House approves more GOB borrowing

While the leadership of the Peoples United Party could bask in a rare weekend of unity and adulation, come this morning they were back to facing the reality of a financial problem that requires cash–not “Que Vivas”–to solve. The particular situation at hand was the need to borrow more money to pay off old debts. If you’ve ever made the journey from the credit union…to the bank…to the pawn shop, then you know how the Prime Minister felt at this morning’s meeting of the House of Representatives. Patrick Jones reports from Belmopan.

Prime Minister Said Musa
?Now therefore be it resolved that this honourable house being satisfied that it will assist significantly in the refinancing of the government?s external debt, and at the same time be beneficial to the overall interest of Belize, approve and confirm that the government of Belize may borrow the said sum on the terms and conditions set out above.?

Patrick Jones, Reporting
Prime Minister Said Musa went to the House of Representatives today to get permission for government to take on two loans: one for seventy-eight point nine million U.S. dollars and another for just under one hundred and thirty seven million. According to the P.M., the first will be used to pay back fifty seven million dollars which the country owes the International Bank of Miami. That money, obtained last October facilitated the purchasing of the Carlisle shares in BTL, which eventually ended up in the hands of American businessman Jeffrey Prosser. When Prosser?s ICC defaulted on the IBOM loan earlier this month, GOB seized the shares and took back the company.

Said Musa
?The matter has become a very complex one. ICC and Belize Telecoms have taken action in a Florida court claiming in essence that they should be given more time to pay for the shares. Carlisle on the other hand, is seeking arbitration claiming that they are entitled to an option to repurchase the shares. In the meantime they have obtained an interim injunction restraining the government from dealing with the shares until the arbitral decision is given. By approving this resolution today, the House will facilitate the government to maintain control of BTL until we can secure a solution that is in the best interest of the Belizean people, BTL and the telecommunications industry as a whole.?

According to the Prime Minister, the loan, which is being secured though the Capital Markets Financial Services of Miami, will be payable on a quarterly basis at nine point two five percent(9.25%) per annum calculated on principal balance outstanding. Under the agreement, the principal amount of the loan shall be repaid in one lump sum seven years from the date of disbursement, which was November 22, 2004.

While the Prime Minister, by sheer majority in the House got the permission to re-profile the IBOM debt, it was not without taking some verbal blows from the Opposition.

Patrick Faber, Collet Area Representative
?For the Prime Minister to come now Madam Speaker and make the point that Mr. Prosser has no money and has defaulted is simply bogus of the Prime Minister. Since he knew from the beginning that he was dealing with a broke man, and that he thought that by sweetening the pot there was no way even a failed business man could mess up the deal. Well guess what, he did and now you are exposed.?

Anthony Martinez,Port Loyola Area Representative
?We never have to gone buy this for fifty-seven million dollars. BTL was a private entity, successful company. That?s all I am saying Madam Speaker. That we never have to gone put ourselves ina that. Whe we gone put we self in a that for? And then now it is costing us. Watch the kind of interest that we the pay.?

Ralph Fonseca, Belize Rural Central Area Representative
?This re profiling that we are doing and the resolution that is being passed today is at a lower rate; it is at nine point two five percent (9.25%). The original loan was at nine point seven five percent (9.75%). And again our poor friend from Collet was asking why we ask for a put a why there is a call. And then he was answering himself. Because obviously the government of Belize wants the flexibility to be able to pay it back as quickly as we have funds available. The next resolution and I don?t want to anticipate, the next resolution talks about more monies coming in which will make us pay down on our debt even faster.?

Leader of the Opposition Dean Barrow says that given the legal mess that GOB finds itself in regarding the BTL shares, all he can do is sympathize with the fix that the P.M. finds himself in.

Dean Barrow, Leader of Opposition
?There is no way we can support that, given the stranglehold that the government has put itself in with respect to BTL where now Prosser is suing them in Miami, Ashcroft has gotten an injunction against them here in Belize to stop them from doing anything with the shares until proceedings in the U.K., which the government committed to have been completed. In the circumstances anything to do with BTL smells to high heaven. There is no way we will support anything that the government comes up with especially in a context where we still do not yet know; we still do not have all the disclosures that we need ought to have about the agreements that the Prime Minister made with Prosser over BTL.?

Barrow says he is also concerned that the loans approved today, becomes due right around the same time that hundreds of millions of dollars from previous loans also become due.

Dean Barrow
?The monies are being borrowed on such ridiculously onerous terms. You are borrowing a hundred and thirty-six million but you are only getting ninety million because of these huge fees that you a have to pay off the top because of the insurance that you have to buy because the government?s name is simply not credit worthy. And also you say that you are doing this for refinancing but you only mention two sets of current indebtedness that you say you are refinancing, the Prime Minister only mentioned two, and both those debts are held on more favourably terms than the terms on which you are currently borrowing, so it makes no sense at all.?

As for the government?s intention to offer shares to Belizeans, Barrow says the P.M. is selling Belizeans dreams.

Dean Barrow
?Despite the Prime Minister saying that the Carlisle shares will be offered first of all to Belizeans, that in our view is very unlikely to happen because the Prime Minister gave a signed buy back option to the Carlisle people. And that option was to be exercise if the transaction with Prosser isn?t completed. It is clear that the transaction wasn?t completed so that buy back option kicks in. The only way Belizeans can come into play is if Carlisle in exercising the buy back option then decides to offer some of the shares that it can as of right now take back, to some Belizeans. But it is going to be for Carlisle to do it and not for the government. That is the kind of legal tangle into which the government has gotten itself.?

The Prime Minister explained that the loan approved today covers forty million dollars already approved by the House last year and that in effect what was formally approved this morning was the remaining thirty-eight point nine million dollars. Patrick Jones, for News 5.

The one hundred and thirty-six million U.S. dollar loan is being handled by Bear Sterns Financial Services. Because of insurance, reserve requirements and other fees, GOB will only get its hands on ninety three million. According to the Prime Minister, forty-two million dollars will be used for debt servicing while fifty one million will go to build up the country’s reserves to near three months of exports.