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Belize missed an interest payment of $23 million

Published: 22 Aug at 2 PM Tags: Dollar Exchange Rate, Currency Exchange,

After missing an interest payment of $23 million (£14.6 million) due on Monday, it is feared that Belize will default on its debt.

There is still a 30-day grace period in which Belize has to pay the interest, but it is likely they will not be able to pay it. Creditors are accusing Belize of trying to force the restructuring of the $550 million bond, as done in Greece. This works out to half of the country’s public debt.

The argument has put focus on the Caribbean and its countries’ growing debt as a result of the fall in tourism. Most of the region relies on tourism for its income, but the financial crisis around the globe has made a real impact on the amount of visitors they have seen this year.

The bond that was issued to Belize will mature in 2029 and pays out an annual coupon amount, which today amounts to 8.5 per cent. If Prime Minister Dean Barrow wins a second term in March he will renegotiate the bond’s terms. Belize can’t afford the coupon amount, he says, but hopes that the country can move towards restructuring the instrument in a sensible way.

The Belize government anticipates extending the bond’s maturity date and cutting the amount to be repaid by 45 per cent. Creditors are not impressed and say that this offer is less than the Greek debt restructuring that occurred this year. \r\n\r\nBelize has been suffering from the current global crisis, as has fellow Caribbean countries. Its currency is measured according to the US dollar, which is two Belizean dollars for one US. Although the decline in tourism has caused a problem, the country’s debt burden has also been affected by the nationalizing of Belize Electricity and Belize Telemedia.