$100 million in savings! GOB restructures Superbond

By Benjamin Flowers
Staff Reporter

Prime Minister Dean Barrow announced this week, that his government has successfully renegotiated the 2034 US dollar bond (Superbond) which will save Belize an estimated $100 million.

Barrow, accompanied by Financial Secretary Joseph Waight, Attorney General Michael Peyrefitte, and Economic Ambassador Mark Espat, held a press conference on Wednesday, explaining the terms of the restructured bond. Barrow explained that there was a 27 percent reduction in the interest rate, but no reduction on the principal amount.
Barrow hailed the restructuring as a success, because under the terms, GOB will not have to implement Public Sector Wage Freezes, or retrench public officers, and said GOB would not roll back the income tax threshold. Barrow added that the 3 percent salary increases for teachers and public officers would be paid at the beginning of the next fiscal year, along with the interest the GOB had agreed on with the unions.

Barrow also said that Belize has not committed to enrolling in any International Monetary Fund (IMF) Standby program, and that there would be no increase in business taxes. Following Barrow’s remarks, Waight said that there would be no raise in the General Sales Tax.

The restructuring effectively saved Belize from defaulting on its US $13 million coupon payment, which was due on February 20. GOB had a 30-day window to make the payment, or it would have to pay out an additional US $59 million to bondholders.
Those new terms included an increase in the interest rate that GOB was willing to pay under the terms of its original consent solicitation, from 4 percent to 4.9375 percent. The new terms also came with an accelerated maturity date, of 2034 instead of 2038.

Under the amended principal amortization schedule, GOB will make five equal annual payouts, beginning on February 20, 2030 and ending on February 20, 2034, as opposed to the proposal for three equal annual installments commencing on February 20, 2036 and ending on February 20, 2038 that GOB had originally proposed.
As a part of its assurances to the bondholders, GOB has committed to ensure a primary surplus equal to at least two percent of GDP in each of the fiscal years 2018/19, 2019/20 and 2020/21.

In the event GOB falls short of the 2 percent targets for any reason, it has committed to making quarterly interest payments for the next year, following the time of default, instead of paying out semi-annually. GOB also agreed to seek assistance from the International Monetary Fund (IMF), to understand why the shortfall happened, and ask for recommendations to meet and keep meeting the 2 percent target. The IMF will make those recommendations public.
People’s United Party Leader John Briceño, held a press conference on Thursday, effectively disagreeing with Barrow that the restructuring was a win for the Belizean people.

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