Belize's Debt Burden: A Country In The Red

Belize's national debt is projected to increase by 0.2 billion US dollars between 2024 and 2029, reaching a new peak of 2.26 billion US dollars in 2029. In 2022, the country's public debt was 1,892 million dollars, a significant increase from previous years. Belize has taken innovative approaches to manage its debt, such as a debt-for-nature swap with The Nature Conservancy, which reduced its external debt by 10% of GDP and positively impacted marine conservation efforts.

Belize's national debt in 2022

In 2022, the country's per capita debt was 4,281 US dollars per inhabitant, up from 4,638 US dollars in 2021 and 3,550 US dollars in 2012. Belize's debt position has improved compared to other countries, and it is now 113th in terms of debt to GDP and 110th in debt per capita out of 191 countries.

In November 2021, Belize signed a debt-for-nature swap with The Nature Conservancy (TNC), an environmental organisation, which reduced the country's external debt by 10% of GDP. Under the agreement, a TNC subsidiary lent funds to Belize to buy back a $553 million "superbond" at a discounted price of 55 cents per dollar. In return, Belize agreed to spend about $4 million a year on marine conservation until 2041 and double its marine protection parks by 2026.

The country's debt-for-nature swap

Belize's barrier reef is a biodiversity hotspot, home to around 1,400 species, including endangered hawksbill turtles, manatees, and several threatened types of sharks. However, climate change, warming oceans, overfishing, mangrove felling, and unchecked coastal development pose significant threats to this fragile ecosystem.

To address these challenges, Belize signed a debt-for-nature swap agreement with The Nature Conservancy (TNC), an environmental organisation, on November 5, 2021. This innovative deal reduced the country's external debt by a significant 10% of its GDP and substantially enhanced the prospects for marine conservation.

Here's how the agreement unfolded:

• A subsidiary of TNC lent funds to Belize to repurchase its $553 million "superbond," representing 30% of its GDP, at a discounted rate of 55 cents per dollar.
• To finance this transaction, TNC's subsidiary issued $364 million in "blue bonds," arranged and underwritten by Credit Suisse.
• The International Development Finance Corporation (DFC), the US government's development bank, provided insurance for the blue bonds, resulting in a low-interest rate, a 10-year grace period, and a 19-year maturity.
• In exchange, Belize committed to investing approximately $4 million annually in marine conservation efforts until 2041.
• By 2026, Belize aims to double its marine protection parks, encompassing coral reefs, mangroves, and sea grasses, from 15.9% to 30% of its oceans.
• An endowment fund of $23.5 million will further support conservation efforts beyond 2040.

This debt-for-nature swap not only alleviated Belize's debt burden but also demonstrated its commitment to environmental protection and sustainable development. It showcased the potential for similar deals with countries facing economic challenges and burdened with expensive debt.

The national debt in 2029

Belize's national debt is forecast to continuously increase between 2024 and 2029 by a total of 0.2 billion US dollars (+9.71%). This means that in 2029, after the seventh consecutive increasing year, the national debt is estimated to reach a new peak of 2.26 billion US dollars.

Belize's national debt has been rising since 2012, when it was 942 million euros or 1,211 million US dollars. By 2021, the debt had increased to 1,795 million euros or 1,892 million US dollars. This represented a rise of 110 or 102 million since 2021. As a percentage of GDP, the debt was 63.38% in 2022, down from 82.21% in 2021 and 63.67% in 2012.

In November 2021, Belize signed a debt-for-nature swap with The Nature Conservancy (TNC), an environmental organization, which reduced the country’s external debt by a striking 10% of GDP. Under the agreement, a TNC subsidiary lent funds to Belize to buy back a $553 million “superbond”—the government’s entire stock of external commercial debt, equivalent to 30% of GDP—at a discounted price of 55 cents per dollar. In return, Belize agreed to spend about $4 million a year on marine conservation until 2041 and to double its marine-protection parks from 15.9% of its oceans to 30% by 2026.

The debt per person in 2021

In 2021, the debt per person in Belize was €3,919 ($4,638) and rose to €4,062 ($4,281) in 2022. This is a rise of €143 ($357) per person.

In 2021, Belize's national debt was 82.21% of its GDP. This fell to 63.38% in 2022, a decrease of 18.83 percentage points. However, the overall national debt increased to $1,892 million in 2022, up from $1,795 million in 2021.

Belize's debt has been rising since 2012 in global debt terms. In 2012, the national debt was $1,211 million, and the debt per person was $3,550.

In November 2021, Belize signed a debt-for-nature swap with The Nature Conservancy (TNC), an environmental organisation. This deal reduced the country's external debt by 10% of its GDP and improved the prospects for marine conservation and protection. Under the agreement, a TNC subsidiary lent funds to Belize to buy back a $553 million "superbond" at a discounted price of 55 cents per dollar. In return, Belize agreed to spend about $4 million a year on marine conservation until 2041 and double its marine protection parks from 15.9% of its oceans to 30% by 2026.

Belize's debt compared to other countries

Belize's national debt is expected to increase by 0.2 billion US dollars between 2024 and 2029, reaching a new peak of 2.26 billion US dollars in 2029. In 2022, Belize's public debt was 1,892 million US dollars, an increase of 110 million US dollars since 2021. This amount represented 63.38% of Belize's GDP, a decrease from 82.21% in 2021.

In comparison, other countries in the region such as El Salvador, Panama, and Costa Rica also carry significant debt. However, the impact of Belize's debt on its overall debt-to-GDP ratio is notable, and it has the highest debt-to-GDP ratio among the countries mentioned.

Belize has taken innovative approaches to debt management, such as the 2021 debt-for-nature swap with The Nature Conservancy (TNC). This deal reduced the country's external debt by 10% of GDP and improved the prospects for marine protection. Belize agreed to increase its spending on marine conservation and double its marine-protected areas by 2026.

The small Caribbean economy's debt-to-GDP ratio is higher than that of other countries, and the impact of its debt agreements on this ratio is significant. The country has explored creative solutions to manage its debt and promote sustainable development, attracting investors interested in environmental and social governance.

Frequently asked questions