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#436607 - 04/26/12 10:39 PM Belize’s Financial position strengthens: JP Morgan
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J.P. Morgan, a leading financial advice agency, is reporting that Belize’s fiscal position for 2012 is sound. In its Latin America and Caribbean Outlook for 2012, the financial agency explains that the restructuring of the Super Bond is inevitable. It states that “any hope that the Barrow administration would reconsider plans to restructure the Super Bond has vanished. Accordingly, attention is now squarely on the shape that such a restructuring will take, rather than if there will be one at all.” It goes on to say that the Debt Review Team “will engage investors to see whether terms that are beneficial to both sides can be negotiated,” adding that it wants to make the restructuring “as amicable as possible.”

The report goes on stating that economic output is projected to strengthen in 2012. This is attributed to good performances in the sugar industry, citrus juice production, greater activity in the wholesale and retail trade, as well as improvement in overnight tourist arrivals benefitting hotels, restaurants and the transportation industry. The report says that “Our forecast for 2012 calls for real GDP growth to strengthen to 3.0% y/y, its highest level since 2008.”

J.P. Morgan also points out that, “The fiscal deficit narrowed to US$8 million (0.5% of GDP) in 2011 from US$23 million (1.7% of GDP) in 2010. The improvement says the report is as a result of 4.2% rise in revenues up to 401 million dollars and a very small increase in expenditure of 0.1% up to $408 million dollars.” J.P. explained that, “while revenue growth was by strong performance of receipts, the increase in expenditures was driven by a 23.3% y/y plunge in capitaloutlays, as current spending actually rose 4.7% last year due to continued growth in the wage bill and an increase in external debt servicing costs.”

The report concludes that the “Vital tourism sector holds its own” with overnight visitors increasing by 3.0%. That is representative of an increase of arrivals from 227,000 in 2010 to 233,000 in 2011.

All in all, the report paints a fairly bright prognosis for Belize’s economy, all because of the excellent stewardship by the UDP government and Hon. Dean Barrow’s leadership which is founded on of fiscal prudence and people-centered governance.

The Guardian


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#436665 - 04/27/12 05:10 PM Re: Belize’s Financial position strengthens: JP Morgan [Re: Marty]
diaspora Offline
Belize economic outlook 2012

Belize B3/B-/NR

Moderately positive economic outlook

• Steady growth is likely

• Fiscal deficit to widen on higher interest bill

• Tourist arrivals to rise slowly


Fundamentals and politics in 2012

Next national elections are not due until June 2013. Prime Minister Dean Barrow’s center-right United Democratic Party (UDP) has a decisive majority in the National Assembly, suggesting that the government should have no trouble enacting its legislative agenda. While national elections are not constitutionally mandated until June 2013, municipal elections are due in March 2012 and should provide a gauge of voter support for the ruling party.

IMF is fairly upbeat on near-term economic prospects. The IMF released in late October a somewhat constructive statement on Belize, highlighting that the country has weathered the financial crisis relatively well by regional standards and noting that its near-term economic outlook remains moderately positive. On the issue of the recently nationalized entities, the IMF called for timely compensation to the former owners once the courts have reached a final verdict, a process that we believe could take some time to materialize.

Growth should hold steady at 2.5-2.8%. Real GDP grew
2.8%oya in 1H11, up from 2.2%oya in 1H10. While our growth forecast calls for a slight moderation to +2.5% in
2011 and +2.8% in 2012 from last year’s 2.9% expansion, we recognize that downside risks are indeed mounting, given the increasing global headwinds and a relatively weak outlook for the domestic public utilities and construction sectors. The Belizean government is working with the private sector to identify specific measures to improve the business environment, which is crucial to foster increased investment and boost growth above current levels.

Fiscal deficit is likely to widen on higher interest bill. The fiscal deficit narrowed to only US$9 million (0.6% of projected 2011 GDP) in January-September from US$22 million (1.6% of GDP) a year earlier. The shortfall moderated from 2.8% of GDP in 2009 to 1.5% in 2010, supported by a spike in the primary surplus from 0.8% of GDP in 2009 to 1.9% in 2010. While our fiscal deficit forecast for full-year 2011 remains at 1.6% of GDP, the favorable year-to-date performance suggests that there is scope for outperformance. We expect the fiscal deficit to

widen to a manageable 2.0% of GDP in 2012, driven
largely by an increase in the interest bill.

Tourist arrivals are likely to post low growth. Stop-over tourist arrivals inched up 2.1% to 171,000 in January- August from 167,000 a year earlier. 2010 data show a
2.5%y/y increase to 238,000 in stop-over arrivals, with both the January-April winter (+1.6%oya) and the May- December summer (+3.2%oya) seasons posting positive growth rates. Based on recent trends, we expect total tourist arrivals to climb 2.5%y/y to 244,000 in full-year 2011 and by a further 2%y/y to 249,000 in 2012.

CAD is set to progressively widen. The current account surplus (CAS) widened to US$26.8 million (1.8% of projected 2011 GDP) in 1H11 from US$4.6 million (0.3% of GDP) in 1H10, driven by a 20.1%oya decline to US$57.4 million in the trade deficit. Despite the positive year-to-date outcome, we believe growth of 6.3%y/y to US$185 million (12.6% of GDP) in the trade shortfall will lead the full-year current account deficit (CAD) to increase to US$45 million (3.1% of GDP) in 2011 and to US$69 million (4.5% of GDP) in 2012 from US$41 million (2.9% of GDP) in 2010.

Downward trend in FDI expected to continue. Foreign direct investment (FDI) totaled US$38 million (2.6% of projected 2011 GDP) in 1H11, down 34.5% from US$59 million (4.2% of GDP) in 1H10. FDI came in at US$98 million (7.0% of GDP) in 2010, down 10.4% from US$109 million (8.1% of GDP) in 2009. We expect FDI, constrained by uncertainty related to the expropriation of a
public utility company (Belize Electricity Ltd.) in June and a slowdown in global economic activity, to shrink 28%y/y to US$70 million (4.8% of GDP) in 2011 and by an additional
14%y/y to US$60 million (3.9% of GDP) in 2012.


Market strategy

In external debt, we are marketweight: The expropriation of a public utility in June triggered the sharp sell-off (and hence underperformance) of Belizean bonds. While fundamentals on paper look reasonably stable, lingering concerns about the potential negative fiscal impact of the expropriation is likely to keep investors at bay.
Belize macro forecasts
2010 2011 2012
Growth (%oya) 2.9 2.5 2.8
Inflation (%eop) -0.2 2.1 3.3
USD/BZD (eop) 2.0 2.0 2.0
Current account (%GDP) -2.9 -3.1 -4.5
Headline fiscal balance (%GDP) -1.5 -1.6 -2.5
Public debt/GDP (%) 85.2 84.3 82.6
Ratings outlook: Possible S&P downgrade.
Source: J.P. Morgan

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#436669 - 04/27/12 06:17 PM Re: Belize’s Financial position strengthens: JP Morgan [Re: Marty]
Katie Valk Offline
Someone should let JP Morgan know we had national election March 2012...
_________________________
Belize based travel specialist
www.belize-trips.com
info@belize-trips.com

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