Belize government's re-election to fan bond worries
* Belize centrist government narrowly re-elected-TV
* Win would move country step closer to bond negotiations
* Tiny Central American country among top 20 debtors
BELIZE CITY, March 8 (Reuters) - Belize appeared to
move closer to a potential renegotiation of its $550 million
overseas debt on Thursday after local media reported the tiny
Central American country's centrist government narrowly won a
second term in power.
The United Democratic Party won a majority of 16 seats in
the 31-seat parliament to the opposition People's United Party's
14, Channel 5 television reported. One seat was undecided,
according to the station's tally. Official results are not due
until later on Thursday.
Prime Minister Dean Barrow said before the election his
first act, if re-elected, would be to win more favorable terms
for Belize's so-called superbond, which makes up half the
country's debt and 40 percent of gross domestic product.
The interest rate on the bond stepped up to 8.5 percent this
year and will account for 12 percent of estimated annual
government revenue. The country of 313,000 people faces a
further squeeze when principal repayments come due in 2019.
"The first thing that we do after being re-elected is to
announce an appointment of a team to go and renegotiate that
superbond to give us better rates - far better rates because we
aren't taking it anymore," Barrow said on Feb. 19.
So far the 61-year-old lawyer has given no details of what
he might suggest to creditors. Analysts said outright default
was unlikely but options might include a request for lower
interest rates, delayed principal repayment, cash-flow relief or
an extended maturity on the 2029 bond.
"He never said what exactly he wants to do, but everyone is
interested in how to make those payments because it will mess up
our income," said fishery department worker Remaldo Acosta, 40,
lining up to vote on Wednesday in the town of San Pedro on
Ambergris Caye, off Belize's northern coast.
Ratings agencies Moody's Investors Service and Standard &
Poors downgraded Belize's foreign-currency sovereign rating well
into 'junk' territory in February after Barrow's comments.
S&P analyst Kelli Bissett said the CCC-minus rating and
negative outlook reflected the high risk of default, or at least
restructuring ahead of a scheduled August interest payment.
"Our best-case scenario reflects the expectation that a
restructuring announcement from the government could come some
period after the elections, possibly by August," she said last
TOP 20 DEBTORS
Belize, about the same size as Massachusetts, is better
known for its laid-back atmosphere and pristine coral reef than
as an international investment destination.
But the bonds' inclusion in JP Morgan's benchmark EMBI
Global Index means they are likely held by more fund
managers than the issue's relatively small size suggests. JP
Morgan has an 'overweight' recommendation on the bonds.
Belize's total debt accounts for about 80 percent of GDP, or
$3,200 per head - lower than the 150 percent debt ratio
Argentina had when it defaulted in 2002, but well above the
sub-10 percent Ecuador enjoyed in 2008, when it defaulted on
$3.2 billion in global bonds.
International Monetary Fund estimates show Belize, whose
$1.25 billion economy relies heavily on tourism and agricultural
exports like sugar and bananas, was the world's 13th most
indebted nation in 2011.
Per capita economic output is half the Central America and
Caribbean average and almost half the 313,000 population - a mix
of Creoles, Spanish-speaking Mestizos, Maya Indians,
African-descended Garifuna and German-speaking Mennonites -
lives in poverty.
As well as the economy, offshore oil drilling and security
were also key election issues, after the homicide rate rose 70
percent between 2005-10 to 41.7 murders per 100,000, on a par
with neighboring Guatemala, according to the United Nations.
"I wouldn't like drilling off our beautiful island," said
primary school teacher Maria Guerrero, 49, a native of San
Pedro. "I want to keep it so my grandson can enjoy it too."
The ruling party, which enjoyed a 19-seat majority in its
first term in office, has promised to hold a referendum on
offshore drilling and to cut the murder rate back to 25 per
Lower gas prices and renegotiate the Superbond!
Prime Minister Dean Barrow reiterated his pre-election promise that the government of Belize would explore all avenues to relieve Belize of the onerous burden of the billion-dollar Superbond, with which the past PUP government saddled the country.
The Prime Minister was speaking at the Belize Biltmore Plaza Hotel on Thursday afternoon, March 8, at a press conference he had called to evaluate the March 7th General Elections.
He admitted that the United Democratic Party’s slim 17-14 victory was disappointing and that he, as the UDP leader, had expected to win at least 20 seats in the House. Nonetheless, he affirmed that the newly elected UDP government would hire a team of experts to renegotiate the Super bond, to obtain a cheaper interest rate and more terms for repayment over a longer period.
He also confirmed that his government would explore every avenue to get some sort of refinery built in Belize to refine local crude and offer Belizean motorists cheaper prices at the pumps, even if those prices were still linked to the world price of oil. He said his government would also be exploring the possibilities for producing bio-fuels, such as diesel from the jatropha plant.
While the Prime Minister acknowledged some of the criticisms in the report presented by the observer mission from the Organization of American States, the he said it was unlikely that Belizean politics would ever change its practice of having partisan booths near the polling stations to make a last-ditch effort to influence electors in how to cast their ballot.
As to the composition of the new government, he said the Belize Constitution limits him in appointing no more than 11 members of the House of Representatives to his Cabinet, although it also allows him to appoint up to five Senators as Cabinet ministers.
Barrow also brushed aside the suggestions from the media that the party might have been the cause of its own defeats and that Deputy Prime Minister Gaspar Vega was to blame for the losses in Orange Walk; since he had hand-picked the UDP candidates in that district.
He said he had every confidence in his Deputy leader for organizing the whole northern caucus of the party machinery, but that some losses were the result of the individual candidates themselves and not the party.