Rocks, Hard Places, Devils and the Deep Blue Sea…

By Michael Rudon Jr.


At a public gathering where he endorsed UDP Chairman Patrick Faber in his run at becoming First Deputy Leader of the Party, former Prime Minister and former leader of the UDP Manuel Esquivel stated that Prime Minister Dean Barrow is currently facing more trials and is under more pressure than any other leader of the country before him.

Indeed there is much happening at this time, created, fostered and exacerbated by internal and external factors, and undoubtedly one of the most critical of those pressing issues is the re-structuring and renegotiation of the much discussed Super-bond.

And that issue, already intense in its own right, takes on much more depth and menace when juxtaposed with another issue which has taken center stage – the request by teachers and public officers for a salary adjustment. Actually, the problem might be that it has gone way past the point of being a request. After thousands of teachers marched in a peaceful but very vocal protest in Belmopan Tuesday, it is clear that the request is more of a demand.

But back to the dilemma, and dilemma it is. For context and clarity a brief chronological view of the events might be useful.

On December 4, 2012, a press release was issued by the Coordinating Committee of Belize Bondholders. In that release, A.J. Mediratta, representing Greylock Capital Management LLC and acting as Co-Chair of the Committee, stated – “We want to urge GOB to reconsider the proposals from the Committee, and also want to be clear that debt relief at the levels sought by the GOB could only be justified with more tangible and objective signs of the country’s stated distress, such as the acceptance of an IMF program.”

The release closes by stating that the Committee AND an ad-hoc Group consisting of 20 institutional members represent over $338 million of the $544 million of bonds outstanding. That works out to a little over 62%.

Mediratta, speaking at press conference at Biltmore Plaza Hotel last week, explained that the Coordinating Committee alone represents close to $200 million of those bonds; however, the ad hoc committee’s numbers are added in, because they have agreed, in writing, to go along with the coordinating committee’s direction.

Just three weeks after that release by the Committee, the nation was presented with an unexpected Christmas gift, or more realistically, a Christmas promise of a gift to come. In a press conference on December 21, Prime Minister Dean Barrow said: “Belize has reached an agreement, in principle, with its bond holders over the re-structuring of the super bond. This agreement is comprehensive, it is sustainable and it will provide well in excess of 150 million dollars in relief to Belize.” (Channel 7 newscast, December 21, 2012)

Of critical note is that the ‘hundreds of millions’ dollar deal was allegedly reached by the simple means of a phone call between Prime Minister Dean Barrow and Co-chair of the Committee A.J. Mediratta. Remember, that Committee represented by Mediratta accounts for approximately half the bond-holders, so it appears that when the Prime Minister stated that an agreement was reached with ‘its bondholders,’ that might have been over-reaching to some extent.

And then, exactly a month after the Christmas promise, A.J. Mediratta came to town. And while he did not come bearing the gift, he came bearing goodwill and a message that the gift was coming, and it might be bigger than first expected. In another press conference, Prime Minister Dean Barrow stated – “Those terms will result by all calculations in a savings in cash flow relief for 2012 of US$11 million. We are looking at cash flow savings in 2013 of US$33 million. We are looking at cash flow savings during the 5-year period 2013-2017 of US$118 million, and we are looking at cash flow savings during the 10-year period 2013`-2022 of US$247 million.”

But hold off on spending the money just yet. During last Monday’s press conference we were reminded that ‘there’s always the possibility of holdouts.’

And here’s something that no one could afford to forget: FOR THE DEAL TO GO THROUGH, 75% OF BONDHOLDERS NEED TO SIGN ON.

So here we are with super-bond crisis on top of salary adjustment crisis, and with the most unfortunate timing, to say the least.

Just a little over a week before the protest by teachers, Prime Minister Barrow made his dilemma clear in an interview: “For at this juncture, the teachers to be demanding a 30 percent increase, sends completely the wrong signal, compounds the difficulties that we are experiencing in trying to nail down a restructuring deal.” (Channel 5 newscast, January 18, 2013)

On one hand, there are bondholders who MUST be convinced that the nation is in a state of financial distress. It undoubtedly took some doing to get to this point, since there is no IMF intervention and for reasons of internal politics, the Prime Minister is forced to periodically give news of an economy which is growing and hopeful. Good for internal politics, bad for sending a message of distress.

On the other hand there are the teachers and public officers who want a raise. They point to those positive figures on economic growth released by the Prime Minister (remember internal politicking) and say that the government absolutely CAN and MUST give them what they ask.

If the Prime Minister somehow finds the money to offer to the teachers and public officers, or even hints that he will be able to find the money in the near future, it will likely derail the entire super-bond restructuring exercise.

On Friday Prime Minister Barrow will meet with union leaders in Belmopan. What comes out of that meeting will say much about the caliber, fortitude and wisdom of the Prime Minister. But even more important than that – what comes out of that meeting will have a great impact on the direction of the nation in the weeks and months ahead!

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