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Jul 11, 2011

Oppenheimer Report looks at debt and nationalizations

carl ross

A new report on the financial status of Belize has been written by a well known Financial Advisor of Oppenheimer and Company Incorporated. Carl Ross, the Managing Director of Investments at Oppenheimer has just concluded research on the ongoing fiscal strength of the economy in light of recent nationalizations that have sent the national foreign debt to soaring heights. His findings were released today. According to the first section of the report called the Fact Pattern is Negative, it says that: “Recent events in Belize appear unfavorable towards private enterprise, the rule of law and contracts, and private property rights.” In a section called Implications and Views from the Trip, Ross says that small countries like Belize need as much foreign investment as it can muster since local capital markets have a shallow pool to find capital. That is highlighted by reports that only a small percent of shares in Telemedia was locally sold since it was first nationalized. The report says that recent nationalizations will mean costly litigation and will “continue to plague Belize and stretch its already thin ranks of senior civil servants. Uncertainty hangs over the government’s debt sustainability because of the contingent liability of the nationalizations.” Ross estimates that the B.E.L. and Telemedia acquisitions can go upwards of twenty percent of the country’s’ G.D.P., in a situation where the debt to G.D.P. ratio is already high. The additional cost of litigation by hiring private and expensive attorneys also add millions to the cost since the Attorney General’s Office, it appears, can’t handle the cases.  Ross says that 2012-2013 will be tough for Belizeans as the next payment of the Super bond will rise to eight point five percent which will add about one percent of G.D.P. to the government’s debt which stretches even further when coupled with the nationalizations.  And for now, the government does not have a plan on how to finance the increased interest bill. Visit channel5belize.com for a link to the full report.

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6 Responses for “Oppenheimer Report looks at debt and nationalizations”

  1. Joe Devine says:

    That is his opinion of course. Don’t we have experts at the Ministry of Finance, Economic Development and Central Bank who have their own opinion on the matter?

  2. Roy Yates says:

    I know personally of a USD$1 Billion dollars economic package that was contemplated for Belize, is put on hold as a direct result of the BEL, BTL nationalizations. Can you imagin what this would have done for the Belize economy? So tighten your belts folks. No one in their right mind will invest their hard earned money and have it taken away from them by government just because they have the power to write something on a piece of paper and call it law to allow theft in the apparance of ligitimacy.

  3. Earl Grey says:

    @Roy…. You’re blowing smoke.

    The US cannot afford to be giving away money like they used to. The USA “maxed out” their credit cards and are still looking to borrow more money to keep themselves afloat. They have 2.5 wars going and the dollar is falling. With the US unemployment at 20% America needs all its money to just survive. You may have been misinformed.

    WE ARE STILL DOING BETTER THAN GREECE…….for now!!!!

  4. Roy Yates says:

    Earl Grey, I don’t make empty statement just to be heard. You obviously have no clue how the global financial system really function. Do you believe that only the US Government make funds available to countries?. Do you believe that its the US government that pay for all those mega hotel resourts around the world? Doing better than Greece is a joke. Google hotel resourts around the world and see the king of complex that exist, and find out how much of US government money is involve. You are a typical Belizeans that I know so well, full of ego, proud on nothing. Typical of the government of the day.

    In my business I know of private citizens that can write off the US debt if they would decide to do so.There are an abundant of money in the private sector around the world that does not belong to governments. Go to the SWIFT money system on the Internet that moves trillions of dollars daily and it may educate you a little.

  5. Liberty and Freedom says:

    Be careful Belizean citizens. When a country disregards the rule of law, discourages private enterprise and ignores private property rights the world will look at this country as a bad investment, not only in foreign aid but for tourism and as a relocation paradise. You can have all the natural beauty and friendliness of the people, however, when a repressive government rears it’s ugly head, foreign aid , tourism and investment walks away. Earl Grey stated that the US cannot afford to give away foreign aid – he is correct. They are broke. They now print tons of almost worthless money. Once they raise their debt ceiling, inflation will increase dramatically. Have you noticed the price of food and gasoline lately?

    It takes each Belizean citizen to fix the problems by:

    * a smaller government
    * a balanced budget
    * and a strong economy

    God Bless Beautiful Belize and It’s Citizens

  6. Ervin M Perez says:

    From the article Mr. Ross is either a naive, on the take or a third class investment analyst. He myopically looked at the contingent liabilities that the government would assumed by taking majority control of these legislated utility monopolies but failed horribly in factoring the future revenues generated from the operations of these businesses. Revenues that would now flow back to the GOB as the majority owner. What Mr. Ross should have looked at is the net present value of the cash flows from the actions of the GOB, and compare these with the pre net present value of GOB contingent liabilities for BEL via Letters of Guarantee, Guarantees for Caribbean Development Bank, IADB loans et al. at no cost. Contingent liabilities that BEL’s bungling of their operation was about to get called by its creditors. No private company’s managerial incompetence should be subsidized on the backs of tax payers for free.

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