Belize Risk Seen Rising

Moody’s says that while Belize is better prepared to face economic challenges than in previous years, it still is highly vulnerable to global recession, given elevated debt. The agency says its recent upgrade to B3 from Caa1 was primarily driven by improvement in key debt indicators over recent years, which reduce the likelihood of imminent default. However, the country should see a significant slowdown in growth in 2009 and 2010 as tourism and oil – leading contributors to GDP growth – weaken. “It will be important for the current administration to focus on ensuring fiscal sustainability,” says Moody’s senior vice president Alessandra Alecci. “Despite the improvement in liquidity and maturity profile . . . Belize’s public debt burden remains onerous both in absolute terms and relative to peers, constraining policy-makers’ room for maneuver in the event of a shock,” she adds. Moody’s classifies Belize’s susceptibility to risk as very high by global standards, but does not expect it to face funding or severe liquidity problems.