It was a US$565 million gamble, but today a very relieved government of Belize announced that the 'Superbond' succeeded. The offer closed last week Friday and 93% of Belize's bondholders have agreed to participate n the new offering. Today Financial Secretary Dr. Carla Barnett and Development Minister Mark Espat, who led the bond effort for government, said it is a relief, but also an undertaking to tight fiscal discipline.
Hon. Mark Espat, Minister of National Development
"This moves us substantially to a position to where one of the biggest clouds looming over public sector financial health and management should be removed and it places us on a path where I think that we can say to the Belizean people that the threat of default has been effectively removed."
Dr. Carla Barnett, Financial Secretary
"I wouldn't call it a sigh of relief but I would call it a certain amount of satisfaction. We are talking about really very high participation rates. We're very happy about that. Clearly our creditors and ourselves came to a high degree of understanding of what the problems were and what we needed to do to fix the problems. What this does allow you to do is achieve a level of sustainability which means that we will move ahead, we ought to be able to build a little bit of foreign reserves. We didn't have much of a cushion for a while and so we're going to be building some foreign reserves and that in and of itself will provide some kind of cushion."
Hon. Mark Espat,
"The government, that is, disclosed that is disclosed that the average rate on the current stock of private sector external debt was between eleven and twelve percent and now you are looking at a interest rate of four and a quarter, six, and eight and a half. When you consider that not only principal payments would be due now and into the future but in fact bullet payments would be due this year, for example an RBTT payment of close to $79 million, and replacing that is a principal moratorium for twelve years and a much lower interest rates, I think it has to be clear not only that we are not getting new money but that the commitments that we have, have been negotiated on much better terms."
Jules Vasquez,
How important is this as a boon for the fortunes of your party, the PUP?
Hon. Mark Espat,
"The national debt and Belize's ability to satisfy its obligations should not be a partisan issue in my view. The credibility of the country and our ability to satisfy whatever commitments we made is an issue that concern every Belizean of whatever political stripe."
International financial analysts say the bond's success owes much to the figures posted on the internet by the Central Bank. Figures which outline mistakes and misrepresentations made in the past. Barnett and Espat said that indeed the transparency and openness which accompanied this bond off were critical to its success.
Hon. Mark Espat,
"The final step was to engage the creditors and say, 'well we have done these first three steps, here are our numbers. Obviously under the current trends we will not be able to repay the debt stocks and so we have to come to better terms that will, yes, save the country money and therefore have you lose some of what you expected but in the longer run, will ensure that what we commit to paying, we're able to pay.'"
Dr. Carla Barnett,
"We posted all the information on the web for the whole world to see and they could take that information apart and when we talked they would be able to know whether or not what we are saying is meshing with what we've published and I think they understood that they we weren't trying to take advantage of them because in instances where bonds failed, sometimes it is because creditors believe you are trying to take advantage of them. So I think at the end of the day we struck a balance where we knew we were going up something and the thing we are giving up is keeping to our, the commitment to keep to our fiscal targets."
The Zurich Insurance Group continues to hold out but Barnett says she expects them to come on board before the closing on February 20th, and that would bring the subscription rate to a near record 95%.
