Belize’s Economic Performance Satisfactory to The IMF
The Executive Board of the International Monetary Fund (IMF) recently concluded its 2013 review of Belize’s economy and released its findings. The Washington based financial institution said that the new bonds, which will expire in 2038, has resulted in a cash flow of US$130 million over the next five years.
Late December, the United Democratic Party government of Prime Minister, the Rt. Hon. Dean Barrow, announced it reached an agreement with its creditors on restructuring the country’s US$544 million foreign debt also known as the “super bond.” Prime Minister Barrow described the agreement as “comprehensive” adding it is “sustainable, and it will provide well in excess of the US$150 million in relief to Belize.”
Bondholders had rejected an offer last year from the Caribbean Community (CARICOM) country on restructuring the debt. Belize said it could not afford to meet rising interest payments on the bond and suggested that they take a haircut of up to 45 per cent.
The IMF said that the debt restructuring took place against prolonged legal disputes over the nationalization of two utility companies, Belize Telemedia Limited (BTL) and Belize Electricity Limited (BEL), and that no agreement has been reached yet over compensation payments. It said the legal dispute may take a few years in court.
The report further cited that the fiscal primary surplus for the fiscal year 2012 to 2013 is expected to deteriorate to 1.3 per cent of Gross Domestic Product compared to 2.3 percent of GDP in 2011. “This deterioration largely reflects the continued decline in oil-related revenues and an increase in the wage bill, despite robust growth in General Sales Tax (GST) revenue.”
While Belize may be able to breathe a little better with good news on its economy, the IMF, in that same report advised that the country should take advantage and begin to rebuild policy buffers, pursue active debt management, accelerate the financial sector reform and strengthen the country’s economic resilience to external shocks.
The IMF is also calling on Belize to advance structural reforms with a focus on removing impediments to private investment, enhancing competitiveness and jobs, as well as, promoting inclusiveness and diversification of exports and energy sources.
The report added that Belize also needs to further strengthen the framework on the Anti-Money Laundering/Combating the Financing of Terrorism.
According to the report, it was the successful completion of the exchange of the “super bond” for new United States denominated bonds that brought Belize a substantial cash-flow relief.