Local News

One week from today, the Government of Belize will need to dig deep into the nation’s treasury to come up with the next coupon payment of forty six million dollars as the next interest payment on the foreign debt becomes payable. It will be the first payment of the stepped up interest payment which now stands at eight point five percent.  The sum of money to be paid next week is budgeted for; but whether or not government will actually make the payment is still not certain.  And the prospect of a default has the private sector and social partners worried.  The Belize Business Bureau today went public with its position saying it wants to help the process of renegotiating the so-called super bond and calls for widespread dialogue on the way forward.  Arturo Lizarraga is the president of the Belize Business Bureau.

ARTURO LIZARRAGO

President

Belize Business Bureau

“We’ve asked the Government to allow us, the Bureau, the Chamber, the Trade Union to come to table along with the Government basically, to provide support to our government in this time of need and this time of crisis but also to come with proposals because we know that whenever you go to renegotiate you have to bring something to the table.  There are lots of discussions as to how do you indicate seriousness that you want to negotiate down what you owe and that you’ll be responsible to pay.  You have to offer something and what we are suggesting is that – we’ve acquired two utilities, we can still pretty much hold on to them but we must give up something – for example, hold on to the land lines, hold on to the fiber optic under the Public Service Commission, hold on to interconnection but get rid of the cell part and open it up to the market.  What you will have is more investment, more competition which will drive down the price which is good to the consumer.  That is one issue, the other issue on energy, we can hold on to the national grid, release or sell off the supplier or producer and give out more contracts.  So for example, people can buy our fuel and people can provide fuel to the national grid.”

For his part, the Manager of the Belize Business Bureau Hipolito Bautista believes that the government is laying the foundation for a possible engagement with the International Monetary Fund, a prospect which he says is not good news for Belize.

HIPOLITO BAUTISTA

Manager

Belize Business Bureau

“Well I think it was very clear in the Prime Minister’s budget speech when he said that we will go to the IMF; when he said that the fact that oil prices are falling and the fact that the production at the wells in Spanish Lookout are also falling that this will actually help us when we go to the IMF, he didn’t say if we go to the IMF but he did say when we go to the IMF.  I am particularly convinced that that is the road that the government will take if the discussions with the bond holders fall through.”

That is why the social partners are uniting in their efforts to help move the proposals published last week by the government forward and make the offers more attractive to the bond holders.  So far, reaction from those bond holders has not been positive and there are many who believe that the three scenarios put forward by government do not go far enough to entice the bond holders.

ARTURO LIZARRAGO

President

Belize Business Bureau

“Well it’s not that it’s not far enough.  There Is another addendum to that page that demonstrates, for example, this morning on the show we spoke about the banking situation and the regulations and that’s why you have the banking bill that’s in the House; you have the bill where you’re taxing the offshore providers that’s at the House as well, I think it’s already gotten the first reading; you have other issues, I think we were talking about growing the macro economy.  The last time we negotiated the bond, the agreement was that it would stay at 3 ½% growth and that hasn’t happened.  Similarly now, we would have to have an intense negotiation, a more detailed off, peace offering.  We have to give the bond holders something to show that you’re serious and so we’re suggesting that these proposals can in fact send a very strong signal and a very useful signal that would encourage the bond holders a reduction; to accept giving us a grace period or whatever option that is taken.  The three options are basically one and the same – I’ll pay you half; I could pay you upfront or I can pay you at the end of the road – or I’ll pay two or three percent instead of eight percent – clearly the bond holders will insist and would want to settle at five and we’d probably go at four and a half but that’s all in the negotiations.  Just the basic proposal as you see in the print media is not sufficient, it’s not sufficient with the addendum.  The devil is in the details and you have to have the things that are ironed out and spelt out correctly and clearly and I believe the discussion should be held across the country because this is a national issue – it affects crime, it affects jobs, it affects the way we’re going to live, the cost of living, it affects everybody both public and private sector.”

Bautista says that when he hears that one of the proposals is to only offer 55 cents on every dollar owed to the bond holders, that is a sign that a default is a possibility and that is a prospect that should have Belizeans worried.

HIPOLITO BAUTISTA

Manager

Belize Business Bureau

“That suggests that Government is saying confidently that we only have half the money.  So it looks quite likely unless they can arrive at a restructuring of the debt that they will be default and there will be a need to go to the IMF.”

PATRICK JONES

News Reporter

Love FM

“But that default will put all of us in a little bit of a hard position…”

HIPOLITO BAUTISTA

Manager

Belize Business Bureau

“A little bit of?  A lot of position; because there are penalties for defaulting…they could seize all our assets in the states, all our foreign exchange assets and that will take away from us the foreign exchange we need to keep this economy going and so it seems quite likely that the Government will have to go to the IMF.  It’s that kind of an organisation that lends billions and millions of dollars to help out countries come out of their financial and current account problems.  Now the IMF is a serious customer; in fact in parts of the world the IMF are hated because they play no games.  We have to study more closely to what the IMF will bring as medicine to lend us this money.  The first thing is this – they will insist on structural adjustment policies and structural adjustment policies in particular means getting rid of all those non-producing initiatives that the Government have – for example the Pro-Poor – just giving away money to poor people to help them – which is commendable, of course, but the IMF will say if you want to fix your economy you can’t be giving away money that you don’t have and the first thing they will go after are these Pro-Poor programs.  The second thing they will go after is our tax holidays so those companies, especially those local companies who try to keep their prices down for the Belizean public will not be able to get any tax breaks and hence some products, even bread will go sky high.”

Among the suggestions from Lizaraga and Bautista is that the opposition People’s Untied Party joins in the discussion and support a call for a national debt ceiling and a cap on public spending.  Love News contacted the Leader of the Opposition Francis Fonseca for comment on the super bond renegotiation exercise; but the PUP leader said that he is awaiting a briefing from either the Prime Minister or the government’s renegotiating team, led by Ambassador Mark Espat so that he will be better informed before making any public comment on the issue.

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