Last night we showed you the staggering debt portfolio that the government hopes to retire with its US$225 million bond offering. As we pointed out, with US$46 million borrowed on a one year term from the International Bank of Miami, government has to come up with a lot of money very quickly via the bond offering. But the bad news tonight, is that floating the much delayed bond has gotten that much harder with the second Standard and Poor's downgrade in a month.
On Monday, the highly influential credit rating service is expected to announce that it is downgrading Belize’s credit rating by one notch. This will bring it in line with the Moody's rating service which downgraded Belize's rating by two notches earlier this month. Standard and Poor’s points to Belize's large financing needs, and a money situation that is described as "precarious." The report also points to, "political friction and the alleged misuse of social security funds which highlights problems with transparency in public finances and which have further damaged investor confidence."
Incredibly, Standard and Poor’s analysts project the public and private sector's combined financing needs of over US$200 million between August 2004 and the end of the year which compares poorly with Belize's US$72 million in foreign reserves at the end of July. The statement warns that Belize's rating could fall further if government does not enact more aggressive fiscal tightening, which leads us to ask: "can you say: 'less than zero?'."