Foreign reserves may recover in about 2 years, Fin Sec says
BELIZE CITY, Thurs. Nov. 9, 2017–Last Wednesday, the Caribbean Court of Justice ordered the Government of Belize to pay US$78 million dollars to the Ashcroft alliance as final settlement for the acquisition of Belize Telemedia Limited (BTL) on or before November 10. Failure to adhere to the court’s deadline would incur interest of 8.34%.
Amandala understands that the government paid the US$78 million dollars today, Thursday. That money represents the final payment for the BZ$557 million settlement with BTL’s former owner negotiated in September 2015 in Miami.
Prime Minister Dean Barrow had stated last week during his press conference that the government has the money, but it is in Belize dollars. The interpretation of that is that the country would have to dip into its foreign reserves to come up with the US$78 million, a figure that amounts to about 25 percent, or one quarter, of the country’s foreign reserves.
Financial Secretary Joseph Waight told the media yesterday that it would take about two years for the country to recover that amount of its foreign reserves.
Waight explained that Government was on target to make the payment by the court-ordered date, Friday, November 10, 2017.
Waight was asked how this would affect the country’s foreign reserves and how the reserves would be replenished.
Waight replied, “It will not wipe out — it will reduce the reserves by about 20-25%. Remaining after that, will be about 3 months of import cover, which is fairly comfortable. Reserves are built over time, generally from surpluses between your exports and your imports. It will take time to rebuild …”
Asked how long it would take for the country to generate US$78 million in savings, Waight said, “That’s a difficult question because it all depends on the level of your exports, how well your tourism is doing. Hopefully, you will not have any natural disasters. It depends on the price of oil on the world market, because those are our big imports, machinery, and things. It’s a little difficult; I would figure about 2 years.”
After serving as Belize’s Governor of the Central Bank for eight years, Glenford Ysaguirre demitted office in early October 2016 and was replaced by Joy Grant, who was appointed as a Senator and had served in the Dean Barrow’s Cabinet as Minister of Energy, Science, Technology and Public Utilities. She had also been an ambassador the US.
Yasguirre’s departure from the Central Bank came shortly after he had written a letter to Financial Secretary Joseph Waight warning that the country would have been placing its foreign reserves in danger if the government had paid out US $70 million to Dunkel International, an Ashcroft alliance company, as part of the settlement for the government’s acquisition of BTL.
Ysaguirre had warned that such a payout from the country’s foreign reserve “would be destructive for the economy of Belize.”
At the time Ysaguirre was leaving the Central Bank, the International Monetary Fund (IMF) released its 2016 Article IV Consultation Report on Belize, which warned of worsening economic times ahead.
According to the IMF report, the Belize economy was saddled by “high public debt, large fiscal and external deficits, and declining international reserves.”
Shortly after his dire warning to the Government, Ysaguirre’s contract at Central Bank was not renewed.