The Government is suffering a massive headache tonight after its efforts to restructure the superbond for the fifth time is proving futile, so far. Holders of Belize’s only international bond due 2034, are making demands. One specific demand the bondholders are making is for the Briceno Administration to accept a full IMF program. If this demand is not met, the possibility of a fifth restructure seems only like a fantasy for Prime Minister John Briceno and his government. Hipolito Novelo reports.
Serial defaulter GOB is facing resistance from bondholders as it seeks a fifth restructuring of the so-called ‘superbond’ due 2034. The Briceno Administration is between a rock, a hard place and the Joint Unions especially since Belize’s debt-to-GDP ratio is at crippling one hundred and thirty-three percent.
Bondholders have signaled to the Briceno Administration that a fifth debt restructuring of the US dollar bonds would only be accepted if the government accepts a full IMF program- something that the Government had previously stated it would not take.
John Briceno, Prime Minister of Belize: “As a country and as responsible leaders I think we have a better understanding as to what we’re going through. We have people with the expertise and with the ideas to be able to put a full home grown economic recovery plan as opposed to have people outside of Belize imposing on us what is it that we need to do. We know what we have to do we have done it before you know. Remember in 2005 when we met with the IMF we came up with our own home grown economic recovery plan that when we left the former Prime Minister then had to admit that we left a primary balance in the budget and that that deficit was less than 1% of GDP. We’ve done that before. Right now we’re facing a primary balance of -9 % of GDP, that means we don’t have enough money to pay the light bill that’s how bad it is.”
On March eight, Financial Secretary Joseph Waight wrote this letter to Dr. Carl Ross and Kevin Daly, representatives of two firms that hold the largest position in the bonds, seeking consent for them to co-chair the bondholders’ representative committee to discuss a needed restructuring of Belize’s only international bond.
The goal was to successfully restructure the bond in time for the next coupon payment due May 20, 2021. The Government is seeking a thirty percent haircut on the principal which would see a reduction of the current capital of five hundred and fifty-six million US dollars to three hundred and eighty-nine million US dollars with an average life of fifteen point three years instead of the current ten-point eight years. The proposed maturity date is May 2041 instead of the current date of February 2034. Bondholders, however, are hesitant in accepting another restructuring. In fact, as of May 4, the bondholders’ committee presented no counterproposal. Minister of State in the Ministry of Finance, Chris Coye had scheduled a virtual meeting with bondholders for May 3, but it was cancelled after Belize’s proposed extension of the customary confidentiality arrangements was rejected by the committee. Committee members expressed that the meeting would have been worthless if Belize did not accept a full IMF program.
Joseph Waight, Financial Secretary: “I don’t think the government is intending to sign on to a formal IMF program. It has stated that it will try to do it’s own home grown which would follow pretty much what an IMF program would entail and by that I mean we’re in a difficult situation, our economy is contracting, we have a big debt problem, we have a fiscal imbalance and essentially what we’re trying to do is put together an economic recovery plan which would address those issues and which would in a sense help to try to stimulate growth and rebound. There’s a lot of uncertainty in the future.”
This latest development is a serious setback for the Briceno Administration which inherited an already crumbling economy, made worse by the COVID-19 pandemic. But the option to adopt a full IMF is not something that any political party in Belize would
Patrick Faber, Leader of the Opposition: “What the IMF proposes is quiet often very draconian as far as we see things. And while that kind of prescription coming from the IMF we in the UDP administration have long withstood that too. But you’ve got to be serious about what it is you’re trying to do in a home grown plan.”
Bondholders also asked the government whether it would consider contesting the legal validity of Belize’s debt to Venezuela under the PetroCaribe program, and to notify the IMF of that position. The Government has no intention of taking such action.