GOB’s Financial Adviser Talks BTL Arbitration

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Updated: July 14, 2016

The Belize Chamber of Commerce and Industry shared its perspective on the BTL arbitration award yesterday. In its release the BCCI questions the delay in reaching a settlement.  Today, Love News sat down with Government’s Technical and Financial Advisor, John Mencias who addressed some of the concerns that have been floating in the general public, such as, how have Belizeans benefitted from the nationalization of BTL. Mencias says the benefits can be seen in the value of shares.

JOHN MENCIAS

“The answer has to be given in terms of the value of BTL to Belizeans because now BTL is in the hands of the government who represent the people of Belize. Prior to 2009 what we had in place was an accommodation agreement that according to all estimates was giving the then share owners of BTL somewhere in the region of $3.50 per share in value over and above what they should have gotten, that was the essence of the accommodation agreement because the tribunal ruled that the value of the accommodation agreement for the former share owners was $3.38 so what they are basically saying is that as a result of that accommodation agreement you got this value that you would not have otherwise gotten. That worked out to $270 million dollars in today’s money and so that is what the Government was trying to pull back for Belizeans. As I explained earlier this morning that came in the form of no import duties to BTL, blocking of VOIP the decreased regulation and ensuring that they had a minimum rate of return. So to repeat the purpose of the nationalization was to negate the effect of the accommodation agreement which basically moved value from the people of Belize either as customers or the government to the share owners.”

We asked Mencias to explain the reason for the delay in arriving at a settlement. He spoke on the amount saved, that will be invested in Belize because of the negotiations.

JOHN MENCIAS

“Let us say that the government had agreed to pay the former share owners what they were asking for in 2009 they would have paid them $460 million dollars then, that is one aspect to it. Based on the panel’s ruling they will pay with interest right now $446 million. Now of that $446 million, $270 million is to be used for projects for the benefit of the people of Belize so in effect then the actual cost is $176 million compare that now to the $462 million back then. Now there is this argument that we have heard that if we would have paid it back then we would have been able to stop or not pay interest on the amount that is not true. How would the government had paid the $460 million it would have had to borrow. The government doesn’t have that amount of money, it would have had to issue treasury notes or something of the like and we have calculated that if it had done so that would have added another $270 million. Looking at it as if we were paying in 2016 which would have brought the bill up to $734 million so you are comparing $734 million to $446 million. Even if some people want to argue that yes but they would have negotiated the number down, good. The share owners were claiming that of that $10.23, $3.10 was due to the accommodation agreement so let’s take out that $3.10 you are still at $7.13. When you look at that again in terms of 2016 dollars assuming that you financed it with treasury notes at 7% it would have come up to $512 million dollars which is still more than $446 million and as I’ve told you they would have had to pay that to the shareowners. This $446, $270 million of it is coming back to the people of Belize for projects.”