Caribbean News Now!

By Cristal Romo
Caribbean News Now contributor

BELIZE CITY, Belize -- Although Belize has retained the same law firm that advised Argentina on its two debt restructurings, Prime Minister Dean Barrow said he does not want to get to the same point as Argentina.

“We really don’t want things to get to that point,” Barrow said in an interview in Belize City on Wednesday when asked about the possibility of facing lawsuits and being blocked from international credit markets, as Argentina has been since 2001.

Barrow was seeking to assuage the concerns of holders of $544 million in bonds after it missed an August 20 coupon payment.

His administration is open to all restructuring proposals put forward by investors as long as they lead to “sustainable” debt payments for the $1.4 billion Central American economy, he said in a national address.

The premier has sent a team of finance officials to Washington to meet with representatives of the US Treasury Department, the International Monetary Fund and Inter-American Development Bank to discuss funding options after missing the $23 million coupon payment.

Belize says it can’t afford to pay its debt after the coupon on the securities jumped to 8.5 percent from 6 percent as part of an accord reached with bondholders in 2007.

Barrow, speaking to reporters in Belize City in his first national address since the missed payment, said restructuring scenarios the government published August 8 “are intended to serve as a basis for detailed discussions” with creditors that have yet to take place. He said that his government isn’t prioritizing payments to holders of the nationalized telecommunication and electricity companies over bondholders.

“We face significant and persistent financing gaps,” Barrow said in his speech. “It may appear Belize is asking for a lot, but we aren’t asking for more than the circumstances require.”

Two of the three restructuring scenarios call for a 45 percent principal reduction, a lower coupon and a maturity extension to 2042 from 2029. The third option includes the reduction of the 8.5 percent coupon rate to 2 percent with a 15- year principal grace period and a maturity date extension to 2062, the central bank said on August 8.

Argentina, South America’s second-biggest economy, offered bondholders securities valued at 30 cents on the dollar in a debt exchange in 2005 following its default. A subsequent debt swap in 2010 hasn’t helped the country end lawsuits by creditors seeking full payment on the notes. Argentina hasn’t sold bonds abroad since the default.

Belize’s economy may get an unexpected boost as tourism and banana production beat the government’s estimates this year, Barrow said. Economic growth may reach 3 percent in 2012, a full percentage point more than the administration expected, he said.

The tourism and services-dependent economy expanded 2 percent in 2011. Manufacturing and construction made up 21 percent of the economy, while agriculture and fishing’s contribution fell for a sixth consecutive year, to 11 percent, according to the central bank.

Reads: 2498


Tweet