S & P downgrades Belize’s ratings in light of its tourism decline

Belize’s ratings on the global scale have been downgraded by S&P Global Ratings. S&P recently made revisions on several tourism-dependent countries including Belize and subsequently gave a CCC rating on the country’s long term foreign and local currency sovereign credit. Belize was at a B-minus with a negative outlook status prior to this revision. Belize’s ratings were also downgraded from a B to C on its short term foreign and local currency ratings. In the category of Belize’s transfer and convertibility assessment, the ratings went from a B-minus to a CCC-plus. While the report acknowledges the fight of the Coronavirus pandemic which has led to a crash in the tourism sector with a heavy impact on the country’s economy, S&P cited other factors contributing to this downgrade. S&P wrote, quote, “Belize’s creditworthiness is constrained by institutional weaknesses that include a track record of the poor capability to maintain sustainable public finances across administrations.” End of quote. The rating agency estimates a contraction of 4% in 2020 and net general government debt at 97% of GDP. The rating agency’s base forecast for tourism in the Caribbean and North Atlantic involves a slump of 60%-70% in the final three quarters of 2020 compared to a year ago, significantly impacting economic growth and fiscal accounts this year. Other countries assessed were Jamaica, the Dominican Republic, Aruba, and the Bahamas.

On the heels of the S&P Rating report on Belize, a publication by Bloomberg has predicted that Belize and several other nations may soon become known instead for its debt crises as opposed to the place where the wealthiest bankers go to play. The report states, quote, “the three nations (Barbados, Belize, and the Bahamas) are some of the most exposed to the sudden stop in global tourism due to the coronavirus pandemic. And after decade-long borrowing sprees, they’re also staring down big bond payments, raising concern over how the Caribbean region can repay its debt. The publication cited S&P Ratings as saying that tourism in the Caribbean will probably decline by 60% to 70% from April to December compared with last year. Marla Dukharan, an economist in Barbados, calls it a once-per-century shock for the Caribbean. She said even in the most optimistic scenario, the region will lose about 50% of its tourist revenue this year which will weigh heavily on the Caribbean’s roughly $80 billion foreign debt load. The Bloomberg publication went on to say that the S&P already rates the Bahamas, Dominican Republic, Jamaica, Barbados and Belize in junk territory. Faced with the COVID-19 pandemic, Prime Minister Dean Barrow has announced that the country will be going further into debt with a goal to manage this crisis and to assist the unemployed and needy citizens. It is still unclear how deeper in debt Belize will be following this global crisis.