You are here
UWI lecturer says Caribbean island should approach IMF
BELMOPAN, Belize—As the Dean Barrow led administration in Belize tries to renegotiate its debt with foreign creditors, a regional economist believes that it is time for the Government to seek the intervention of the International Monetary Fund (IMF). Senior Lecturer in the Department of Economics at the University of the West Indies (UWI) Cave Hill campus, Dr. Winston Moore says if the IMF intervenes a clear signal could be sent to the international community that the country is serious about addressing its fiscal difficulties.
“‘Anytime a country defaults on its debt it signifies some degree of distress. Indeed, the most recent Article IV report for Belize (since December 2011) hinted that there might have been difficulties in relation to debt on the horizon.”‘ He said in order to emerge from the crisis Belize should implement a credible plan for fiscal adjustment.
According to Moore, investor confidence in Belize could also be threatened. He told CMC that the Central American nation could be faced with difficulties in accessing funds on international markets in the future. Belize suffered its latest downgrade from Standard and Poor’s moving deeper into junk territory after the Government announced that it could not meet its first payment on its foreign debt
The Washington-based international rating agency has lowered its long-term foreign currency sovereign credit rating on Belize to double-C from triple-C-minus. On Tuesday, the Government of Belize said it could not pay the US$23 million semiannual coupon due on August 20 on its $546.8 million bonds due 2029.
“‘We simply cannot afford this coupon payment given the financing shortfalls and other challenges we face,”‘ said Prime Minister Barrow adding his administration wants to “‘move quickly toward a sensible restructuring of the instrument.
S&P noted that under its criteria, “‘a missed payment or an exchange that we view as distressed constitutes a default.”‘
The rating agency further pointed out that Belize which has per capita gross domestic product (GDP) of approximately US$4,500 had net general government debt of 68 per cent of GDP at year-end 2011 and it projected the country’s 2012 gross external financing requirements at $US210 million. S&P warned that it would lower Belize’s foreign currency ratings to ‘SD’ (selective default) if the government misses its August 20 payment or if it proposes a debt exchange to investors.
An ‘SD’ rating is assigned when Standard & Poor’s believes that the obligor has selectively defaulted on a specific issue or class of obligations, excluding those that qualify as regulatory capital, but it will continue to meet its payment obligations on other issues or classes of obligations in a timely manner. Earlier this year, Belize suffered a series of downgrades from S&P and Moody’s Investors Service which both raised concern about the possibility of additional debt restructuring by the government.
User comments posted on this website are the sole views and opinions of the comment writer and are not representative of Guardian Media Limited or its staff. Guardian Media Limited accepts no liability and will not be held accountable for user comments.
Please help us keep out site clean from inappropriate comments by using the flag option.
Guardian Media Limited reserves the right to remove, to edit or to censor any comments. Any content which is considered unsuitable, unlawful or offensive, includes personal details, advertises or promotes products, services or websites or repeats previous comments will be removed.