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Mar 8, 2017

Belize Will Not Give Up Oil and Utilities; Resists Full I.M.F. Program

Dean Barrow

Turning back to the Super Bond, the proposed sale of shares in B.T.L. and B.E.L. also caught the eyes of bondholders during the renegotiation process.  According to PM Barrow, creditors wanted in on the profits by including those proceeds in the Super Bond.  It is a move that was similar to a request made in 2013, when bondholders requested oil recovery certificates from the export of crude.  They also insisted on the involvement of the International Monetary Fund, that Belize also joins an I.M.F. program.

 

Prime Minister Dean Barrow

“We did not issue any value added instruments such as oil recovery certificates.  When you negotiate with these people that’s the first thing they want, as has happened again on this occasion.  “Well, we understand that you are selling some shares in B.T.L. and B.E.L. to S.S.B.   We want the money from that sale to go into dealing with the Super Bond.”  The answer is no, we can’t do it.  And likewise on the first occasion, they wanted oil recovery certificates.  In other words, depending on how much oil you were exporting, a portion had to go to them.  We were able to head off all that sort of thing.  So what we negotiated was a final deal at a net present value of fifty-six point seven-five cents on each Super Bond dollar or a reduction in net present value terms of over forty-three percent.  What is net present value?  It’s the way these people calculate their current flows as against the investment originally made and they look at when the investment will ultimately be liquidated in full and they want to be sure that there is no loss between what they’re earning as a consequence of the investment of the loans that they made, what they are earning as they go along and where they will come out at the end of the process when the loan would have been, as it were, liquidated.  I want to be clear that in terms of that first Super Bond renegotiation, we resisted the insistence of the then creditor committee that we enter into an I.M.F. program and we have so resisted again.”

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