"The government came in with the idea to jumpstart the economy with a lot of infrastructure projects that caused their deficit and debt levels to rise," Richard Francis, an analyst at S&P in New York, said in a telephone interview.

S&P cut the credit rating for Belize, a nation that borders Mexico and Guatemala, on August 4 to CC, leaving it two levels above a default rating. The government on August 2 said it would seek to restructure some of its international debt.

"Negotiations could be a difficult balance, because I get the sense the government would like to do a market friendly restructuring, but what that entails isn't clear," Francis said. "And if they don't get enough relief they could get into trouble again in not so distant future."

The government had a deficit of $94.3 million in the fiscal year ending 2005, equal to 4.2 percent of gross domestic product and down from a deficit of 8 percent in the previous fiscal year.

Sugar, citrus fruit and juice, and bananas account for about 60 percent of Belize's annual exports, half of which are sent to the U.S. The country relies on tourism for about a fifth of the country's annual GDP.