Nothing to show for 40% of National Debt

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The PUP administration presented its budget for the financial year 2021-2022 during a House Meeting on Friday April 9th. The budget presentation was largely unimpressive with observers stating that it was the most boring presentations ever. And while the reader, Prime Minister Johnny Briceno, could not inspire anyone by his monotonous reading, a portion of the reading did catch our attention. In his presentation he cited that 40% of Government’s indebtedness is as a result of the Superbond.
He broke down the numbers as follows:
“$872 million is owed to our bilateral lenders, 55 percent of which was borrowed under the Petro Caribe Program with Venezuela; while 34 percent of this amount is owed to the Republic of China on Taiwan and the small remainder to other friendly countries.
$794 million is owed to multilateral lenders, with 36 percent owed each to the Inter-American Development Bank and the Caribbean Development Bank, 17 percent to OPEC, 7 percent to the World Bank and the balance to international financial institutions such as CABEI and the EIB.
$1.168 billion is owed to external commercial creditors, 97 percent of which represents the so-called Superbond, while the remaining $60 million is a domestic US dollar bond issued by the Central Bank of Belize in 2020.
And finally, some $1.35 billion is owed to domestic creditors, the largest portion, about $561 million or 41 percent, is owed to the Central Bank of Belize while domestic banks are owed some 28 percent of Government’s local debt stock.
At present, therefore, two thirds of Belize’s public debt, approximately $2.8 billion, represents external loans that must be repaid with foreign currency.
The average interest rate on external debt is 4.2 percent and on domestic debt is 2.7 percent.”
It is most interesting to note that 40% of what is owed is as a result of the Superbond. What needs to be said is that while the previous Government engaged in borrowing from multilaterals and bilateral organizations, there is something to show for those loans. Every one of those loans by the UDP added to the national development. We can think immediately of the improvements that were made on the national sporting infrastructure as well as the national road network. None of the borrowing done by the UDP was from commercial institutions and the interest rate on the loans were never for more than 3 percent.
In stark contrast, the Superbond was all commercial borrowing by the PUP. The terms were onerous and before renegotiating it, the interest that Belizeans would have paid was in the region of 8%. The worst thing of it all is that we have absolutely nothing to show for the superbond worth $1.108 billion. Most of what makes up the superbond were loans to private individuals and entities such as those offered to the Novelo’s, Galleria Maya, Intelco, Mahogany Heights and UHS, none of which proved of any benefit to Belize’s national development.