credit analysis belize - central bank
TRANSCRIPT
CREDIT ANALYSIS
SOVEREIGN & SUPRANATIONAL DECEMBER 5, 2011
Table of Contents:
SUMMARY AND OUTLOOK 1 OUTLOOK AND SCENARIOS 2 COMPARATIVES 2
Peer Comparisons 2 Regional Comparisons 3
ECONOMIC STRENGTH 3 Factor 1 – Economic Strength 3
INSTITUTIONAL STRENGTH 5 Factor 2 – Institutional Strength 5 Factor 3 – Government Financial Strength – Very Low 6 Factor 4 – Susceptibility to Event Risk – Very High 8
RATING HISTORY 9 SOVEREIGN RATING MECHANICS: BELIZE 10 ANNUAL STATISTICS 11 RELATED WEBSITES 13 MOODY’S RELATED RESEARCH 13
Analyst Contacts:
NEW YORK 1.212.553.1653
Gabriel Torres 1.212.553.3769 Vice President – Senior Credit Officer [email protected]
Maria Paula Carvajal 1.212.553.1124 Associate Analyst [email protected]
Mauro Leos 1.212.553.1947 Vice President – Senior Credit Officer [email protected]
Bart Oosterveld 1.212.553.7914 Managing Director – Sovereign Risk [email protected]
This Credit Analysis provides an in-depth discussion of credit rating(s) for Belize and should be read in conjunction with Moody’s most recent Credit Opinion and rating information available on Moody's website.
Belize
Belize
Foreign Currency Local Currency
Government Bond Rating B3-Stable B3-Stable
Country Ceilings Bonds B1-Stable A1
Country Ceilings Bank Deposits B3-Stable A3
Moody’s sovereign rating lists
Summary and Outlook
Belize's B3 government bond ratings reflect the government’s high debt burden and weak public finances, relatively weak institutions, and an economy that remains highly vulnerable to natural disasters and external shocks. The government restructured part of its debt in 2007 but the debt-to-revenues ratio and other debt metrics remain higher than most rating peers and a key ratings constraint. Institutional concerns have surfaced most recently in the aftermath of a controversial nationalization of the national electricity company, and raising further questions about the medium and long-term fiscal position.
The economy remains comparatively weak with a $6600 per capita GDP (2010 PPP basis) and a nominal GDP of less than $1.5 billion. Economic growth has been stronger than most of the Caribbean nations with which it shares a language and history. But averaging only 2.5% annually in the last five years, economic growth remains insufficient to change the country’s relative standing. Historically dependent on agriculture and tourism, the discovery of oil in 2005 led to speculation of a major shift in the economy but production peaked at only 4000 bpd and is now declining.
The stable outlook reflects our view that government finances are manageable after the recent debt restructuring but vulnerabilities remain high, including the potential fiscal cost of recent and previous nationalizations. Debt service is set to rise in coming years, as interest rate step-ups on the restructured debt kick in and amortization starts. The combination of higher debt payments and contingent liabilities may lead to downwards ratings movements if left unaddressed.
SOVEREIGN & SUPRANATIONAL
2 DECEMBER 5, 2011
CREDIT ANALYSIS: BELIZE
Outlook and Scenarios
Belize’s Stable Outlook balances improvements to the main debt metrics after the 2007 restructuring with continued financing concerns as debt service is set to rise and the fiscal costs of recent nationalizations become clearer. Funding needs fell after the restructuring by deferring principal payments and lowering interest rates, both temporary measures. This remains our most likely scenario.
A Negative Outlook or other downwards ratings movement is the second most likely scenario and could result if the government does not adjust its finances to the expected increase in debt servicing costs. Extra pressure on fiscal accounts from payments due on past nationalizations and frequent natural disasters are further credit negatives, and could result in ratings downgrades.
A Positive Outlook or other upwards ratings movement remains the least likely scenario, given all the current fiscal risks. An increase in fiscal revenues available to service debt would support this scenario, as would an increase in trend GDP growth, that reduces the overall debt burden.
Comparatives
In this section we look at Belize’s ratings from the perspective of other rated sovereigns. The first part focuses on other countries with similar ratings, and this peer comparison is the key one in Moody’s ratings process. The second part provides more color by drawing comparisons with some of Belize’s neighbors.
Peer Comparisons
Compared to median of B category sovereigns Belize has a similar level of economic development but a much smaller economy and, even more importantly, it is growing slower than the rest. Its debt burden is also greater than the median B sovereign, supporting Belize’s position at the bottom of the B category.
FIGURE 1
Rating Peer Comparisons* Country FC Rating Per Capita GDP (PPP) GDP (US$ billions) Debt/Revenues
Belize B3, Stable $6566 $1.5 285
Argentina B3, Stable $15892 $459.6 187
Pakistan B3, Stable $2674 $204.3 475
Nicaragua B3, Stable $2765 $7.3 135
Jamaica B3, Stable $7810 $14.9 431
B Median $5784 $17.9 158
* all data for 2011, except PPP data for 2010
Compared to Argentina Belize is poorer, smaller, grows less, and has a higher debt burden. But Argentina’s very weak institutions, which include underreporting inflation which impacts payments on its inflation indexed bonds, support the similar ratings.
SOVEREIGN & SUPRANATIONAL
3 DECEMBER 5, 2011
CREDIT ANALYSIS: BELIZE
Pakistan has a larger economy but is poorer and even more indebted. Nicaragua is also poorer and with a larger economy than Belize, but unlike Pakistan has less debt. Institutional concerns, including a recent debt default, hold back Nicaragua’s rating.
Jamaica shares a common Caribbean heritage and is both richer and larger. But Jamaica’s economy is among the slowest growing in Moody’s rated universe, and it has one of the highest debt burdens, even after last year’s debt restructuring.
Regional Comparisons
Belize straddles the Caribbean, with which it shares a common history, and mainland Central America, of which it is part. In this region Jamaica (B3, Stable) and Nicaragua (B3, Stable) have similar ratings, with Honduras (B2) and St Vincent (B1) also in the same rating category. All these countries suffer from a combination of relatively low economic development, high debt burdens, and small growth. Neighboring countries with higher ratings have larger economies and less debt e.g. Guatemala (Ba1, Stable) or Costa Rica (Baa3, Stable). Barbados (Baa3, Negative) has even more debt than Belize, but a much richer economy and access to greater funding sources.
Economic Strength
Factor 1 – Economic Strength
Scale Very High High Moderate Low Very Low
BELIZE
+ -
Belize’s low economic strength1 is based on the country’s comparatively weak level of economic development and modest growth prospects going forward. Moody’s ranks economic strength by focusing on several factors, the most important of which is economic development as proxied by GDP per capita, adjusted for purchasing power. Belize’s 2010 GDP per capita of $6,596, is similar to the $6,092 median of Low economic strength sovereigns. The median for the next level, Moderate economic strength, is more than twice as high, at $14,426. In some cases the overall size or dynamism of the economy can compensate for relatively low development, but as Figure 2 below shows this is not the case for Belize. Given this we view the Low economic strength as unlikely to improve in the medium term, and regard it as a structural ratings constraint.
FIGURE 2*
Belize Median of Countries with
Low Economic Strength ** Median of Countries with
Moderate Economic Strength**
Per capita GDP (2010, PPP basis) $6,566 $6,092 $14,426
Nominal GDP (US$ Billions, 2010) $1.4B $24B $105B
Average Annual Growth Rate (2007-2012) 2.2% 4.2% 3.2%
* Source: Official data and Moody’s estimates.
** Based on Moody’s rankings
1 Moody’s sovereign methodology is based on ranking all countries on four factors: Economic Strength, Institutional Strength, Government Financial Strength, and
Susceptibility to Event Risk. The five-point scale for the first three factors goes from best (very high) to worst (very low). The scale for the fourth, susceptibility to event risk, is also five points from best (very low) to worst (very high). See Sovereign Bond Ratings (September 2008).
SOVEREIGN & SUPRANATIONAL
4 DECEMBER 5, 2011
CREDIT ANALYSIS: BELIZE
Belize’s economy relies heavily on tourism and exports of agricultural goods such as cane sugar and bananas. The country is also a recipient of generous official grants and multilateral assistance. In 2006 the discovery of high quality crude oil boosted economic growth and government revenues, and raised prospects of a fundamental shift in the economic structure. But production has peaked at around 4,000 bpd, and output is declining. Oil revenues rose 58.8% in the first eight months of 2011, compared to the same period in 2010, but this reflects exclusively an increase in prices as oil production fell 3.4%. Most of Belize’s oil comes from one major oil field where production continues to decline. A second field has diversified production but its output remains less than 10% of total production.
Raising long term growth remains a key credit challenge for Belize, whose economic growth lags most rating peers. We estimate Belize will grow 2.2% annually from 2007 to 2012, but the median for countries with Low economic strength is almost double that, at 4.2%. Reaching greater growth is hobbled by the impact of weather and a weak infrastructure. In particular agriculture and tourism could both benefit from greater investment and integration with Mexico, its much larger neighbor.
Concerns about security, a spillover from problems in neighboring Mexico and Guatemala, also act as an economic constraint. Growth will remain modest this year and next, between 2.5% and 3%, although the global crisis may place downward pressure on 2012 growth. Another economic concern is the banking system, which suffers from high levels of non-performing loans (NPLs) and insufficient provisions. Belize Bank, the largest bank in the system, has NPLs that recently peaked at 32% but have been trending downwards. Despite the large NPLs limited banking alternatives and public confidence in the financial system reduces the risk of a bank run. An important step was taken on July 2011, when Belize participated for the first time in the IMF’s Financial Sector Assessment Program (FSAP), intended to set up guidelines for a potential reform to the system.
Belize’s external position is weak as well, with a comparatively high external debt burden and consistently large current account deficits. We estimate an external debt to current account receipts ratio of 135 for 2011 compared to 90 on average for B category sovereigns. Current account deficits averaged 17% of GDP from 2000 to 2005, mostly financed by FDI. But they have trended downwards and we expect deficits averaging 4% of GDP this year and next. Highlighting their importance to the country’s external accounts, oil revenues in 2010 were almost 8% of GDP, a troubling indicator given that oil production is on a downturn. Like several other countries in the region Belize has pegged its exchange rate to the US dollar, a regime in place since the 1970s. We see no immediate risk of devaluation, and the size and liquidity of the fx market is too small to allow significant speculative action against the currency.
SOVEREIGN & SUPRANATIONAL
5 DECEMBER 5, 2011
CREDIT ANALYSIS: BELIZE
Institutional Strength
Factor 2 – Institutional Strength
Scale Very High High Moderate Low Very Low
BELIZE
+ -
Moody’s sovereign methodology ranks Belize’s institutional strength as Low on a comparative basis. Traditional indicators of governance, such as those published by the World Bank, provide low rankings for Belize and have deteriorated in recent years. Further concerns about institutions have surfaced more recently in the aftermath of several controversial nationalizations.
There is no single internationally comparable indicator that directly measures what Moody’s seeks to quantify in its Institutional Strength rankings. But we use the World Bank’s governance indicators as one possible proxy across nations. The governance indicator ranges from -2.5 to +2.5, where the higher number indicates a better institutional framework. Belize governance indicators have averaged -.47 in the five years 2010, the latest available data, not that far from the -.56 average of all sovereign with a Low institutional strength. But the trend has worsened as the score averaged -.2 in the previous five years.
Institutional weakness is also evidenced by some recent nationalizations, including that of Belize Telemedia Limited (BTL) in 2009 and Belize Electricity Limited (BEL) earlier this year. These nationalizations have raised concerns of appropriate procedures and compensations, and legal disputes continue to be battled in Belizean courts. A bigger credit concern is the increase in contingent liabilities for a government with already high debt levels.
The 2009 BTL nationalization was overturned by the courts but the government chose to push for further legislation, including a possible constitutional amendment, that would make the nationalization permanent. The more recent nationalization of BEL was prompted by concerns that the electricity company would be unable to continue operating, due to financial problems. Both nationalizations continue to be litigated in the courts. Belize has the Trinidad and Tobago based Caribbean Court of Justice as its court of final appeal.
While we do not provide judgment on the legality of any of these actions we consider last minute nationalizations of key parts of the economy that threaten to destabilize fiscal accounts as an indication of relatively weak institutions. Ratings upgrades will thus hinge on implementing rules that support greater transparency and accountability, and improve trust in government institutions.
Security concerns continue to rise as rates of murder, illegal drug trafficking, and money laundering steadily increase. The government seeks new legislation to deal with criminal activities but, even if approved, implementation is going to be difficult and costly, and it will take some time to measure its effectiveness.
SOVEREIGN & SUPRANATIONAL
6 DECEMBER 5, 2011
CREDIT ANALYSIS: BELIZE
Factor 3 – Government Financial Strength – Very Low
Scale Very High High Moderate Low Very Low
BELIZE
+ -
Moody’s assesses Belize’s Government Financial Strength to be Very Low, based on its high levels of government debt and limited funding options. After its 2007 debt restructuring fiscal metrics improved and funding requirements fell, but interest payments on the restructured debt will rise in coming years, and principal payments will come due, raising overall debt servicing costs. Higher debt servicing plus the uncertainty of the fiscal costs of recent nationalizations raise concerns of another restructuring.
In February 2007, Belize’s government restructured most of its public external debt; reducing interest payments and alleviating liquidity concerns. The restructuring did not involve a reduction in the face amount of debt and so, as Figures 3 and 4 below show, the biggest change was on interest payments due, not on overall debt to GDP. Debt to revenues was 294% at the end of 2010, almost double the median for other B rated sovereigns, but lower than either Jamaica’s 440% or Greece’s 367%, the other two publicly rated sovereigns with Very Low financial strength. As is common with other sovereigns with such low ratings Belize lacks easy access to local funding due to its underdeveloped and shallow domestic markets, and finds it very hard to access international capital markets. High debt burdens, reduced funding options, and moderate growth at best combine to become a structural ratings constraint.
FIGURE 3
Gen. Gov. Direct Debt/GDP
0
10
20
30
40
50
60
70
80
90
100Debt Restructuring
Source: Moody's Investors Service
FIGURE 4
Gen. Gov Debt and Interest Payments as a percentage of Gen Gov Revenue
0
5
10
15
20
25
30
0
50
100
150
200
250
300
350
400
450
Gen. Gov. Direct Debt/Gen. Gov. Revenue (LHS)
Gen. Gov. Int. Pymt/ Gen. Gov. Revenue (RHS)
Source: Moody's Investors Service
While the debt load has not budged much, the fiscal balance has shown an important improvement (see Figure 5 below) despite a recent worsening2. The overall central government balance has swung from deficits of 10.8% of GDP in 2003 to 1.5% in 2010. We expect a fiscal deficit of 2.2% of GDP for this year and a similar number for 2012, although the impact from the world crisis and natural
2 Belize reports both fiscal year and calendar year budget numbers. The fiscal year runs from April to March, so the 2010/11 fiscal year runs from April 2010 to March
2011. To facilitate cross country comparison we utilize calendar year where available. All data in this report refers to calendar year, unless stated otherwise.
SOVEREIGN & SUPRANATIONAL
7 DECEMBER 5, 2011
CREDIT ANALYSIS: BELIZE
disasters could lead to higher deficits. The government’s revenues are dependent on tourism and oil extraction, two sectors that are highly exposed to external factors and are volatile by nature.
FIGURE 5
Gov. Balances (as a percentage of GPD)
-8
-6
-4
-2
0
2
4
6
8
-12
-10
-8
-6
-4
-2
0
2
4
2003 2004 2005 2006 2007 2008 2009 2010 2011F 2012F
Gen. Gov. Financial Balance/GDP (LHS) Gen. Gov. Primary Balance/GDP (RHS)
Source: Moody's Investors Service
Fiscal consolidation began in 2005 as funding sources dried up, leading the authorities to undertake a series of policy measures aimed at restoring fiscal sustainability. These included a very sharp reduction in capital expenditures and the introduction of a general sales tax. However, this upward trend reversed in 2009 and no significant improvement is foreseen in the near term.
Super-Bond: New Structure of Debt Payment
In 2007, US $565 mm of Belize’s external debt (equivalent to half of all public debt) was restructured, and exchanged for a new so-called “super bond”. The new super bond makes principal payments starting in August 2019, and continuing with equal semi-annual installments until the February 2029 final maturity. It includes a step-up coupon structure as follows:
» Interest of 4.25% for fiscal years 2007/2008 to 2009/2010;
» 6.00% for fiscal years 2010/2011 to 2011/2012;
» and 8.50% from fiscal years 2012/2013 to 2028/2029
Figure 6 shows the Super-bond’s debt service payments by year:
FIGURE 6
Service Debt Payment Superbond
-
20
40
60
80
100
120
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
(usd$mm) Principal Interest
SOVEREIGN & SUPRANATIONAL
8 DECEMBER 5, 2011
CREDIT ANALYSIS: BELIZE
The government estimates financing needs of Bz$109mm, approximately 3.6% of GDP, for fiscal year 2011/12, to be funded mostly from multilateral and bilateral sources, implying limited rollover risk. As recently as 2005 funding needs reached more than 20% of GDP.
Going forward though, debt servicing will rise once again with the super bond (see box above) and the still unmeasured fiscal cost of the recent nationalizations. BEL has long term debts and high operational costs that could lead to greater fiscal costs to the government. The fiscal costs of the BEL and BTL nationalizations remains unclear, with BTL claiming a value of at least $100 million while the government argues it will be significantly less. We expect that payments will be staggered, providing some flexibility even as debt payments increase.
Factor 4 – Susceptibility to Event Risk – Very High
Scale Very Low Low Moderate High Very High
BELIZE
+ -
Moody’s methodology classifies Belize’s susceptibility to event risk as “very high” by global standards. First, Belize is prone to natural disasters. Hurricanes and floods are frequent, almost yearly occurrences, which have the potential to affect at least two of Belize’s economic pillars: agriculture and tourism.
Secondly, Belize’s weak institutions mean that there are significant political risks that can directly impact government finances. In the past, these have included fraud, illegitimate government guarantees, and legal actions against the government. Finally, because Belize’s public debt is both high and mostly denominated in foreign currency, a forced devaluation due to a significant deterioration of external liquidity would have a devastating impact on the government’s ability to honor its obligations.
SOVEREIGN & SUPRANATIONAL
9 DECEMBER 5, 2011
CREDIT ANALYSIS: BELIZE
Rating History
Belize
Foreign Currency Ceilings Government Bonds Outlook Date
Bonds & Notes Bank Deposit Foreign
Currency Local
Currency
Long-term Short-term Long-term Short-term
Rating Raised B1 -- B3 -- B3 B3 Stable February-09
Rating Raised B2 -- Caa1 -- Caa1 Caa1 Stable February-07
Rating Raised Caa1 -- -- -- -- -- -- May-06
Rating Lowered Caa3 -- Caa3 -- Caa3 Caa3 Stable October-05
Rating Lowered B3 -- Caa1 -- B3 B3 Negative June-05
Rating Lowered B2 -- B3 -- B2 B1 Stable August-04
Review for Downgrade Ba3 -- B1 -- Ba3 Ba2 Stable June-04
Rating Lowered Ba3 -- B1 -- Ba3 Ba2 Stable May-03
Outlook Changed -- -- -- -- -- -- Negative August-02
Rating Assigned Ba2 NP Ba3 NP Ba2 Ba1 Stable January-99
SOVEREIGN & SUPRANATIONAL
10 DECEMBER 5, 2011
CREDIT ANALYSIS: BELIZE
Sovereign Rating Mechanics: Belize3
SCALE + -+ -
SCALE + -
SCALE + -
+ -
SCALE + -
ECONOMICSTRENGTH
How strong is the economic structure?
GCP/capita Diversification/size Long-term Trends
INSTITUTIONAL STRENGTH
How robust are the institutions and how predictable are the policies?
Rule of Law Governance Transparency
Very High High
GOVERNMENT FINANCIAL STRENGTH
How does the debt burden compare with the government' s resource mobilization capacity?
Government balance sheet tool kit
Balance of Payment tool kit
SUSCEPTIBILITYTO EVENT RISK
What is the risk of a direct and sudden threat to debt repayment?
Financial Economic Political
ECONOMICRESILIENCY
RATING RANGE:B3 - C
FINANCIALROBUSTNESS
Moderate Low Very Low
Very High High Moderate Low Very Low
Very High High Moderate Low Very Low
Very Low Low Moderate High Very High
3 Sovereign Bond Rating Methodology
SOVEREIGN & SUPRANATIONAL
11 DECEMBER 5, 2011
CREDIT ANALYSIS: BELIZE
Annual Statistics
Belize
2003 2004 2005 2006 2007 2008 2009 2010 2011F 2012F
Economic Structure and Performance
Nominal GDP (US$Mil) 988.3 1,056.3 1,114.8 1,213.0 1,276.4 1,358.8 1,349.0 1,401.0 1,487.8 1,570.7
Population (thousands) 273.7 282.6 291.8 301.4 311.5 322.1 333.2 341.5 350.1 358.8
GDP per capita (US$) 3,611 3,738 3,820 4,025 4,097 4,218 4,049 4,102 4,250 4,377
GDP per capita (PPP basis, US$) 5,821 6,066 6,254 6,543 6,596 6,764 6,597 6,566 -- --
Nominal GDP (% change, local currency)) 6.0 6.9 5.5 8.8 5.2 6.5 -0.7 3.9 6.2 5.6
Real GDP (% change) 9.3 4.6 3.0 4.8 1.2 3.6 0.1 2.9 3.0 2.5
Inflation (CPI, % change YoY) 2.6 3.1 3.7 4.2 2.3 6.4 -1.1 0.9 3.1 3.0
Gross Investment/GDP 20.5 19.6 19.5 18.9 19.7 27.2 21.0 23.0 22.0 21.0
Gross Domestic Savings/GDP 7.9 10.9 13.7 19.8 17.9 19.4 18.0 19.0 19.5 19.0
Nominal Exports of G&S (% change, US$ basis) 7.5 1.6 13.9 22.2 2.7 10.3 -13.7 14.7 7.4 -7.4
Nominal Imports of G&S (% change, US$ basis) 5.9 -5.2 12.9 7.5 4.9 20.8 -17.8 3.5 8.6 -0.3
Openess of the Economy [1] 119.4 109.2 117.3 123.2 121.6 132.1 112.0 117.4 119.5 108.7
Government Effectiveness [2] -0.17 -0.27 -0.15 -0.42 -0.50 -0.53 -0.47 -0.44 -- --
Government Finance
Gen. Gov. Revenue/GDP [3] 22.9 24.3 24.1 24.8 30.0 29.5 25.9 27.1 27.0 27.3
Gen. Gov. Expenditure/GDP [3] 33.7 30.6 30.9 26.7 31.2 27.9 28.7 28.7 29.6 30.2
Gen. Gov. Financial Balance/GDP [3] -10.8 -6.3 -6.8 -1.9 -1.2 1.5 -2.8 -1.5 -2.2 -2.5
Gen. Gov. Primary Balance/GDP [3] -7.1 -0.5 -0.1 3.9 4.1 5.4 0.8 1.9 1.2 0.6
Gen. Gov. Direct Debt (US$ Mil.) [3] 849.85 957.20 1,025.70 1,060.44 1,072.97 1,077.48 1,101.15 1,126.85 1,162.50 1,280.00
Gen. Gov. Direct Debt/GDP [3] 86.0 90.6 92.0 87.4 84.1 79.3 81.6 80.4 78.1 81.5
Gen. Gov. Direct Debt/Gen. Gov. Revenue 374.9 372.6 382.2 352.7 280.3 269.1 315.2 296.6 285.3 294.3
Gen. Gov. Int. Pymt/ Gen. Gov. Revenue 16.3 23.8 27.9 23.6 17.6 13.1 13.9 12.6 12.3 11.5
Gen. Gov. FC & FC-indexed Debt/GG Debt 84.9 85.5 86.4 85.9 85.0 84.6 85.5 83.7 83.9 84.0
External Payments and Debt
Nominal Exchange Rate (currency/$, Dec.) 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00
Real Eff. Exchange Rate (% change) [4] -2.5 -2.4 -0.7 0.2 -4.8 -0.5 4.2 -3.0 -- --
Current Account Balance (US$ Mil.) -176.45 -154.95 -151.20 -25.40 -52.05 -144.85 -82.85 -40.60 -55.00 -64.00
Current Account Balance/ GDP -17.9 -14.7 -13.6 -2.1 -4.1 -10.7 -6.1 -2.9 -3.7 -4.1
External Debt (US$ Mil) 749.70 849.05 932.60 985.15 972.70 957.80 1,263.69 1,244.95 1,290.00 1,320.00
Public Sector External Debt/Total External Debt 100.0 100.0 100.0 100.0 100.0 100.0 80.4 81.1 81.4 81.4
Short-Term External Debt/Total External Debt 5.6 4.9 5.4 5.6 5.7 5.7 4.4 4.4 4.3 4.2
External Debt/ GDP 75.9 80.4 83.7 81.2 76.2 70.5 93.7 88.9 86.7 84.0
External Debt/ CA Receipts 126.4 139.5 132.8 110.4 100.6 94.5 151.4 130.4 135.8 132.0
Interest Paid on External Debt (US$ Mil.) 41.78 56.46 67.23 64.35 59.03 49.42 48.85 49.81 49.68 51.10
Amortization Paid on External Debt (US$ Mil.) 80.74 130.36 148.08 70.40 617.57 71.63 62.85 55.08 53.00 68.23
Net Foreign Direct Invesment/GDP 1.1 10.6 11.4 9.0 11.2 12.5 8.1 7.0 4.0 4.0
Official Forex Reserves (US$ Mil.) 76.07 35.80 62.78 104.44 98.42 156.07 175.42 180.48 210.00 220.00
Net Foreign Assets of Domestic Banks (US$ Bil.) 0.05 0.05 0.06 0.04 0.08 0.09 0.08 0.10 -- --
SOVEREIGN & SUPRANATIONAL
12 DECEMBER 5, 2011
CREDIT ANALYSIS: BELIZE
Belize
2003 2004 2005 2006 2007 2008 2009 2010 2011F 2012F
Monetary, Vulnerability and Liquidity Indicators
M2 Growth (%change, Dec/Dec) 3.5 13.4 6.5 13.1 15.4 13.3 6.4 -0.1 -- --
Short-term Interest Rate (% per annum, Dec 31) 7.2 7.6 7.8 8.2 8.4 8.5 8.2 7.4 -- --
Domestic Credit (% Change) 20.4 20.6 1.4 11.3 15.6 8.8 2.6 -1.3 -- --
Domestic Credit / GDP 56.8 64.1 61.5 62.9 69.1 70.6 73.0 69.4 -- --
M2/ Official Forex Reserves 7.2 17.4 10.6 7.2 8.8 6.3 6.0 5.8 -- --
Total External Debt/FX Reserves 985.5 2,371.6 1,485.5 943.3 988.3 613.7 720.4 689.8 614.3 600.0
Debt Service Ratio [5] 20.7 30.7 30.7 15.1 70.0 11.9 13.4 11.0 10.8 11.9
External Vulnerability Indicator [6] 114.7 226.2 530.2 191.8 644.0 128.7 75.5 62.8 59.8 59.2
Liquidity Ratio [7] 89.9 89.3 51.1 29.5 34.1 18.5 22.1 21.7 -- --
Total Liabilities due BIS banks/Total Assets held in BIS banks 31.3 32.6 29.7 23.6 24.2 25.3 30.0 28.4 -- --
"Dollarization" Ratio [8] 4.1 4.4 5.1 5.3 5.2 3.5 3.4 3.3 -- --
"Dollarization" Vulnerability Indicator [9] 14.5 23.9 22.1 20.4 21.9 12.0 12.1 11.0 -- --
Notes:
[1] Sum of Exports and Imports of Goods and Services/GDP
[2] Composite index with values from -2.50 to 2.50: higher values suggest greater maturity and responsiveness of government institutions
[3] Central Government
[4] IFS Real Effective Exchange Rate
[5] (Interest + Current-Year Repayment of Principal)/ Current Account Receipts
[6] (S/T External Debt + Currently Maturing Long-Term External Debt+ Nonresident Foreign Currency Deposits Over One Year)/ Official FX Reserves; Note that amortization data for 2007 includes restructuring, refinancing and reprofiling
[7] Liability to BIS Banks Falling With in One Year/ Total Assets Held in BIS Banks
[8] (Total Foreign Currency Deposits in the Domestic Banking System/ Total Deposits in the Domestic Banking System)
[9] (Total Foreign Currency Deposits in the Domestic Banking System/ (Official Foreign Reserves + Foreign Assets of Domestic banks)
SOVEREIGN & SUPRANATIONAL
13 DECEMBER 5, 2011
CREDIT ANALYSIS: BELIZE
Related Websites
» Belize Ministry of Finance
» Central Bank of Belize
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Moody’s Related Research
Credit Opinion:
» Belize
Moody’s Website Links:
» Sovereign Risk Group webpage
» Sovereign Rating List
Special Comments:
» Latin America and Caribbean Sovereign Outlook, January 2011 (130753)
» Latin America’s 2011 Government Financing Needs, May 2011 (131729)
» Clouds Still Looming Over the Caribbean, July 2010 (126009)
Statistical Handbook:
» Moody’s Country Credit Statistical Handbook, May 2011(133011)
Sovereign Default History and Rating Methodologies:
» Sovereign Default and Recovery Rates, 1983-2010, May 2011 (132672)
» Sovereign Methodology Update – Narrowing the gap – a clarification of moody’s approach to local vs. foreign currency government bond ratings, February 2010 (118820)
» Sovereign Bond Ratings, September 2008 (109490)
To access any of these reports, click on the entry above. Note that these references are current as of the date of publication of this report and that more recent reports may be available. All research may not be available to all clients.
SOVEREIGN & SUPRANATIONAL
14 DECEMBER 5, 2011
CREDIT ANALYSIS: BELIZE
Report Number: 137861
Authors Gabriel Torres Maria Paula Carvajal
Production Associate David Dombrovskis
© 2011 Moody’s Investors Service, Inc. and/or its licensors and affiliates (collectively, “MOODY’S”). All rights reserved.
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