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Nov 30, 2012

Prime Minister explains why government rejected bondholders plan

Dean Barrow

Belize’s super bond debt stands close to five hundred and fifty million US dollars. The government’s initial proposal was rejected by bondholders but the committee representing bondholders and the government continued negotiations that concluded in a counter offer by the bondholders. The rejection of the terms proposed by the bondholders was posted on the Central Bank of Belize’s website on Thursday morning. Following the meeting of the House of Representatives this morning, Prime Minister Dean Barrow explained to reporters that the two scenarios were far from acceptable because they both reverted to the eight point five percent interest that the country had already stated it could not afford.

 

Prime Minister Dean Barrow

“Short term relief, but certainly not sustainable. When you look at the sort of ultimate output of their proposal, when the experts calculate the sort of net present value, which is the yard stick that they use, it didn’t offer any material improvement over the current superbond terms. One wants to be careful to try and explain it in a way that the lay person can understand and perhaps that’s the best manner of putting it. The relief, as you say, would have been extremely limited, extremely short term, therefore, extremely temporary. What we are counter proposing, if accepted or if anything close to what we are counter proposing is accepted, we would have the longer term sustainable relief that we’ve been seeking from the start. Instead of using the midpoint between the claimants valuation and the NERA valuation, indeed we’ve said lets treat it as operating at the NERA level.  That ought to offer some additional comfort to the bondholders because it then means that we have a little more space and when you input that sort of ingredient into the equation, it allows us to in fact make this advance over the position we had originally adopted.  So it comes out in terms of the output less favorable to us than our original proposal, more favorable to the bondholders than our original proposal, but certainly still a great way removed from what the bondholders offered which, of course, we’ve rejected. There must be, on both sides, a willingness to be flexible. One doesn’t make a counter proposal, as we have done, just for the sake of making a counter proposal. In other words, it is not—we don’t see it as merely one more bargaining chip. Serious work has gone into the counter proposal and the counter proposal is, in the revised circumstances, we think absolutely justified. If the counter proposal is, as it is, driven by actual reality, driven by numbers, driven by projections; then you know that it’s not a proposal from which we would be prepared to depart easily, but again, if it represents the optimum result that we are looking for in the new circumstances, we will concede that as a consequence of negotiations, there may be some little room for additional maneuvering.”

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8 Responses for “Prime Minister explains why government rejected bondholders plan”

  1. Anthony says:

    PM BARROW, STOP MAKING UP EXCUSES AND PAY OUR DEBTS.

    WE DEMAND THAT JULIUS ESPAT AND THE PAC (PUBLIC ACCOUNTS COMMITTEE) DIG UP ALL THE CORRUPTION OF THIS ADMINISTRATION, INCLUDING THE MILLIONS PAID TO BARROW’S FAMILY MEMBERS.

  2. Bear says:

    Actually, the bondholders don’t need to be flexible. They have a contract and the law on their side.

    We need experienced, professional sovereign debt negotiators who have been in these situations before, who can package a “win-win” proposal that the bondholders might agree to.

    I think our PM and our whole team are in over their head, since they have never been in the situation before, let alone succeeded in it. Too much is at stake for our future — poverty or prosperity is at stake for the entire nation.

  3. Belizean says:

    I hope we can meet a agreement for the future of this country. We as a small nation need to not just be making payments to bills we owe. We need accountability, so our children can see why they may be have to keep paying these bills. I am taking about nation building, roads, Streets, drains, utilites. And the ever elusive free primary and secondery education.

  4. Rod says:

    Lone lies spews out of this mans mouth when will he ever tell the truth.

  5. Buju says:

    It is funny but serious at the same time.

    Sometimes i listen to the news and I swear think that the opposition wants the country to fail.

    The only way we will move forward is if we work together for a common goal now matter who is in power. If we keep fighting among ourselves only the poorer people of this country will suffer.
    Lets start the change by doing it ourselves and stop playing politics in everything we do!

    Unity is power and POWER is the people!
    As Evan X says :
    Power to the people!

  6. Rules Bound says:

    Belizeans need to start asking why the hell are we paying Mark Espat of Hallmark Services $20,000.00 a month. This investment is a TOTAL WASTE of taxpayer’s money. Waste a time if you ask me.

  7. Come On says:

    Princess margaret drive has been the best street in the city for some 40 years that i can recall, wide good drainage , now with sidewalk. absolutely no need to concrete. if the concrete this then it is clear to all that the concreteing is a HUSSLE. have you noticed that the concrete streets are more narrow. the cement company and the contractor want to save money and reap bigger profits so the make the street more narrow, no drainage works on most of these conctrete streets. this is a HUSSLE and I want the association of engineers to be put to task to give their opinion on the concret strrets, the amounts and size of steel being used, the strength of the mix. come on people talk up.

  8. Storm says:

    @Come on has a good point — these street contracts have all the appearances of a hustle, presumably with invisible official hands in the contractor’s pocket [and a diversion of taxpayer money from other needs, like garbage collection].

    These days every public contract should have an outside auditor watching every dollar.

    The treasury is always too empty to pay bills, where has the money gone?

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