By Alexis R. Milan
Belize’s credit rating was upgraded from stable to positive in a new report from Standard and Poor’s (S&P) Rating Services, citing new investments in the sugar and non-traditional agricultural products. S & P acknowledged that Belize’s economic growth prospects have improved.
According to S&P, export sector growth and the new $140 million sugar investment will likely improve Belize’s external liquidity over 2014 – 2017.
Several factors constrain Belize’s long-term rating at a ‘B-’ including weak political institutions, productivity limitations resulting from low investment over the past decade, and the country’s limited pool of skilled labor.
S&P also noted that the government’s 2013 debt rescheduling provided the country with cash flow relief, but said key fiscal policy challenges remain.
The report also said that Belize’s outlook is positive with potential for growth if the government can address upcoming external liquidity pressures related to nationalization compensation claims.
Higher exports would narrow the country’s narrow current account deficit and boost its international reserves S&P noted and added that the government is actively strategizing the payment of external obligations related to the nationalization of two utilities, by using government deposits financed by the PetroCaribe initiative and re-opening its 2038 bond.
S&P said it would likely revise Belize’s outlook to stable if the country’s investments and growth prospects weaken or if the country’s fiscal position were to deteriorate or in the event that government financial planning for compensation payments erodes.
S&P is a leading international provider of credit ratings, research and analytics.
Belize’s credit rating was assessed and scored on five factors, including institutional and government effectiveness, economic structure and growth prospects, external liquidity and international investment position, average government debt burden and fiscal & monetary flexibility.