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Aug 14, 2012

But bond coupon was in the budget

Dean Barrow

The announcement is stunning because in the presentation of the budget for the 2012/2013 budget in July, the Prime Minister specifically and categorically stated that “For the fiscal year 2012/2013, we have budgeted overall debt service payments at Belize two hundred point seven million dollars, of which approximately one hundred and seventy-four point five million is related to external debts… we are budgeting the interest payable under the current terms of the Superbond, some ninety-three million Belize dollars… as things now stand, debt service payments for this fiscal year will be twenty-nine percent above the level for fiscal year 2011/2012.” In June, PM Barrow told the media that the message to bondholders is that the country can’t pay, however in July he said that though it was budgeted, there was a dilemma since he didn’t expect that we would have to pay the full premium.

 

Dean Barrow [File: Jun 14, 2012]

“In other words, what we have to do is to make coherent and compelling argument to say to the bondholders that we absolutely can’t pay; we will not pay because we can’t pay. And that case is made by advancing the numbers, the facts, the data; analyzing those data and facts and numbers. I have had a look at it, I have indicated to the team leader that I am happy with it and that is what is going to be set to the bondholders; and shortly thereafter, we will begin the actual face to face negotiating process with as many of the bondholders as we can physically interact with.”

 

[File:  Jul 4, 2012]

“I really can’t say. We obviously are faced with a dilemma. If we didn’t put it in the budget; if there was not a line for it, then it means we would have been signaling that we have no intention of paying. You know that the engagement of the bondholders, we conceal of it as being as far as possible amicable or until it reaches the point where it isn’t. And so I think that would have sent completely the wrong signal. But we did have a footnote and I did make clear that we don’t expect to pay this because we are confident that relief there must be. As I suggested in the description that I’m sure you would not have missed and no doubt would not have approved of; this is an existential matter for us isn’t it. So there it is. We had to budget for it, but we have the explanatory note. I fully expect that by the time the payment date rolls around we would have made great progress as a consequence of the interaction with the bondholders and we would see our way at that juncture. I really don’t think I can go beyond that now.”

 

Late this evening, a press release entitled “GOB defaults on bond coupon payment” was sent from the Peoples United Party (P.U.P.). The P.U.P. called on the Prime Minister and Minister of Finance to immediately address and inform the Nation on the specific reasons for the decision and the consequences and implications expected to follow. The release went on to say that the Leader of the Opposition was neither consulted on, or informed of this very critical decision which has very serious implications for Belize’s economy and development. For clarity, the coupon payment which is due on Monday, also has a thirty day grace period that ends on September nineteenth, after which there could be a fault on the coupon payment. If that should happen, locally a default could be interpreted as a hardball stance in the country’s negotiation, but for the foreign creditors, it may be viewed as a clear defiance that could make Belize’s junk graded bonds less stable on the international financial markets. 

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17 Responses for “But bond coupon was in the budget”

  1. Storm says:

    Figures don’t lie, but liars can figure. Sounds like the double-talk of every conman who ever stained the Jewel.

    It was budgeted, now it’s gone. WHERE DID IT GO? WHO HAS IT? WHY IS THE COOKIE JAR EMPTY?

    Personally, I think Hon.Barrow should abdicate now and never return from Miami. We’ll do better without him. We have a country sunken by debt to get afloat again, and he’s an anchor.

  2. it's just that simple says:

    Could start taxing murderers for every victim they kill or injure.
    Only offer volume discounts to preferred customers,
    like gang leaders or government officials; no one else.

    Same for thieves, get a percentage of their booty, to pay off debt, nothing toward corruption.
    We need to tighten belts, no corruption during regular business hours.

  3. Rod says:

    Yes they did have the money before barrow spent the money on his vacation trip to Miami beach for him and his family.

  4. Louis says:

    ” I fully expect that by the time the payment date rolls around we would have made great progress as a consequence of the interaction with the bondholders “.

    Yet again, fiction vs reality.

    In Barrow’s fictional world there would be “great progress” by Aug 20.

    Outside of Barrow’s fantasy world, nothing could be further from the truth. No progress has been made with bondholders.

  5. Ricky Malthus says:

    Mark Espat said that he conceded that a sharp downgrade of GOB’s financial status is likely- but the effect is minimal since, again, Belize does not seek Commercial credit. This is a combination of absurd arrogance, ignorance, and economic stupidity. All governments in the world are big business including the government of Belize. ( This is why we have massive corruption in Belize government-because this is where politicians can enrich themselves and their families overnight by stealing/appropriatinf natural and other resources without accountability.) But Espat is making a colossal , stupendous mistake by stating the foregoing. The truth is any loans from private lenders, bond holders IMF, World Bank, Gov’t to Gov’t loans are essentially commercial loans. And if Belize repay its loans, then the country’s earning power, exchange rates, trade, stability of income and employment, consumption function,assets’ valuation, investments, the crowding out of private investments by government versus private investors, and management and general regulatory climate will be affected tremenduously. So Espat , either you know what you say, and you are treating belizeans like stupids; or you don’t know what you are saying and in that case, you are not competent to restructure the Super Bond or even to have authored it initially.

  6. Uncle Benji says:

    I hope UDP supporting idiots comprehend the magnitude of what’s going on. Picture this scenario:

    You worked forty hours per week in the hope of getting a paycheck. At the end of the week, you are told that you will be paid next week, but keep on working. After three months of this crap, you cannot afford to wait, so you insist on your monies. You are being kicked out of your house for not paying the rent, your wife is sleeping with your best friend to pay the bills, your daughter has become Ms. Cocaine, and now, your boss gives you a paycheck that bounces like an indian rubber ball. You explode………….. (imagine the rest.)

    Belize is on the brink of some very bad things waiting to happen. But you still believe in Ali-Ba-Barrow. Fools rush in where wise ………………..

  7. Uncle Benji says:

    The acoounting books are cooked. Government accountants are either incompetents or fraudsters.

    Hopefully things will get so bad for us Belizeans that it will force us to go Honduran on our government and Ali-BaBarrow.

    In Central America republics like Honduras or Guatemala, the people do not tolerate stupid government administrators. The military would remove them from office in a heartbeat. It’s call a coup. Maybe, just maybe, we could gather up the ….. to be pro Honduran. Trust me, …………………, Belize might just be a better place.

    Guatemala, Honduras, you got love them.

  8. Louis says:

    Storm, Rod, both of you are absolutely right. If the money was budgeted, where is it now?

  9. Neruda says:

    I for one support the PM’s decision NOT to pay the superbond, especially after I have read the unresearched vitriol that some “writers” have posted. For example, Uncle Benji, would you prefer to live in Guatemala or Honduras, under military dicatotorships where you would not even have the right to express the ignorant and poorly written opinion that you posted? If yes, you are welcome to move to any of these two countries, if either of them would deign to accept you as a resident.
    The relevant question we should be asking is this: Where did that original loan go? What was done with this money (that led to the superbond) by the previous PUP administration? The current government should hold those who were then in power (Musa, Fonseca etc) accountable for this original loan that created the superbond. They (Musa, Fonseca etc) owe the country an explanation and if they cannot or do not want to account for it, then they should be taken to court and charged with treason and grand theft of the government’s resources. As Belizeans, we need to support this government and force it to bring those responsible to justice. Again, where are the ORIGINAL millions of dollars that led to the Superbond? Uncle Benji, in Guatemala or Honduras or El Salvador, these thieves would have already been made to “disappear” or be in jail.

  10. Elgin Martinez says:

    The GOB is runing a ponzi Scheme plain and simple.The Pm must be held accountable,what happen to transparency?

  11. blackberry says:

    Congrats to the PM for stop saying “ I was not aware or I did not know” Now he puts himself in an imaginary world saying “ I fully expect ”

  12. BMNJ says:

    Maybe the monies that was set aside for the loan payment are in suitcases at somebody’s house. Well, maybe inside the homes of the ‘not ordinary people’?

  13. Louis says:

    Neruda, please don’t confuse creditors with Musa.

  14. Rod says:

    Damm another dunce the one on ya now Neruda you are another twit if this corrupt pm and gov. Didnt spent all the money in Miami beach and on their families perhaps they could pay this super bond off do you actually know anything about what this pm and gov. Are doing with our monies you must be living under a rock with aw big dunce hat on your pm and this ya gov. Done thief all the money and spend it tha Miami beach millions have gone towards his ex wife millions have gone towards his present wife and the rest of the millions are in his ministers pocket so please Neruda take off that dunce hat and think fu aw change damm.

  15. Uncle Benji says:

    @Neruda. As a rule, I do do respond to criticism, but I am feeling poignant, thus it’s your lucky day. The English language has always been a challenge for you, and unfortunately it continues to be. So get on your knees, hang your head and prepared to be schooled (not that it will be of much help to you.)

    First and foremost, the way we know life in Belize City, we are about fifty years behind Honduras or Guatemala. I smell your fear already Neruda.

    Secondly you talked about me not doing research before posting. My post are nothing but personal comments. Comments do not require research moron. Oooh, I know your hemmoroids are starting to swell……… try Prepration H.

    Speaking of Preparation H, reread your post Neruda. In your last sentence, you are saying the same thing I said in my post. Thus you agree with me. If you are female and not scary to look at, ………………

  16. Think-About-it says:

    Neruda, not paying the superbond is not only irresponsible, it will hurt us as Belizeans going foward. You can contest the reasons for the debt, but that’s not the bondholder’s problem, all they did was lend money in good faith to a democratically elected government. The UDP campaigned on the superbond among other things in 2008 and won, so a political disagreement was solved at the polls as it should have. Musa / Fonseca paid the price at the polls. Since then, the UDP was supposed to govern competently and responsibly and solve the problem they were elected to solve, but instead they accrued another half billion dollars in debt for two utility companies. Are you now happier with your phone service and electricity service? Was it worth half a billion dollars?

  17. Seletar says:

    I was in Nicaragua several times during the 80′s, when they had big financial problems. What I remember most was that the poor workers got paid on Friday, and every Monday, the government devalued the currency. That forced the workers to spend all their money immediately so it would not be in their hands when it was devalued.

    Is the Jewel heading off that cliff? The government will fall for sure if that happens, but will the people recover? It will take a while.

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