Financial Secretary Joe Waight told Amandala today, Monday, that the task of a newly appointed Debt Review Team is not just to look at restructuring the US$500 million super bond, but to review Belize’s entire external debt, which currently stands at about US$1 billion or 80% of Belize’s Gross Domestic Product (GDP).
The Government of Belize announced via press release today that, “To conduct the urgent review, the Prime Minister and Minister of Finance and Economic Development, the Hon. Dean Barrow has appointed a Debt Review Team led by Mr. Mark Espat. The other members of the team include Minister of Government Hon. Godwin Hulse, Financial Secretary Joseph Waight, Central Bank Governor Glenford Ysaguirre, Central Bank Deputy Governor Christine Vellos, and Advisor in the Ministry of Finance Alan Slusher [former chair and governor of Central Bank].”
Barrow will chair the review team, which held its inaugural meeting on Friday, March 16, 2012.
As Amandala had reported in its weekend edition, dated Sunday, March 18, 2012, Espat had been asked to lead the process of restructuring the super-bond.
Espat said he firmed up that decision on Friday, when the Prime Minister first spoke publicly about his appointment.
The greatest concern is the super bond payment due this August. Since the step-up interest rate reaches 8.5% for the August payment, the Government of Belize’s payment will increase, according to Financial Secretary Waight, from US$16 million to US$23 million—an increase of BZ$14 million.
Espat said, “In terms of the objective [of the restructuring], I don’t think any option is being taken off the table.”
Waight told us that the debt review exercise is independent of this year’s budget exercise, which will be delayed by about three months.
As it stands right now, GOB will have to provide for the US$23 million super bond payment, but if by then we are able to get more debt relief, this would be reflected in the new budget, Waight said.
He said that just as the Government did back in 2008, this year, 2012, they will be issuing a warrant to postpone or extend the budgetary appropriations by another 3 months, so the new budget will come sometime in June/July.
Espat recalled that when the super-bond was first planned, negotiated and sealed, the process spanned 2005-2007, first with the internal debt review, which took months, and then the launching of the exchange offer, which closed in Feb/Mar 07.
“It was about 14 months from the publication of debt review and its recommendations, right up to closing of the new bond,” said Espat, recalling that the discussions with creditors alone lasted about 6-7 months.
This new process is expected to be much more compact, indicated Espat.
The first order of business is to conduct the review of all the external, public sector liabilities; then Government will be in a better position to look at its options, Espat explained.
The next few weeks, he said, are important in getting a better sense of what the debt dynamics are.
Today’s statement from Government said, “Following the appointment of the new Cabinet last week, the Government of Belize announces the commencement of a comprehensive review of external public sector debt and contingent liabilities.”
The super bond is only half the external debt; the rest is with bilateral funders and multilateral financial agencies.
GOB said it “...has also retained external advisors to support the process of preparing comprehensive fiscal and macro projections, and identifying debt management alternatives.”
Prime Minister Dean Barrow commented that, “A pre-eminent priority of our recently re-elected Government is to examine thoroughly our country’s debt dynamics, with a resolute view to placing the nation’s medium and long term finances on a sustainable footing.”
He said Government is “keenly conscious of the effects of the great recession, a historic downturn from which Belize has not been insulated.”
Belize’s review of its debt obligations must, therefore, take into account the realities of the new regional and global economic landscape, as well as the likely impact of GOB’s contingent liabilities, he added.
Waight told our newspaper that “the idea would be to look at the external debt, to see the sustainability of it, and, if necessary, we would try to engage our investors to see whether we can negotiate terms that would be good for us and also good for them.”
He said the Government is not giving details yet, and they will have to see what Government can manage, and talk to creditors to see what can be worked out.
“We want it to be as amicable as possible,” said Waight.