On Wednesday, August 22nd, Belize’s Economic Ambassador His Excellency Mark Espat, and Financial Secretary, Joseph Waight, left in the middle of Prime Minister Barrow’s press conference in order to board a plane to the United States. Espat is the leader of Belize’s debt restructuring team. Along with Secretary Waight, he will meet representatives of the Inter-American Development Bank (IDB), the International Monetary Fund (IMF) and United States Treasury Department. The three organizations may prove to be key allies in governments restructuring efforts.
It is important to get the IDB and IMF on board in order to gain the confidence of investors in the information presented by Belize. In his address to the nation from the Biltmore Plaza Hotel, Prime Minister Barrow explained that the IDB may assist Belize by partially guaranteeing the restructured bonds through a policy-based loan. Belize has already shown willingness to comply with requested reforms from the IDB by introducing several financial legislations at the House of Representatives. Those legislations, including the Commercial Banks and Financial Institutions Amendment Bill, will go back to the House for second and third readings on Thursday, August 23rd. The support of the IMF is perhaps even more important than that of the IDB. However, if that support is dependent on Belize being subject to IMF policies, then Prime Minister Barrow said, “Belize will do without”.
The restructuring of the Superbond is the single most important national issue on the Government’s table, and the immediate concern is figuring out how to get bondholders around that table. The decision not to make the $47 million capital and interest payment due on August 20th, may have nudged them, and the days ahead could be important ones in Belize’s history. After August 20th Belize has a 30-day grace period before a default is declared. Neither side is hoping for a default; therefore, negotiations should peak during this period. A reporter from Bloomberg News asked Prime Minister Barrow if Belize was prepared for the litigations that may arise as the result of a default. Prime Minister Barrow said that he hopes it does not come to that because “bondholders ought not to view this as us throwing down the gauntlet” but Belize is prepared for “all alternatives”. Government has already put forth three proposals to bondholders. Those proposals include reductions in the principal, interest rates or an extension in the maturity period. On Wednesday, Prime Minister Barrow said, “The government of Belize will only accept a resolution that fully reflects the country’s capacity to pay.”
Since releasing those proposals, government has held consultations with the Belize Chamber of Commerce and Industry, the Belize Tourism Board, the Association of Protected Areas Management Organization, Citizens Organized for Liberty through Action, and several other social partners in an effort to move forward in a united nationalistic front. Local support for the restructuring exercise has been great; however, what is left of the Opposition media has chosen to lead a smear campaign on the restructuring process. They have tried to paint the restructuring exercise as an initiative made necessary by this administration’s inability to manage the economic affairs of the country. In reality, Belize is only in a comfortable negotiation position because of the UDP administration’s impressive display of fiscal discipline and transparency. That is why we can lean on the IDB for support and that is why we can approach the IMF with confidence in our policy structures.
Prime Minister Barrow wished to send a clear message to all Belizeans: “We are going to see this thing through to success.”
