Belize ‘too rich’ for debt relief?

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Published by BBN Staff at May 8, 2020

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Posted: Friday, May 8, 2020. 3:46 pm CST.

By Aaron Humes: According to Caribbean Business Report, countries like Belize, Barbados, and Suriname have raised worries with investors about repayment of their debt bonds.

But these countries may be “too rich”, the Report writes, for a global debt relief initiative backed by the Group of 20 based on average incomes.

The multilateral effort plans to waive debt payments temporarily for 73 of the world’s poorest nations amid the COVID-19 crisis. The G-20 plan aims to free funds in low-income countries to combat the coronavirus crisis.

Of the eight regional nations that fit the criteria, the report says, only Honduras and Grenada have international dollar bonds; others owe mostly loans or local debt.

Meantime, some of the region’s most distressed sovereigns — Suriname, Belize, and Barbados — don’t match the World Bank’s low-income country guidelines.

Almost all the nations that can request debt relief are also eligible for International Development Association (IDA) funding. To qualify for IDA resources, a nation must have a gross national income per capita of less than $1,175 or lack creditworthiness to access other types of funding.

Haiti’s gross national income was $800 per capita in 2018, according to World Bank data. By contrast, Suriname’s was $5,210, while the latest figures from Belize and Barbados were $4,470 and $15,410, respectively.

Nonetheless, Caribbean nations are suffering from a triple blow that’s eating up revenue. Tourism has ground to a halt. Remittance flows, which briefly spiked in some places, are expected to fall sharply. And oil prices have also collapsed.

In the case of Belize, Standard and Poor’s rated Belize’s outlook as negative and warned the finance world that, quote, “The negative outlook reflects increased vulnerability to non-payment of upcoming debt service, particularly the interest due on Belize’s global bond (around US$13 million) in August 2020.”

Prime Minister and Minister of Finance Dean Barrow said it was a bit of a ‘waiting game’ to see whether sovereign debt relief will be actioned by the Inter-American Development Bank (IDB), World Bank and International Monetary Fund (IMF).

He also added that Belize will meet a juncture when no money is available.

As of December 2019, Belize still owes some $1.053 billion in the “Superbond,” on which we pay interest twice a year till the end of this decade when the principal payments kick in. Total debt stands at over $3.5 billion, near 100 percent of GDP.

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