S&P Downgrades Outlook On Belize’s Currency Ratings

by Mike Godfrey, Tax-News.com, Washington

27 July 2004

International ratings agency Standard & Poor’s has downgraded its outlook on Belize’s ‘B+’ long term foreign currency ratings and ‘BB-’ local ratings to negative from stable.

According to S&P, this change in outlook reflects the challenges faced by the government in tightening its fiscal policy coupled with mounting external liquidity pressures, and compounded by delays in the introduction of certain tax measures.

S&P analyst Olga Kalinina noted: "On the fiscal front, results may fall short of the original projection of a 0.9% general government deficit (including a social security surplus of 0.7%) in fiscal year 2004-2005, due to delays in levying a new one-time land tax and in eliminating some tax exemptions."

Kalinina went on to warn that the country’s ratings could come under downward pressure if the government fails to keep a grip on the fiscal situation and if the external liquidity position becomes more stretched.

"Firm government resolve on the fiscal front and adept debt management on the external side will be required to maintain the ratings at their current levels," she concluded.

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