Belize, a Central American nation with an economy the size of Pine Bluff, Ark., is running out of money to pay its debts. But the tiny country is playing hardball with its lenders.

Belize is insisting that creditors forgive 45% of what they are owed, or allow it to delay any debt payments for 15 years. Otherwise, it says it won't make its next payment of $23.1 million due on Monday. And if Belize and its bondholders don't reach a deal by Sept. 19, the country will default on its $543.8 million in outstanding debt—making it...