opposition leader John Briceño said that the massive debt looms over the country. The S&P rating, according to Briceño, will inevitably deter foreign investment.

John Briceño, Party Leader, P.U.P.

“The international debt is certainly something that continues to plague our country and the decisions that the government has been doing has not been helpful. It has not been helpful because it has killed foreign direct investments and it has killed confidence in Belize. They have even reduced, the rating agencies like S&P have reduced our ratings which in turn increases the cost of money to bring into the country. Those are issues that we will have to address head-on as soon as we get into government to ensure that we can find a way to continue to attract their foreign direct investments to this country. It is about having the ability to be able to think as a businessperson, like myself as a businessman, how is it that we could make this happen and we in the People’s United Party can and we will make it happen. We will be able to make sure that people can work once again in this country.”

The S&P rating and other issues were discussed this morning at a breakfast meeting with the media.

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