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Twsco SWOT. Weak external liquidity. The liquidity position of the public
sector is especially dire in 2005, hampered by the massive ...
Submitted by phasavee on February 5, 2006
Category: Business
Words: 673 | Pages: 3
Views: 381
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Weak external liquidity. The liquidity position of the public sector is especially dire in 2005, hampered by the massive amortization needs (as compared to the available assets) and limited ability to access external financing. The public sector's amortization for 2005 is estimated at US$150 million (including the amortization of US$79 million of notes arranged by the Capital Markets Financial Services, Inc. in November 2004) compared with gross international reserves of US$139 million. The actual financing gap is even higher, as the public sector finances larger part of Belize's high current account deficit. At the same time, the available (usable) reserves are lower, at roughly US$90 million, since the international reserves must cover at least 40% of the monetary base in support of the Belizean peg. The access to the external financing is limited and continues to suffer due to the unstable political situation. On a country level, the financing gap in 2005 (current account deficit + principal amortization + short-term debt) is estimated at US$524 million, or 580% of usable reserves, one of the highest ratios among the rated sovereigns. Specifically, this estimate includes the current account deficit (US$184 million); amortization payments of the public sector (US$150 million), and private sector financing needs (US$190 million).
High general government debt with a deteriorating profile. The government debt upward trajectory has been difficult to reverse due to persistent fiscal slippages and more recently, government's assumption of Development Finance Corporation's (DFC) debt as a result of the bank's financial collapse. DFC-related liabilities (including mortgage-backed securities (MBS) transactions initiated by DFC) are estimated at 9% of GDP and are considered (starting in 2004) the government's direct, rather than contingent liability. As a result, the general government debt has increased to 97% of GDP in 2004 (91% on a net basis), up from 85%...
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