It is a rare event when our Financial Secretary, unobtrusive Joseph Waight, chooses to make a public statement.
This week he broke with tradition and cautioned that Belize has to begin to make plans for how she is going to meet higher Superbond interest payments, when these become due four years from now, in 2019.
Belize has been able to pay the 5 percent interest of the super bond debt without going into default. But in 2019 the interest rate will rise from 5 percent to 6.767 percent. This translates to Belize paying some $9.3 million more a year in interest than we are paying today.
Belize’s super bond debt stands at a little more than one billion Belize dollars today. We have a little more than 20 years to pay it off. By our calculation we will need to find some $50 million Belize a year to pay off the principal , plus an additional 50 million to meet the yearly interest. . This interest will jump to 6.76 million when the higher interest kicks in three and a half years from now.
We have to, at all costs, avoid the type of roll-over which got us into this mess in the first place.Financial Secretary Joseph Waight explained how it happened:
“We used to borrow to repay, capitalize the interest, (and) add the interest in. Therefore, if we look at the components of the first bond, a lot of it was interest, because we were deferring payment. … In effect it was not money spent on tangible things.”
It comes as a shocking revelation to many that while the previous government was accommodating its friends with generous concessions and pretending that all was well, it was secretly defaulting on its debt obligations and rolling over the interest to postpone the inevitable day of reckoning.