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Prime Minister Provides Comment on Bondholders’ Resistance

Prime Minister John Briceno was busy in his constituency today, but Love News did reach out to him for his response on the bondholders’ position regarding the restructuring. We were unable to get him on camera, but he did respond to our questions via text messages. In the first instance, we asked the PM what will be the government’s next step in view of the bondholders’ request for Belize to join an IMF Programme. PM Briceno replied, (quote) “Immediately upon taking office, my administration undertook a rapid assessment of the public finance crisis, followed by extensive collaboration with the IMF during their Article IV Mission. Thereafter, budget consultations took place with the social partners. Government has decided upon a home-grown Recovery Plan, outlined in step-by-step format during my recent Budget Presentation. Though not all, many IMF recommendations lend credibility to our Plan. Government will continue to implement this home-grown Recovery Plan entailing spending adjustments, revenue recovery, debt reduction and relief and elevated economic expansion and diversification” (End of quote). Our next question for the Prime Minister focused on the payment coming due for the Superbond later this month. With the hesitance of the bondholders to restructure, will Belize enter into default? According to the PM, and we quote, “Government’s negotiators have put forward the financial terms of a restructuring proposal which has now been published. The new terms include principal and coupon reduction as well as an extension of maturity for the bonds. Government’s approved 2021/22 Budget reflects the impact of debt relief. My expectation remains steadfast for a restructuring that’s supported by the requisite majority of bondholders. Default benefits no one. And the facts are that the super bond is Government’ most expensive debt, representing almost 50 cents of every dollar paid to service the public debt over the last several years.” (End of quote). Our newsroom sent as many as seven questions regarding the country’s economy. Another one has to do with the reluctance from the Government to subscribe to the IMF plan. Love News understands that there is a high level of confidence in the Briceno administration’s recovery plan, and that it could yield positive results if stakeholders, social partners, and creditors come on board. Prime Minister Briceno says it is the government’s belief that Belize can rebound quickly, but shared sacrifice is required. The Prime Minister went on to say that despite the differences with the unions, he is hopeful and even optimistic that union negotiators will come to see the equitable nature of the contributions being asked of all stakeholders, as part of the Recovery Plan. He stated, (quote) “The alternatives to the Recovery Plan would not be even-handed but likely include massive job cuts, immediate tax increases and risks to our exchange rate regime. I can’t imagine the Unions or any one preferring those alternatives.” (End of quote). With the constant back and forth in the last three months with the unions, our newsroom asked the government, ‘why not pursue a retrenchment exercise?’ Prime Minister responded, quote, “any right-thinking person knows that 90% of a salary is better than no salary at all. Our Government is working to create jobs, not destroy jobs. This is why I believe that the vast majority of Belizeans appreciate that my Administration is being reasonable and fair. Government is reducing its operating costs, expects to make pensions contributory, is seeking debt relief, is moving to bolster revenue collections and hopes to stimulate higher economic growth. The wage adjustment, 10% only, is just one of several vital steps necessary to rescue Belize from this crisis.” (End of quote). Love News understands that it is the Government’s Debt Management Unit is responsible for negotiating with bond holders. The Team is led by Minister of State Christopher Coye and includes domestic and international financial and legal advisors. He did note, however, that as the Minister of Finance, he does assume full and final responsibility for this process. Interestingly, Prime Minister Briceno noted that when it comes to the Superbond, he is not interested in capitalizing coupons as what the Barrow administration did last August. He says such a repeat would only increase the country’s debt. The reality of the situation today is the Belize is not in a position to service the Superbond on the current terms. Briceno added that his obligation to the country is to ensure that the proverbial can is not kicked down the road yet again. Love News also understands that the Briceno administration is hoping that its recovery plan will have the debt to GDP ratio down to eighty five percent in the year 2025, and below seventy percent by the year 2030. Prime Minister John Briceno says he will pursue these targets relentlessly.