Belize's main opposition People's United Party (PUP) is calling on Prime Minister Dean Barrow to immediately address the nation on the implications of his administration's decision to default on its external debt payment due on August 20.
PUP said that Opposition Leader Francis Fonseca was neither consulted nor informed of "this very critical decision which has very serious implications for Belize's economy and development".
A statement from Barrow's office on Tuesday said that the next interest payment of US$46 million on Belize's accumulated US$544 million foreign debt, referred to as the "super bond", is due on August 20.
The payment would have been the country's first under the interest payment plan on the US dollar Step Up Bonds due in 2029.
The government said the reason for the non-payment is that the stepped up payments represent almost one half of the country's total public indebtedness under the new stepped up 8.5 per cent rate.
"We simply cannot afford this coupon payment given the financing shortfalls and other challenges we face," Barrow said, adding that his administration wants to "move quickly toward a sensible restructuring of the instrument".
Belize is currently trying to renegotiate its foreign debts with creditors and has offered them a three-pronged payment plan, which involves an extension of the payment period on the super bond well beyond the 2029 maturity date.
The PUP said the coupon payment also has a 30-day grace period that ends on September 19 after which there could be a default on the coupon payment.
It said if that should happen locally a default could be interpreted as a hardball stance in the country's negotiation, but for the foreign creditors, it may be viewed as a clear defiance that could make Belize's junk graded bonds less stable on the international markets.
Manager of Belize Business Bureau, Hipolito Bautista, said that there are penalties for defaulting and the country may now have to look at the Washington-based International Monetary Fund (IMF) for assistance.
He said the creditors "could seize all our assets ... all our foreign exchange assets and that will take away from us the foreign exchange we need to keep this economy going and so it seems quite likely that the government will have to go to the IMF".
Hipolito described the IMF as a "serious customer" that is hated in some parts of the world "because they play no games".
"We have to study more closely what the IMF will bring as medicine to lend us this money," he said. "The first thing is this, they will insist on structural adjustment policies and in particular (that) means getting rid of all those non-productive initiatives that the government have."
Hipolito said "The second thing they will go after is our tax holidays so those companies, especially those local companies who try to keep their prices down for the Belizean public, will not be able to get any tax breaks and hence some products, even bread, will go sky high."