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CDB Approves Two Loans For Belize

by Leroy Baker, Tax-News.com, New York

18 December 2006


The Caribbean Development Bank (CDB) has approved a US$25 million loan to help Belize carry through its economic and fiscal reform efforts.

At its meeting in Barbados last week, the board of the CDB also approved the bank's Country Strategy Paper for Belize for the period 2007-09, the main objectives of which are to enhance sustainable economic growth by supporting attempts to correct fiscal and external imbalances, financing investments that are critical for enhancing growth, lending to eligible private sector entities, and financing critical social development projects.

The US$25 million 'Policy Based Loan' is designed to support the efforts of the government of Belize to address the most critical challenges facing Belize, namely the correction of the fiscal and external imbalances.

The PBL is intended to help the Government of Belize close these gaps over the short to medium term, while it continues to implement corrective measures, including the restructuring of its debt, the reform of its tax regime and the control of public expenditure.

The loan is comprised of US$15 million from the CDB's Ordinary Capital Resources (OCR) and US$10 million from the bank's Special Fund Resources (SFR). The OCR portion of the loan is to be repaid in 20 years, including a grace period of 5 years, at a variable interest rate which is currently 6.25% per annum. The SFR portion of the loan is to be repaid in 25 years, including a grace period of 5 years, at an interest rate of 2.5% per annum.

The loan is to be disbursed in two tranches, the first of which is expected during the first quarter of 2007, once the ongoing debt restructuring process has been successfully completed.

An additional US$12.6 million loan was approved for road upgrades from the bank's OCR funds. This 6.25% loan has a grace period of 5 years and repayment will be made over 17 years, beginning in year 6.


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