Country UpdateJanuary 18, 2021
- Costa Rica
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- Dominican Republic
- El Salvador
- Ivory Coast
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Market Pricesbelize sovereign
|BELIZE 4.9375 02/20/34||45.75||46.25||13.45||1447||+2||2034-02-20|
Market Mapbelize sovereign
Scholarly research shows that domestic debt grew as a share of total debt in EMs during the first decade of the century, but defaults on domestic creditors still decreased significantly.
A default to domestic investors usually carries a higher political and economic cost than a default to foreign investors.
Domestic debt is usually concentrated in local financial institutions, such as banks, insurance companies and pension funds.
Standstills have been the talk of the town since March, but only Ecuador, Suriname and Belize have used them so far.
We look at the similarities and differences between the three cases in order to understand what each country intends to do with them.
BUY Ecuador: Restructuring negotiations are already very advanced and we think the bonds will have significant upside after a deal is closed.
SELL Belize: There is willingness to continue paying after the standstill, but their repayment record speaks for itself.
HOLD Suriname: The outgoing administration negotiated a standstill on their 2023 bond, but we don’t kno...
The process of defaulting and restructuring usually involves a sharp spike in yields just before the credit event.
Then yields lose their economic meaning and only prices make sense, as they turn into a summary of market expectations for the recovery values.
This period ends when an exchange takes place and the old bonds are replaced by new bonds with a given exit yield
One year after the agreement, yields fall on average 4.1 pp from 12.6% to 8.5%.
This shows that there is potential to pick up price gains by entering a credit just after restructuring, and waiting for spread compression during the first year.
Low interest rates and the hunt for yields of the last decade has left broad swaths of EMs overindebted and vulnerable.
The first half of 2020 is not yet over and we already have 3 countries in default.
The recent record of most defaults on Eurobonds on a single year was 4 in 2017, so 2020 is not far from setting new records.
Eurobond restructuring processes are usually among the most complicated due to the variety of holders and the different interests they represent.
Suriname, Zambia, Belize, Sri Lanka and Angola are in the most risk to engross the default-statistic for the year.
As of May 22, 8 countries have at least one USD-denominated sovereign bond trading below 50 cents on the dollar.
The Covid-19 crisis could lead to a new wave of sovereign defaults from prolonged confinements.
We discuss the worst debt restructuring events so far this century.
Argentina 2005 remains at the forefront of these events if we exclude the exceptional cases of countries at war or leaving them.
The countries with the most compromised solvencies that could generate problems with their debt are Angola and somewhat behind, Sri Lanka, El Salvador, Egypt and Pakistan.
Adverse court rulings, progressive weakening of the financial system and the passage of three hurricanes between 2007 and 2016, slowed GDP growth and widened the current account. As a consequence, Belize has carried out three debt restructurings: on 2006-07, 2012-13 and 2016-17.
The last restructuring carried out in 2016-2017 effectively brought liquidity relief to the country, although the Debt to GDP ratio remained almost unchanged as there was no nominal haircut. The difference with respect to the two previous restructurings was the execution of measures aimed at greater fiscal consolidation – at that time the goal was to re...
On November 27, the Statistical Institute (SIB) published an update of the macroeconomics figures corresponding to October and the third quarter of 2019 (3Q19).
The institute detailed in its monthly report that year-on-year inflation stood at -0.1%, compared to October 2018; similarly, year-to-date inflation in 2019 stood at 0.2%. On the other hand, Belize's GDP increased by 1.8% in 3Q19, in year-on-year terms, despite the negative performance of the tourism sector.
Meanwhile, according to the SIB Labor Force Survey published on the same day – which is published in a bi-annual basis – the unemployment rate ...
Since November 16, Belize’s government made an adjustment in the prices of liquefied petroleum gas (LPG), linking prices to consumption. Those users who consume less than 300 gallons, would paid on average BZD 9 cents more; for those buying up to 2000 gallons the increase was BZD 57 cents and for a consumption level above 2000 gallons, the rise was of BZD 42 cents.
LPG is widely consumed in Belize, especially by low-income households. Inflation is particularly sensitive to fuel increases, so we expect a slightly rise, although it will remain at its average levels (0% - 0.3%).
Similarly, the price of kerosene had a slight ...
As we indicated in our previous report, the European Union dropped Belize from its tax haven “black list” on Friday, November 8. This list includes all countries that have unfair or less transparent tax regimes.
According to the council, Belize was moved from the blacklist to a gray list, and to be white-listed, the country's authorities should address the issue of its foreign source income exemption regime. The country should address the issue of its foreign source income exemption regime by end 2019.
The Belizean government asserts that it will continue its commitment to EU representatives as well as foreign f...
The European Union (EU) plans to exclude Belize from the black list of tax havens on November 8, since the country promised to make the necessary adjustments to curb tax evasion. According to Bloomberg, the removal of the country from the blacklist follows the submission to the Parliament of a tax legislation revision, known as the "International Business Law," made by the Executive.
However, the document quoted by Bloomberg indicates that Belize will remain on the gray list until its “commitment to amend or abolish the harmful characteristics of its income exemption regime from foreign sources” is completed.
On October 7, the IMF published a statement that includes the first impressions of the technical team that visited the country for the preparation of the Article IV consultation. The agency highlighted the 3.2% GDP expansion in 2018 and projects a 4% growth for the first quarter of 2019 (1Q19).
However, the Fund warned that recent data reflects a slowdown in economic activity, given a slight contraction in 2Q19 (-0.8%) due to a severe drought. The IMF projects a 1.5% growth for 2019.
The IMF pointed out the possibility of a weaker growth in US economy affecting tourism, as the main risk the country is facing. Other risks are hi...
The main meteorological research institute of the region (CIMH), reported on October 1st that, although there is less likelihood of a short-term drought, there are greater chances that a long-term drought will occur by year-end.
Previously, on September 19, the government held a press conference with the Agriculture Ministry, the Banking Association and the Central Bank. The effect of drought not only directly affects the performance of national crops but will also affect the availability of food, so the price of food will increase. So far, these climatic conditions have damaged rice, corn, and citrus fruits crops along with livestoc...
Since 1976, Belize has used a fixed exchange rate system, which set at a parity of two Belizean dollars (BZD) to one US dollar (USD). This policy has been relatively successful in the last two decades, as long-term inflation rates have remained low.
A significant deficiency in the country’s CPI methodology is that prices for the full set of categories within the index are only compiled quarterly (in February, May, August and November). The index for the remaining months is based only on the variation of food and fuel prices, which together account for only 33.1% of the full CPI.
Belize is und...
On July 29, the most recent newsletter of the Caribbean Climate Outlook Forum (CariCOF) was published. It indicates that although recent rains in the Caribbean may continue, there is still a risk of drought in the short term for certain areas of Belize, especially the Northeast, which would harm agricultural production and small rivers.
Previously, in July of this year, the Standardized Precipitation Index was calculated - used to provide early warnings of prolonged droughts - and it had been determined that long-term drought was evolving in Cayo district, where Orange Walk is located.
CariCOF warned that most of Belize must re...
On Monday, July 15 the Belize Tourism Board (BTB) published tourism statistics of the first half of the year . In its technical report it is noted that during the second quarter of 2019, the number of tourists who entered the country increased 6%compared to the same peiriodo of last year.
So far, 286,576 visitors have experienced the tourism alternatives offered by the country. But not all are good news. On June 23, the murder of a cardiologist from the United States along with his travel guide during a fishing expedition was known, this news shook the country.
Although the fateful incident occurred at the end of June, BT...
After having postponed the consultative referendum on two occasions, the Belizeans finally approved to take the territorial dispute they have with Guatemala to the International Court of Justice (ICJ), in The Hague, and that it is this body that finds a solution. Although Guatemala recognized the independence of Belize in the early 1990s, it never accepted the borders and continues to claim some 11,000 square kilometers of the small country that is approximately half of the territory.
On Sunday, June 9, a statement was released by the Belizean representative in which he explained that the document on the territorial, insular and mari...
A few days after the publication of our last report, it was learned that the Belizean court of justice finally suspended the referendum that was to be held on April 10, in which it would be consulted only if the citizens agreed or disagreed that the territorial dispute that exists between Belize and Guatemala, will be taken to the instances of the CIJ in The Hague and it was said entity that resolved the conflict.
However, earlier this week the Prime Minister, Dean Barrow, under the faculty of the Governor General of Belize, issued a referendum mandate setting the elections for May 8 incoming.
The Guatemalan president, Jimmy Mo...
The referendum will be held next April 10, in which the Belizeans will be consulted if they agree with the International Court of Justice being the entity that makes the decisions regarding the border disputes that have been maintained with Guatemala for many years. However, in the course of this week several legal processes have been developed that could lead to the postponement of the electoral elections.
On Wednesday, members of the opposition party belonging to the United People's Party (PUP) challenged the legality of how the referendum will be processed before the Supreme Court of Belize. The hearing concluded with the ruli...
Last week, at a meeting chaired by the EU's finance and economy ministers, it was announced that Belize, along with nine other countries, is on the list of countries qualified as "non-cooperative on taxes". Belize, Aruba, Barbados, Bermuda, Dominica, Fiji, Marshall Islands, Oman, Vanuatu and the United Arab Emirates had until the end of December last year to comply with the EU tax provisions or at least demonstrate a minimum commitment to comply with the requirements to avoid this positioning.
Almost immediately, the Belizean government responded to the press release issued by the EU claiming that they reached an "...
The European Code of Conduct Group (CCG), informed Belize along with other financial jurisdictions last week, that they should take measures to update the country's preferential tax measures, otherwise they would be exposed to the risk of being blacklisted. of transactions.
Finance Secretary Joseph Waight told national media that he has contacted the government and is already taking steps to prevent the country from being blacklisted.
Belize, together with Barbados, Curacao, Mauritius, Saint Lucia and the Seychelles, was asked to commit to replacing "harmful" tax practices and to seek alternatives to avoid being i...
At the end of last month, the Belmopan executive issued a statement after the weekly meeting of the government cabinet, noting that the ministers "unanimously reaffirmed their position in favor of the 'yes' vote in the April 10 referendum." which, he says, "is the correct decision for Belize to put an end forever to the unfounded claim of Guatemala."
"All members of the Cabinet are now fully convinced that Belize should take this matter to the International Court of Justice and put an end to this unfounded claim once and for all for the full sovereignty and territorial integrity of Belize," the s...
2019 Belize begins with the signing of the multilateral agreement to implement measures related to the tax treaty to prevent basic erosion and the change of profits, also known as the multilateral instrument BEPS. This convention allows governments to "close gaps in existing international rules that allow corporate profits to" disappear "or artificially shift to low or zero fiscal environments, where companies have little or no economic activity," reported international communication
The agreement has been hailed as the world's leading instrument for updating bilateral tax treaties and reducing opportunities f...
Earlier in the week it became known that the Dutch Ministry of Finance is expanding its official list of places it considers to be involved in tax evasion by another 16 low-tax jurisdictions, including the islands of Guernsey and Jersey, the Isle of Man and Belize .
All countries on the Dutch list impose a tax on corporate profits of 9% or less, the ministry said in a statement. Additions raise the total on the Dutch blacklist to 21. "By writing our own blacklist, we are again proving that we are serious in our fight against tax evasion," junior tax minister Menno Snel said in a statement. "And this is just one of the ...
In previous reports about this country, we pointed out that its territory was small and that it shares a border with Guatemala. Historically, a dispute has developed in which Guatemala seeks to reclaim around 11,030 m2 of Belize, as well as hundreds of islands and islets, under the allegation that Belize is usurped by that territory.
On April 10, 2019 elections will be held in which the Belizeans must decide if the case of Guatemala's claim on the territory of this country to its final point. In Guatemala they held a similar referendum on April 15 of this year, which found that 95% of voters agree to proceed with the case in The ...
The Foreign Trade Bulletin was published last week by the Belize Institute of Statistics. This report showed that merchandise exports for the period between January and June of this year totaled USD 226.5 million, this figure represents a decrease of 18% compared to the same period of last year.
The SIB explained that four of the five main export products of the country were affected in the first half of 2018, with sugar being the most affected.
The decrease in sales of orange concentrate during the month resulted in a reduction in exports to the European Union and CARICOM, each of which fell by approximately USD 1.3 million co...
Currently, this country is facing a process of debt restructuring. An IMF report suggested that Belize, like some of its neighbors in the Caribbean, might have been more appropriate to opt for a comprehensive package of debt restructuring, rather than the limited trade restructuring that Belize chose.
For years, the IMF has urged Belize to implement stricter austerity measures, including the reduction of the annual "wage bill", which is the largest of all countries in the region. Among other things, the IMF has urged the government to increase the General Sales Tax to 15%, however, the current administration has been reluct...