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.

CMC