BELIZE SUPERBOND RESTRUCTURING DEBATE. MARCH 2012.

MORE ON RE-STRUCTURING THE SUPERBOND DEBT THAT HAS A CHOKE HOLD ON THE ECONOMIC DEVELOPMENT OF BELIZE

source unknown - taken from a Belize listserve debating membership -
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The rhetoric recently adopted by the UDP on the superbond is reminiscent to us of some of the arguments that were being put forward in Ecuador before the government declared the majority of its outstanding debt illegitimate and defaulted. In Belize, statements by the prime minister and other UDP leaders that blame the size of the current bond (which was itself the result of a restructuring in 2007) on the opposition People's United Party (PUP), seem to be pointing in the same direction.

Following Barrow's re-election, we believe the question is not whether a restructuring of the superbond will actually be attempted - as this is the declared intention of prime minister Barrow - but rather whether the restructuring will be carried out in a way that could isolate Belize from international sources of financing. While it is still early to assess what the exact terms of a restructuring could look like, we highlight that access to international capital remains vital for Belize, given the country's anemic economic growth, persistent fiscal deficits and a weakening investment outlook. Should the renegotiation of the terms on the superbond result in a disorderly default, we believe the country's economic outlook could deteriorate rapidly over the coming years."
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Comment: Myself I believe Barrow our PM and Finance Minister is not at all worried about external financing. Since the SUPERBOND was established, to absorb, what at the time, was publicly generally believed to be an embezzlment operation to put MILLIONS abroad in private political hands, using foreign bank loans. Nobody was ever prosecuted and the rumor mill quotes, at least one of the rascals of the triumvirate that allegedly embezzled millions, might himself have bragged that he got $500 million out of it. True or not! It was a crooked shady deal all round.
However the nation of Belize got saddled with the financial economic wreckage afterward.
Barrow has pointed out that Belize does not borrow any monies from foreign commercial banks, since that debacle of the PUP SUPERBOND. At least in the meaning of world financial centers. What we do nowadays, is use the growth of REGIONAL FINANCING from places like the IDB, the new Central American financing system, the new coming online, Mexican financing system, CARICOM funding and sometimes even the OAS. we have no future intentions of borrowing as a nation, from International Commercial banks. Nor do we need to. In the last four years, the UDP under BARROW has switched a large part of our funding to internally financed Belize Treasury Bills and where it is needed, we mostly go to the newer regional development bank centers we are partners and members and shareholders thereof.
Much of our economic infra-structure has been switched to GRANTS from country governments that wish Belize well. Where those countries have set up their own projects they have been successful. Giving money directly to our own government sees too much financial waste. But projects run through NGO´s is working fine.
The statement above in the preamble therefore; that we would be hurting ourselves, reputation wise by commercial foreign banks is pure NONSENSE, if we defaulted for example, or any other re-structuring, it is just not true. The memory of foreign banks is about three years. The UDP currently are just starting a 5 year term and can successfully finance anything needed nowadays, through regional financial centers, both Caribbean, Mexican and Central American. We have not used, nor do we need foreign commercial banks over the past four years, nor do we expect to need them going out the next five years. So defaulting, or any other re-structuring solution, like a BOND HAIRCUT might make for some unhappy INTERNATIONAL BOND HOLDERS, but in my opinion will not even make any kind of dent in the reputation of Belize, or our financial integrity. Likewise, Belize BONDS are known to be HIGH RISK, JUNK BONDS category and were never anything else. Bond holders simply allocated only a tiny percent of their portfolios to Belize Bonds and had to build in the RISK and write off provisions, before buying Belize Bonds. Losing them would not damage any known foreign Bondholder portfolios. The RISK of loss was already priced in.
The reference to anemic economic growth is totally out of whack. For 300,000 people we are doing damn fine. Better than the record of the USA, or the U.K. or most of the EU countries. Our GDP is running about 3.1 % and if we can get the problems of importing material supplies tax free for manufacturing, we are going to end up in four years with a GDP of 4% or better. That would be HONEST GDP, not the PUP style of borrow and spend by the government to artifically boost the economy.
- JUST MY OPINION - We could default and as Said Musa is often quoted, it would be just a lee breeze passing over, and in three years, nobody would even care. Nor would we ourselves even notice, as we do not borrow from anybody that would use it, to squeeze more money out of our government.