MEXICO CITY, June 29 (Reuters) - The Belize prime minister said on Friday that a federal deficit leaves the government more likely to seek debt relief but he did not raise the threat of default.
Prime Minister Dean Barrow said that expenditures - which include an 8.5 percent interest payment on a $550 million ‘super bond’ - will exceed the roughly $450 million in expected government revenue.
That kind of imbalance has prompted creditors to join together to try and stop the government from balking on the loan that has a $23.5 million payment due August.
Moody’s pushed Belize’s credit rating further into junk status early this month, pointing to falling oil-related revenues and rising liabilities following the nationalization of local phone and telephone utilities.
And while Barrow has citing those same woes to say the nation of roughly 313,000 has reached a “fiscal cliff,” he boasted on Friday that the country is now on a relatively stable footing.
“I call it a matter of great pride to report that Belize has been and is doing well economically,” he said at a press event to discuss a 2012/2013 budget that is expected to clock a fiscal deficit of 2.5 percent of gross domestic product, up from the 1.1 percent of GDP in the previous fiscal cycle.
“There are all these factors making it impossible for us to repay under the terms contracted by those that got us into this mess,” Barrow said.
Still, Barrow stopped short of threatening to stop payments on the loan or an outright default.
Financial officials have begun talks with creditors to renegotiate the terms of the bond and earlier this month Barrow said the International Monetary Fund and the Inter-American Development Bank were open to talk of restructuring.
The budget proposal will be presented to congress for debate on July 11.