Belize unable to pay bond holders, seeking extension
Published:Sunday | May 23, 2021 | 12:08 AM
BELMOPAN (CMC):
The Belize government last week formally informed bond holders that it would not be able to make a scheduled US$7 million coupon payment to its international bondholders that was due on Thursday.
Belize is looking to restructure a US$550 million Superbond that emerged from 2006-07 restructuring and now contributes to a 133 per cent debt-to-GDP (gross domestic product) ratio that the International Monetary Fund (IMF) deems unsustainable.
A government statement noted that it is seeking the consent of the bondholders to have the payment deferred to September 19, this year ‘with the effect that the amended grace period will expire on the same date as the grace period applicable to the next schedule coupon, payable on August 20, 2021”.
The statement said that the country’s “economy and financial conditions have been acutely affected by the consequences of the coronavirus (COVID-19) pandemic.
It said that the primary deficit increased to 8.3 per cent of gross domestic product (GDP) in the fiscal year 2020-21 from 1.4 per cent of GDP in the previous fiscal year.
“In addition, the government’s current projections indicate that the primary balance could fall to a deficit of 2.8 per cent for the fiscal year 2021-22,” the statement said, quoting a statement by the International Monetary Fund (IMF) team that carried out an assessment of the country’s economic situation that “Belize is not expected to return to its 2019 level until 2025”.
It said that following extensive stakeholder consultations Belize is implementing a five year home-grown recovery programme that started with this year’s national budget.
“As a result the government has implemented aggressive fiscal adjustments measures and commenced consultations and discussions with advisors, bondholders and other parties regarding possible alternative terms for meeting its contractual obligations under the bonds.”
Last week, the Reuters News agency reported that Belize’s bid for its fifth debt restructuring in 15 years was threatening to turn sour as holders of its so-called ‘Superbond’ urged it to agree to an IMF programme.