Sovereign Debt Restructurings in Belize: Achievements and Challenges Ahead

By Tamon Asonuma, Gerardo Peraza, Kristine Vitola, Takahiro Tsuda

July 22, 2014

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Tamon Asonuma, Gerardo Peraza, Kristine Vitola, and Takahiro Tsuda. Sovereign Debt Restructurings in Belize: Achievements and Challenges Ahead, (USA: International Monetary Fund, 2014) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Asset and liability management, Bonds, Debt restructuring, Debt service, External debt, Financial institutions, Public debt

Keywords: Amortizing bond, Belize, Belize debt restructuring, Bond, Bond exchange, Bonds, Cash flow, Debt exchange, Debt exchange operation, Debt restructuring, Debt service, Debt sustainability concern, Deficit, Exchange offer, External Debt, Global, Growth performance, Inter-Creditor Equity, Market financing, Market haircut, Sovereign Debt Restructuring, Step-up coupon, WP

Publication Details

Pages:

28
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2014/132
Stock No:

WPIEA2014132
ISBN:

9781498369510
ISSN:

1018-5941

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