After all the dire predictions over what the rollover of the Superbond might do the economy of Belize, March 8 rolled around and the predictions showed themselves to be greatly exaggerated.
Belize will not have to face a devaluation. Belize will not be subjected to IMF control. Belize will not be raising her General SalesTax. We will have a ten year grace period from the heavy stuff to put our house in order and build up our reserves.
We will have a shorter time frame ( four years less) to pay back the debt, and at lower interest rates (4.9375%), which is a 27% reduction on the interest payments under previous terms. The amortization payments are scheduled to begin in 2030 through to 2034 but there has been no reduction on the principal amount. From 2019 to 2030 Belize will enjoy cash flow savings of some BZ $605 million.
It seems too good to be true! But there is a flip side to this coin, and Belizeans will have to roll up their sleeves and go to work if we are to get out of this mess.
Under the new dispensation Belize will have to pay off the full principal in five equal amounts totaling some US $109.4 million annually so that by the year 2034, Belize should be free of Superbond debt. These payments will begin in February 2030 and must be completed by February 20, 2034.
The question of interest is important. Starting now and continuing for the next 17 years, Belize will be paying a flat interest of 4.9375%, a slightly lower rate than the previous 5% which was scheduled to step up to 6.767% in August.
To meet these goals Belize will need to make gains in her GDP amounting to 2 % growth starting next year and continuing for at least three years.
There are built- in penalties if Belize should fail to meet any payment, and Belize has agreed to consult with the International Monetary Fund if any problem should arise.
On balance it appears that Belize should be able meet its payment in any given year without squeezing taxpayers.
With luck, so long as there are no more hurricanes or other natural disasters, this is an achievable goal for Belize.
Reporter’s assessment of the re-negotiated superbond: a brilliant achievement by Belize negotiators from bondholders who have been sympathetic and helpful!