The Belize government has rejected a counter proposal from external creditors who collectively own US$544 million in bonds, referred to as super bonds scheduled for maturity in 2029.

The Dean Barrow governments position, submitted earlier this week, is included in a statement published on the Central Bank of Belize's website.

In September, Belize won a 60-day reprieve from bondholders after paying half of an overdue interest payment, delaying any potential legal action under the spectre of a full-blown default. The reprieve ended on December 1.

According to the official statement, the counter-proposal puts forward alternative scenarios all of which the government says offers only "temporary reductions in the current coupon rate with modest extensions in average life.

These alternative scenarios include temporary reduction in the coupon rate and an extension in the average life of the bond, a return to the 8.5 per cent coupon rate at the expiry of the reduced coupon period, and a series of "Required Terms" which includes "GDP (Gross Domestic Product) warrants and oil recovery certificates," and the payment of what's called consent fees to participating creditors.

But the Barrow administration's response to the counter offer is a complete rejection saying that the proposed return to the current 8.5 per cent coupon rate "is designed to be no worse than NPV neutral once the combined effect of the Required Terms is factored in.

The government also indicates that while the bond holders counter offer offers some short-term cash flow relief, the counter proposal is "wholly incompatible with its objective of placing the country's debt burden on a sustainable footing.

"The government of Belize believes that the counter-proposal ignored Belize's high overall debt levels, and that it amounts to little more than a short-term fix not dissimilar to the 2007 exercise," according to the official statement.

It said the government views the recently submitted scenarios from the bondholders to be "unsustainable" and that the Barrow administration is "disappointed that a counter-proposal of this nature has come five months after discussions with the committee began.

CMC