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ORCID

Tamon Asonuma 0000-0002-2258-3249

Michael G. Papaioannou 0000-0003-2420-8319

Keywords

Sovereign Defaults; Sovereign Debt Restructuring; External Debt; Inter-Creditor Equity; Serial Defaults

Abstract

This paper examines the causes, processes, and outcomes of the two Belize sovereign debt restructurings in 2006–07 and in 2012–13, which occurred outside an IMF-supported program. It finds that the motivation for the two debt restructurings differed, as the former was driven by external liquidity concerns while the latter was motivated by a substantial increase in the coupon rates and future fiscal solvency concerns. Despite differential treatment between residents and non-residents, both 2006–07 and 2012–13 debt exchanges were executed through collaborative engagement, due in part to the existence of a broad-based creditor committee and the authorities’ effective communication strategy. However, while providing temporary liquidity relief, neither of the debt restructurings properly addressed long-term debt sustainability concerns. Going forward, the success of the 2012–13 debt restructuring will still depend on the country’s ability to strengthen fiscal efforts and the public debt management framework.

Acknowledgments

This is an extended version of the IMF Working Paper “Sovereign Debt Restructurings in Belize: Achievements and Challenges Ahead” (WP 14/132). The views expressed in this paper are those of the authors and should not be attributed to the International Monetary Fund, its Executive Board or its Management, as well as to the Japanese Ministry of Finance. We would like to express our thanks for helpful comments and suggestions to the editor, two anonymous referees, Charles Blitzer, Spencer Jones, and Rafael Molina. The usual disclaimer applies.

First Page

5

Last Page

26

Page Count

22

Received Date

28 September 2016

Revised Date

03 January 2017

Accept Date

13 January 2017

Online Available Date

13 January 2017

DOI

10.7172/2353-6845.jbfe.2017.2.1

JEL Code

F34; G15; H63

Publisher

University of Warsaw

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