Sovereign Debt Restructurings in Belize: Achievements and Challenges Ahead

Abstract

This paper examines the causes, processes, and outcomes of the two Belize sovereign debt restructurings in 2006–07 and in 2012–13 that occurred outside of an IMF-supported program. It finds that the motivation for the two debt restructurings differed, as the former was driven by external liquidity concerns while the latter was motivated by a substantial increase in the coupon rates and future fiscal solvency concerns. Despite differential treatment between residents and non-residents, both 2006–07 and 2012–13 debt exchanges were executed through collaborative engagement, due in part to the existence of a broad-based creditor committee and the authorities’ effective communication strategy. However, while providing temporary liquidity relief, neither of the debt restructurings properly addressed long-term debt sustainability concerns. Going forward, the success of the 2012–13 debt restructuring will still depend on the country’s ability to strengthen fiscal efforts and public debt management framework.

Keywords: Sovereign debt restructuring, Belize, External debt, Debt restructuring, Debt sustainability, Inter-Creditor Equity, debt exchange, sovereign debt, public debt, debt management, debt exchanges, current account, commercial debt, public debt management, debt service payments, debt renegotiation, sovereign debtor, external liquidity, current account deficit, external public debt, debt service relief, bilateral creditors, debt management strategy, private creditors, current account deficits, debt obligations, central bank, multilateral creditors, debt servicing, long-term debt sustainability, repayment capacity, external debt service, debt negotiations, official creditors, debt renegotiation pro

JEL Classification: F34, G15, H63