$190 million, that's how much government needs to find to avert a sovereign default in the coming fiscal year. That figure is contained in this draft report, the external debt strategy compiled by a team of foreign experts from Houlihan, Lokey, Howard and Zukin, a European Investment Bank.
7NEWS has obtained a copy of the confidential report and it paints a worrying picture of Belize's national debt service profile. For the upcoming fiscal year 2006 to 2007, the experts project that debt servicing will reach a record $280 million. According to Ministry of Finance figures, the government will have just $90 million available for financing, leaving a financing gap of $190 million. That's money that government doesn't have, in fact the report states that the sum of principal and interest due to external creditors during 2006/2007 is 250% of the available amount.
According to the experts, the government must decide whether it will bridge the gaps by making new loans or go back to the institutions and countries that loaned them the money in the first place and request restructuring. Both courses are riddled with pitfalls but some option has to be pursued, otherwise, the report makes it clear, government will simply not be able to meet its debt requirements and faces the risk of default. Well that's what the experts say, but to hear the Prime Minister and Minister of Finance Said Musa tell it, there's no worry at all, in fact he hasn't even read the report.
Rt. Hon. Said Musa, Prime Minister of Belize
"Well we've been working on it and this is the very reason why we recruited and appointed this debt management team, Houlihan, and I am sure if you read the whole report, which incidentally I haven't read yet, it hasn't been presented to me yet, you will see, because they've been mandated to do this, to come up with a plan for us to address the debt situation."
Jules Vasquez,
Sir as Minister of Finance this report was done on January 16th...
Rt. Hon. Said Musa,
"That's not the report, that's preliminary, that's not the report. The report has not yet been presented to government."
Jules Vasquez,
But the preliminary report I would imagine...
Rt. Hon. Said Musa
"(That) is only giving the diagnosis."
Jules Vasquez,
But it has four options in the preliminary report.
Rt. Hon. Said Musa,
"Yes, yes but it's not the report. I don't know where you get whatever document you have but that is not the report of Houlihan, they are presenting it in the next few weeks."
Jules Vasquez,
But it us authentic what I have and the number...
Rt. Hon. Said Musa,
"What you have may well be authentic, I don't know what you have, but, yes, analysis of presenting four options and so on, yes that is so."
Jules Vasquez,
But the debt shortfall is $160 million, this is a real problem, this is the greatest financing shortfall your government has faced. It appears we'll be in imminent threat of default if something magical does not occur.
Rt. Hon. Said Musa,
"Man Jules that is what you said last year; 'about 2005 PUP was going to default, the government was going to collapse,' you and those that you support, your television station. That is what they have been predicting, doom and gloom, all along. The truth of the matter is the PUP government has never defaulted on its debt obligations and we will not."
Executive fantasy aside, for the record, Channel 7 news has never predicted or speculated upon imminent default, we have only reported on warnings of default risks from international financing institutions and rating agencies. The final report from Houlihan, Lokey, Howard and Zukin is due later this month. The study is being paid for with foreign funding.
