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Aug 9, 2011

S&P downgrade of US credit rating is also expected to affect Belize

Israel Marin

The lowering of S&P credit ratings on larger economies such as Italy, Greece, Spain and most notably the United States have caused havoc; in fact in the US, it created panic and the worst plunge in years in the stock market.  That is expected to have immense far-reaching impact.  The ripple effect will undoubtedly be felt locally where Belize’s economy is dependent upon that of the United States, says businessman Israel Marin.

Isani Cayetano

“Interestingly, the United States was also recently downgraded as well.  Is there any correlation in your mind between what has taken place with us as a nation and what has recently occurred with the United States seeing as though we are heavily reliant upon what happens in the United States?”

Israel Marin, Vice President, BCCI

“I think the rating agencies use the same parameters to rate whatever country.  Belize, for example, the rating that we got was based on the amount of debt that we have.  So I think we’re at almost eighty percent GDP.  With the bond that we have, the super bond as it is known out there.  But when you go out and you say well I’m going to acquire B.E.L. and there’s another hundred, hundred and ten million dollars and there’s the B.T.L. issue which we yet have not quantified what is it that we’re going to be paying.  So when the rating agency looks at that and says can Belize afford to be paying that in an economic situation where there is very small economic growth then the answer is no.  So they will rate you and say well the ability for Belize to pay is questionable.  Maybe they can pay it if there’s an economic growth or if government stops fiscal spending.  The U.S. got downgraded because it owes a whole lot of money and the economy is not performing the way that it should so the rating agency downgraded it one notch but it means a lot to the U.S.  And being that the U.S. is the biggest economy in the world it affects the entire world because if the U.S. has to be paying more interest or the interest rate in the U.S. goes up that means the interest rate throughout the world will eventually start going up.  What else does it mean?  It means that people become fearful and you saw that on the stock market a couple days ago. Does it remind you like if we’re talking about the U.S. or we’re talking about Belize?  It’s the same thing.  The financial sector or the financial woes of a country are the same wherever you go, it’s just that they’re talking trillions and we’re talking millions but it’s the same problems we’re having.”

In the one on one interview, Marin, the Vice President of the Chamber of Commerce, also gave his perspective on the oil industry. We’ll have his views on Wednesday’s newscast.

Viewers please note: This Internet newscast is a verbatim transcript of our evening television newscast. Where speakers use Kriol, we attempt to faithfully reproduce the quotes using a standard spelling system.

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2 Responses for “S&P downgrade of US credit rating is also expected to affect Belize”

  1. Lucas says:

    First, the biggest economy is CHINA. Second, Independent Economists have criticized S&P as not knowing how they are earning their food. According to these economists, a country’s rating is based on it’s ability to pay it’s bill something the U.S. has aways done and is capable and able to continue to do. It is widely believed that what S&P did, is pure politics. By the way, today the market did very good.

  2. bzn2dabone says:

    I agree with you, Lucas, the US was also downgraded and economists are questioning S&P’s ability and criteria in rating a country since the US markets have began to improve even when S&P was predicting gloom and doom. That begs the question whether Belize’s rating aptly applies to us…hmmm.

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