BELIZE CITY, Belize. Mon. Nov. 8, 2021 –From the National Assembly to COP26 in Glasgow, Scotland, the Government of Belize’s Blue Bond deal has been a topic of wide discussion. This week, the Minister of State in the Ministry of Finance, Chris Coye, alongside the Program Director of The Nature Conservancy (TNC), Julie Robinson, held a press briefing to explain the various aspects of the deal.

The Blue Bond was designed with the objective of protecting Belize’s marine resources and is also being hailed for dramatically reducing the country’s debt-to-GDP ratio. Julie Robinson touched on the agreements made as part of the new financing deal when she spoke to the media:

“Several agreements are in place. The first is the Blue Loan Agreement, so that was for the restructuring of the Super Bond. So, the Super Bond was at five hundred and fifty-three million. TNC came in, and we provided financing through Credit Suisse, so Credit Suisse are the underwriters. In order to purchase that debt at fifty-five cents to the dollar. So, think of it as actually a fifty-five percent discount on that Super Bond, so that provided immediate debt reduction and savings to the government of US250 million straight off the bat. In addition to that, so this new loan agreement has a longer term. So, it’s a nineteen-year term and that plus lower coupon rates in the early years gives an overall debt savings of another two hundred-million US in savings. In the first five years alone, it’s going to be fifty million US that government is going to save as part of this new deal. So that’s the Blue Loan Agreement, and that is being done through a subsidiary of TNC. So, we set up another company that’s called the Belize Blue Investment Company. So, they’re the ones that purchased that essentially through the government,” she said.

With the funds that will be available due to the savings to be enjoyed by GoB as a result of the deal, the government will be setting up a Conservation Fund through a Conservation Financing Agreement, and the allocated funds will be used to finance maritime protection and enhancement efforts:

“This will enable us to set up a Conservation Fund of which government will be making semi-annual payments that will amount to an average US four point two million per year paid in Belize dollars – so let’s say eight point four million on average. It fluctuates from year to year, but those funds will be used to first of all build permanent capacity within various governments – whether it’s the ministries or departments. You have Coastal Zone, Department of the Environment, Fisheries Department – to build their capacity to be able to implement those conservation commitments. We cannot expect government to implement these without having the resources, so that’s first and foremost. Forty percent is the strategic allocation that will go towards government. Of course, it still has to be accountable. So, it’s not as if they’re just going to get money and you don’t have to report on anything. There are a number of safeguards in there to ensure that the funds are being used for the development and implementation of these milestones. The rest of those funds will then go towards grants programs. And then there’ll be a call for proposals, for example every six months. And whether you’re a conservation NGO or a community-based organization, or a fishing cooperative, or you’re in the tourism sector. It’s open and available for users of the resources, of the marine space to be able to implement innovative ideas. So that Conservation Financing Agreement is for twenty years and then after the twenty years, you’ve probably heard the Prime Minister talk about an Endowment Fund that has been capitalized . That over the twenty years will build to be over ninety million US, then the interest from that, once the conservation agreement comes to an end, the twenty-year agreement — the interest from that endowment will then continue to go into conservation,” she said.

During the briefing, the Minister of State also mentioned the difference the Blue Bond will make in governance.

“The super noose no longer exists. It was cancelled on Friday when the Superbond holders were paid off at a forty-five percent discount, which means we automatically saved a quarter billion US dollars — or a half billion dollars in Belize terms. But automatically our debt-to-GDP ratio falls by twelve percent. Our external debt falls by an even greater percentage, more like twenty percent. So, the benefits are gained already. In terms of opportunity, recall that when this administration came into government, the state of economy, there was no fiscal space. In fact, the government was borrowing a million dollars a day roughly, in Belize dollar terms. We are not borrowing a million dollars a day. And I don’t expect we will be borrowing a million dollars a day. Or that is the intent – we will not be borrowing a million dollars a day for the foreseeable future. But we are in the process of improving our fiscal position. This goes some ways to doing that, but we have a long way further to go,” Coye remarked.

Coye then highlighted the substantial difference between the interest that would have been paid (and that was paid) on the Superbond and the interest to be paid on the Blue Bonds, as well as the more favorable repayment terms of the Blue Bond loan.

“So, the repayment terms for the first nine or ten years is interest only. Those first nine years the interest rate is on a step-up basis. So, it starts off at 3.2%. So, if you take 3.2%, three hundred and sixty million, that’s what you’re paying in the first year, it’s going to be less than twenty million dollars Belize. Whereas we were paying over fifty million dollars on interest alone in the Superbond. So right off the bat in the first year we’re saving over thirty million dollars. And then the second year I think it’s 3.7, then it goes to 5.2 and then settles off at around 5.95. So, you calculate the interest of the principal amount and that would give you what you will be paying on a per annum quarterly. And then at the end of that ten-year period we have nine years to pay off the principal on an even basis. So, you split it – nine into three hundred and sixty; that’s forty million a year plus the interest that accrued on a per annum basis, and that’s what you’re paying.”

Coye also gave assurance that there is a plan in place to ensure that GoB no longer defaults on payment.