IDEAS home Printed from https://ideas.repec.org/a/sgm/jbfeuw/v2y2017i8p5-27.html
   My bibliography  Save this article

Sovereign Debt Restructurings in Belize: Debt Sustainability and Financial Stability Aspects

Author

Listed:
  • Tamon Asonuma

    (International Monetary Fund, U.S.A.)

  • Michael G. Papaioannou

    (International Monetary Fund, U.S.A.)

  • Gerardo Peraza

    (International Monetary Fund, U.S.A.)

  • Kristine Vitola

    (International Monetary Fund, U.S.A.)

  • Takahiro Tsuda

    (Ministry of Finance, Japan)

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 fi scal 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.

Suggested Citation

  • Tamon Asonuma & Michael G. Papaioannou & Gerardo Peraza & Kristine Vitola & Takahiro Tsuda, 2017. "Sovereign Debt Restructurings in Belize: Debt Sustainability and Financial Stability Aspects," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 2(8), pages 5-26, October.
    • Handle: RePEc:sgm:jbfeuw:v:2:y:2017:i:8:p:5-27
    as

    Download full text from publisher

    File URL: http://www.wz.uw.edu.pl/portaleFiles/3842-journal-of-b/articles/jbfe_2_8_2017/JBFE_2%288%292017_1Asonuma_et_al_akcept.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Catão, Luis A.V. & Fostel, Ana & Kapur, Sandeep, 2009. "Persistent gaps and default traps," Journal of Development Economics, Elsevier, vol. 89(2), pages 271-284, July.
    2. Ugo Panizza & Federico Sturzenegger & Jeromin Zettelmeyer, 2009. "The Economics and Law of Sovereign Debt and Default," Journal of Economic Literature, American Economic Association, vol. 47(3), pages 651-698, September.
    3. Carmen M. Reinhart & Kenneth S. Rogoff & Miguel A. Savastano, 2003. "Debt Intolerance," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 34(1), pages 1-74.
    4. Michael Tomz & Mark L.J. Wright, 2013. "Empirical Research on Sovereign Debt and Default," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 247-272, May.
    5. International Monetary Fund, 2002. "Japan: Staff Report for the 2002 Article IV Consultation," IMF Staff Country Reports 2002/175, International Monetary Fund.
    6. Asonuma, Tamon & Niepelt, Dirk & Ranciere, Romain, 2023. "Sovereign bond prices, haircuts and maturity," Journal of International Economics, Elsevier, vol. 140(C).
    7. International Monetary Fund, 2002. "Denmark: Staff Report for the 2002 Article IV Consultation," IMF Staff Country Reports 2002/101, International Monetary Fund.
    8. International Monetary Fund, 2002. "Belize: Staff Report for the 2002 Article IV Consultation," IMF Staff Country Reports 2002/255, International Monetary Fund.
    9. Tamon Asonuma & Christoph Trebesch, 2016. "Sovereign Debt Restructurings: Preemptive Or Post-Default," Journal of the European Economic Association, European Economic Association, vol. 14(1), pages 175-214, February.
    10. Carmen M. Reinhart & Kenneth S. Rogoff, 2004. "Serial Default and the "Paradox" of Rich-to-Poor Capital Flows," American Economic Review, American Economic Association, vol. 94(2), pages 53-58, May.
    11. Javier Díaz-Cassou & Aitor Erce-Domínguez & Juan J. Vázquez-Zamora, 2008. "Recent episodes of sovereign debt restructurings. A case-study approach," Occasional Papers 0804, Banco de España.
    12. International Monetary Fund, 2002. "Nepal: Staff Report for the 2002 Article IV Consultation," IMF Staff Country Reports 2002/205, International Monetary Fund.
    13. International Monetary Fund, 2002. "Slovak Republic: Staff Report for the 2002 Article IV Consultation," IMF Staff Country Reports 2002/209, International Monetary Fund.
    14. Mr. Tamon Asonuma, 2016. "Serial Sovereign Defaults and Debt Restructurings," IMF Working Papers 2016/066, International Monetary Fund.
    15. International Monetary Fund, 2002. "Mongolia: Staff Report for the 2002 Article IV Consultation," IMF Staff Country Reports 2002/252, International Monetary Fund.
    16. Mr. Tamon Asonuma & Xin Li & Mr. Michael G. Papaioannou & Mr. Saji Thomas, 2017. "Sovereign Debt Restructurings in Grenada: Causes, Processes, Outcomes, and Lessons Learned," IMF Working Papers 2017/171, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gatien Bon & Gong Cheng, 2021. "Understanding China's role in recent debt relief operations: A case study analysis," International Economics, CEPII research center, issue 166, pages 23-41.
    2. Tamon Asonuma & Mike Xin Li & Saji Thomas & Michael G. Papaioannou & Eriko Togo, 2018. "Sustainability and Equity Challenges to Pension Systems: The Case of Lebanon," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 2(10), pages 67-106, December.
    3. Serhiy Zabolotnyy & Mirosław Wasilewski, 2019. "The Concept of Financial Sustainability Measurement: A Case of Food Companies from Northern Europe," Sustainability, MDPI, vol. 11(18), pages 1-16, September.
    4. Ning Wu & Jingyi Zhao & Mohammed Musah & Zhiqiang Ma & Lijuan Zhang & Yutong Zhou & Yongzheng Su & Joseph Kwasi Agyemang & Juliana Anyei Asiamah & Siqi Cao & Linnan Yao & Kaodui Li, 2023. "Do Liquidity and Capital Structure Predict Firms’ Financial Sustainability? A Panel Data Analysis on Quoted Non-Financial Establishments in Ghana," Sustainability, MDPI, vol. 15(3), pages 1-21, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tamon Asonuma & Mike Xin Li & Saji Thomas & Michael G. Papaioannou & Eriko Togo, 2018. "Sustainability and Equity Challenges to Pension Systems: The Case of Lebanon," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 2(10), pages 67-106, December.
    2. Mr. Tamon Asonuma & Gerardo Peraza & Kristine Vitola & Mr. Takahiro Tsuda, 2014. "Sovereign Debt Restructurings in Belize: Achievements and Challenges Ahead," IMF Working Papers 2014/132, International Monetary Fund.
    3. Tamon Asonuma & Michael G. Papaioannou & Eriko Togo & Bert van Selm, 2020. "Belize’s 2016–17 Sovereign Debt Restructuring – Third Time Lucky?," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 2(14), pages 47-67, December.
    4. Lars E.O. Svensson, 2003. "Escaping from a Liquidity Trap and Deflation: The Foolproof Way and Others," Journal of Economic Perspectives, American Economic Association, vol. 17(4), pages 145-166, Fall.
    5. Hend Al-Sheikh & S. Nuri Erbas, 2012. "The Oil Curse and Labor Markets: The Case of Saudi Arabia," Working Papers 697, Economic Research Forum, revised 2012.
    6. Mr. Vivek B. Arora, 2007. "Monetary Policy Transparency and Financial Market Forecasts in South Africa," IMF Working Papers 2007/123, International Monetary Fund.
    7. Terry McKinley, 2006. "Gearing Public Finance to Growth, Employment and Poverty Reduction in Moldova," Research Report 3, International Policy Centre for Inclusive Growth.
    8. Silvia Marchesi & Tania Masi, 2019. "Sovereign risk after sovereign restructuring. Private and official default," Working Papers 423, University of Milano-Bicocca, Department of Economics, revised Nov 2019.
    9. Francesca Caselli & Matilde Faralli & Paolo Manasse & Ugo Panizza, 2021. "On the Benefits of Repaying," IMF Working Papers 2021/233, International Monetary Fund.
    10. Josefin Meyer & Carmen M Reinhart & Christoph Trebesch, 2022. "Sovereign Bonds Since Waterloo," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 137(3), pages 1615-1680.
    11. Catão, Luis A.V. & Mano, Rui C., 2017. "Default premium," Journal of International Economics, Elsevier, vol. 107(C), pages 91-110.
    12. Trebesch, Christoph & Zabel, Michael, 2017. "The output costs of hard and soft sovereign default," European Economic Review, Elsevier, vol. 92(C), pages 416-432.
    13. Silvia Marchesi, 2016. "Life after default? Private vs. official sovereign debt restructurings," Development Working Papers 398, Centro Studi Luca d'Agliano, University of Milano, revised 26 Aug 2016.
    14. Silvia Marchesi & Tania Masi, 2020. "The price of haircuts: private and official default," Development Working Papers 460, Centro Studi Luca d'Agliano, University of Milano, revised 06 Feb 2020.
    15. Antonio Bassanetti & Carlo Cottarelli & Andrea F Presbitero, 2019. "Lost and found: market access and public debt dynamics," Oxford Economic Papers, Oxford University Press, vol. 71(2), pages 445-471.
    16. Kris James Mitchener & Christoph Trebesch, 2021. "Sovereign Debt in the 21st Century," NBER Working Papers 28598, National Bureau of Economic Research, Inc.
    17. Vivian Norambuena, 2015. "Sovereign Debt Default: Are Countries Trapped by Their Own Default History?," Working Papers wp416, University of Chile, Department of Economics.
    18. Mr. Tamon Asonuma, 2016. "Serial Sovereign Defaults and Debt Restructurings," IMF Working Papers 2016/066, International Monetary Fund.
    19. Marchesi, Silvia & Masi, Tania, 2020. "Sovereign rating after private and official restructuring," Economics Letters, Elsevier, vol. 192(C).
    20. Michael Tomz & Mark L.J. Wright, 2013. "Empirical Research on Sovereign Debt and Default," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 247-272, May.

    More about this item

    Keywords

    Sovereign Defaults; Sovereign Debt Restructuring; External Debt; Inter-Creditor Equity; Serial Defaults.;
    All these keywords.

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sgm:jbfeuw:v:2:y:2017:i:8:p:5-27. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/somuwpl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.