December 29, 2006. In the end of December, an open letter addressed to the international financial community was published by the International Monetary Fund. It discussed the progress towards economic reform that the Belize government has managed to make in the past 2 years.
In accordance with IMF, tax measures and expenditure cuts in Belize have led to a remarkable improvement in the primary balance of government. It seems to be a good result that a deficit of 3% of GDP in financial year 2003/04 turned into a surplus of 3% of GDP in financial year 2005/06. However, these efforts do not seem sufficient to bring the economy back onto a sustainable path. So, the Belize authorities are to undertaking further adjustment efforts during financial year 2006/07 and have to do this further on.
To conclude, the IMF has welcomed the progress by the Belize authorities, however, noting that the situation of Belize will still remain vulnerable for some time.
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December 18, 2006. The Belize Government has launched an offer to exchange the country's outstanding commercial indebtedness in return for new USD bonds that will be issued by Belize.
The government has already announced the financial terms of new bonds in a press release. These terms include the following: equal semi-annual principal amortizations commencing in 2019, a final maturity falling due in 2029, a step-up coupon structure with annual interest payments (4.25% for the first 3 years after issuance of the bonds, 6% for years 4 and 5, 8.5% in year 7 through).
The Belizean authorities had 4 months of intensive consultations with the affected creditors before the exchange offer. The Government is advised by in the transaction by financial advisers, Houlihan Lokey Howard & Zukin.
After in the middle of December the launch of the transaction was approved, tenders by the creditors are scheduled due until January 26, 2007. During the 3rd week of February 2007, the transaction is expected to close.
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December 8, 2006. Yesterday, the Inter-American Development Bank (IDB) announced that it had approved a USD 25 million fast-disbursing loan for Belize to support its government's agenda of reforms regarding restoring macroeconomic and financial stability, improving its business climate and raising investors' confidence.
By issuing the loan, the IDB loan provides Belize with an opportunity to strengthen its fiscal position by means of raising revenues and cutting expenditures. This way, Belize has reduced the fiscal deficit from 8.7% of GDP in 2004 to 3.3% in 2005.
The loan will be formed of 2 tranches - the 1st is USD 10 million to be given first, and the 2nd one is USD 15 million to be be given when Belize goes forward with its reforms. The loan is given for 20 years, with a 5-year grace period and a LIBOR-based interest rate.
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October 31, 2006. Press Office of the Government informed the public that Belize will be represented by its Prime Minister, Rt. Hon. Said Musa, at an upcoming conference in London, which is called "Transforming the Caribbean Economy - new avenues for investment".
The conference on the changing Caribbean economy is aimed at finding out how the economy is about to change dramatically within 20 years when preferential treatment ends and the region is to be dominated by such sectors as services providing, manufacturing and tourism, as well as a new and better-integrated agricultural economy. The conference "Transforming the Caribbean Economy - new avenues for investment" is expected to encourage a boost in active thinking about the Caribbean future investment, inter-relationship between the public and private sectors and their role. It will provide an overlook of the new Caribbean economy, explore the ways of attracting investment to the Caribbean, considering the opportunities for investment and for public private partnerships.
The conference addressers are British Prime Minister, Tony Blair; the president of Guyana, Bharrat Jagdeo; Prime Minister of Barbados, Owen Arthurs; the president of Guyana, Bharrat Jagdeo; the Chairman of Sagicor, Arthur Bethell and other leading members of the financial community in London and the Caribbean. The chairman will be Lord Triesman - the British Minister at the Foreign and Commonwealth Office, responsible for relations with the Caribbean.
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September 30, 2006. As a bridge between Central America and the Caribbean, Belize made a significant step towards the Central America region. On September 25, 2006, the Government of Belize signed an Association Agreement with CABEI (the Central American Bank for Economic Integration). The agreement enables Belize to be incorporated to CABEI as a non-founding Beneficiary Member.
Belize being a non-founding Beneficiary Member, both its Government and the private sector will benefit from projects and programmes financed by CABEI.
When signing the agreement, Musa, Prime Minister of Belize, indicated the necessity for greater economic cooperation with Central American neighbours. The investments that CABEI has made in the Central American region definitely affected Belize's decision on joining it. Within the next few years, both in economic and social development the massive investments are expected. Special attention will be paid to the reduction of poverty. Also, the money from CABEI will be spent on small and medium enterprise funding as well as education, health and rural development.
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September 28, 2006. Last week the Government of Belize has admitted that it was close to default, and is going to restructure its debt, notwithstanding the fact that the Government headed with Prime Minister Said Musa has reduced a deficit of GDP from 9% to 3% in just two years. Mr Musa denies the devaluation plans, however, Standard & Poor's recently lowered Belize's sovereign credit rating from CCC to CC, and noted that in case of a punitive debt swap the rating would be reduced to SD (Selective Default).
Belize has six outstanding international bonds totaling &338 million and &253 million in commercial loans, further &116 million is accounted for by domestic debt. Belize bonds were trading at 72 cents on the dollar last week, and bond yields on the 9.75% coupon bond due in 2015 were nearly 16%. Now it is likely that all external debt will be swapped for a new bond issue.
Belizean Prime Minister and Minister of Finance explained that Belizean external public sector debt stock cannot longer exist on the current terms, and the help of the creditors is urgently needed. Said Musa blamed the tropical storms which were in Belize between 1999 and 2003, and major infrastructure investment programme and increasing oil prices.
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December 1, 2005. The Central Bank of Belize has made the announcement that United Exchange International Bank is not licensed to provide any banking and/or financial services in or from Belize. The full text of the Warning Circular can be found below:
Warning
Pursuant to Section 3 of the Banks and Financial Institutions Act, Revised Edition 2000, The Central Bank of Belize hereby advises that:
UNITED EXCHANGE INTERNATIONAL BANK
is not licensed to provide banking and or financial business in or from within Belize.
Any person with information that UNITED EXCHANGE INTERNATIONAL BANK is conducting banking business or who wishes to make inquiries about any other business entity engaged in banking business, whether licensed or not, should contact the Central Bank of Belize at telephone no. (501) 223 - 6194 or fax no. (501) 223 - 5122 or e-mail: cbbfssd @ btl.net
DATE: 1 December 2005
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