Belize Plans US$50 Million Bond to
Develop Caribbean Resort
MEXICO CITY, Aug. 23 (Bloomberg News)
Belize may sell a $50 million bond next year to finance a four-star hotel on a Caribbean
island that inspired the Madonna song "La Isla Bonita.''
The island of San Pedro, off the northern coast of the Central American country, has
excellent diving among its coral reefs as well as deep-sea fishing. In recent years the
island, which forbids cars on most roads, has attracted the wealthy, who have built
secluded vacation houses.
``We will need to go to the private capital markets in the U.S.,'' said Keith Arnold, the
governor of the Central Bank of Belize, in a telephone interview from Belize City. "Not
this year but certainly next year."
The Belizean government has already received a "BB" credit rating from Standard &
Poor's, two notches below investment grade. And in June, Belize obtained a $29 million
loan through a private offering led by Salomon Smith Barney. The five-year, 9.25 percent
bond was sold to yield about 11.25 percent, Arnold said. The new bond will be a public
Belize has worked to make itself attractive to investors. S&P said the government has
followed conservative economic policies such as selling off state-owned companies and
running a budget deficit lower than 2 percent of Gross Domestic Product.
Belize has already sold off its telephone and electricity companies and plans to sell its
state water authority as well as ports and airports to help raise cash for infrastructure
spending. The government is particularly focused on the tourism industry, which it hopes
to develop taking advantage of the country's coral reefs, tropical forests and Mayan
Until recently Belize has financed new infrastructure with the help of loans from the
World Bank and the U.K., U.S. and Taiwanese governments. Now, it wants to borrow
more to expand faster, Arnold said.
Historically, the Belizean economy has been dependent on agriculture exports, mainly
sugar and bananas, and the government wants to reduce this reliance. In 1999 tourists
spent $111.5 million, up from $108.3 million the year before, according to the Tourism
The Central Bank expects the economy, which supports a population of about 250,000
people, to grow 5 percent this year.
(Ed. NOTE: An official of the Central Bank told the newspaper today that under
government's "small equity investment program," which allows government to become a
partner in businesses in the hotel industry, government, through the Ministry of Tourism,
will invest the US$50 million in what is expected to be a hundred-million dollar plus hotel
project on San Pedro.
The Government of Belize a couple years ago had invested US$1 million in the Ramada
Hotel, which subsequently went into bankruptcy. Government lost its investment in the
hotel when it was sold.
Belize's public sector external debt is said to be, as of June this year, at approximately