BELIZE CITY, Mon. Nov. 8, 2021 — Last Friday, the Government of Belize and the Nature Conservancy (TNC) issued a joint release officially announcing the finalization of a deal that has replaced the Superbond with Blue Bonds. The Blue Bonds for Ocean Conservation program signed with Belize is the second of its kind worldwide and a first for Latin America. The aim of deals such as this one is to reduce the national debt load in exchange for commitments to scale-up durable ocean conservation around the world.
As a result of the deal, Belize’s “Superbond” — a burden shouldered by all citizens of the country — has been wiped off the books following the restructuring of US$553 million of our national debt.
In a press release issued on Friday, Hon. John Briceño stated, “Blue Bonds will help us support the vibrant marine life that resides here and maintain the rich biodiversity that is crucial for the health of our ecosystem and the planet. We are proud to be pioneers in this work, and to lead the way for other countries to join us as we conserve our oceans for Belize and beyond.”
According to the release, entities which played key roles in the process which led to the finalization of the intricate deal included Citigroup Global Markets Inc., which acted as Belize’s Financial Advisor and ESG Structuring Advisor, as well as Dealer Manager in connection with the Offer and the consent solicitation; Global Bondholder Services Corporation, which served as Information and Tender Agent; HallMark Advisory, which served as Belize’s Lead Negotiator and Domestic Financial and Conservation Advisor; and Lee Buchheit, who acted as Belize’s Strategic Advisor. Sullivan and Cromwell LLP served as Belize’s legal counsel.
As has been mentioned by various PUP officials, including the Minister of State in the Ministry of Finance, Chris Coye, this deal reduces the severity of Belize’s economic peril through the reduction of our debt to GDP ratio by 12 percentage points from 127% to 115%, but the deal still leaves our national debt, which previously was $4 billion, at three and a half-billion dollars — by no means a sustainable position, says Coye.
Nonetheless, this deal is a major accomplishment for Belize and is being lauded as a precedent that can be used by coastal communities and small island developing states around the world to meet national goals and protect their marine resources simultaneously.
The joint release states, “TNC’s ‘Blue Bonds for Ocean Conservation’ program is part of an ambitious plan to drastically scale-up durable ocean conservation around the world. This conservation model is an innovative strategy to work with governments to restructure a portion of their sovereign debt, securing long-term sustainable financing for the management of valuable natural resources. This approach helps governments unlock funds at scale to deliver on their conservation goals and support the well-being of their communities and economies. Belize is the first country in Latin America to use the Blue Bonds for Ocean Conservation Model, which will support Belize in its commitment to protecting 30% of its ocean, as its marine environment is a globally significant hotspot for biodiversity.”
The government plans to meet its goal of protecting 30% of our marine resources in just 9 years, by 2030, and has also secured funding from the World Wildlife Fund to achieve this goal. These strides put Belize in a strategic position to lead by example and become a key player worldwide on the marine conservation front. Since over one-third of the Mesoamerican Reef, the largest coral reef system in the Western Hemisphere, is located in Belizean territory, its preservation is pivotal to our survival as a nation.
TNC Program Director in Belize, Julie Robinson, says this deal will be transformative to the country and people. “This deal will be transformative for our nation and its people, allow Belize to significantly reduce its external debt while reinvesting in a wide range of critical projects and programs: restore coral reef and mangrove ecosystems, improve marine fisheries and coastal zone policies, invest in sustainable fisheries, aquaculture, and tourism, enhance social and environmental resilience to climate change impacts in coastal communities, and more,” the release said.
As previously mentioned, in total almost US$553 million of the national debt will be restructured through this agreement. “The transaction announced today restructures US$553 million of the country’s debt, leading to an overall debt reduction of $250 million, more than US$200 million in debt service savings, and an estimated US$180 million in funding for conservation over the next 20 years,” the joint release states.
Four million dollars will be pumped into this account each year for new cash flow, and an endowment fund will be capitalized and is estimated to grow to over US$90 million by 2041. This endowment will fund marine protected areas management and conservation projects focused on reefs, fisheries, and other key marine resources beyond 2041.
“Both the Government and non-governmental actors (including non-profit organizations, civil society, academia, and the private sector) shall be eligible to apply for funding with a strategic allocation earmarked for Government to support its capacity building and other efforts to achieve specific Conservation Commitments that were formalized in the agreement”, the release states.
The finalization of this deal marks a new day for Belize and new hope for the protection of our priceless marine resources. The joint statement ends by stating, “Both the Government and non-governmental actors (including non-profit organizations, civil society, academia, and the private sector) shall be eligible to apply for funding with a strategic allocation earmarked for Government to support its capacity building and other efforts to achieve specific Conservation Commitments that were formalized in the agreement.”