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Aug 18, 2015

What’s the Opposition’s Take on Local Banking Sector?

Francis Fonseca

Fonseca says that while all eyes are on Guatemala and the threat to the Sarstoon, there is another critical issue on the front-burner which has potentially devastating consequences on Belize’s economy – the crisis in our banking system. In recent months, Belize Bank, Belize Bank International and Atlantic Bank International have lost correspondent bank relationships with Bank of America, while Heritage Bank has been put on notice.  CIBC First Caribbean International Bank, on the other hand, is pulling out of the country.

 

Francis Fonseca, P.U.P. Leader

“The reality is that offshore banks with no corresponding banks means no offshore banking sector and the essence of offshore banking is the free flow of foreign currency, primarily US dollars through the banks without any exchange control. This is akin to conducting banking business in the US, but doing it outside of the US. Without these corresponding banks that we have been hearing about, then you are forced to do banking back in the United States, which means that Belize offshore banks are no longer attractive, and ultimately leads to a loss of skilled labour jobs in the banking sector. Moreover apart from facilitating the offshore services sector in Belize, funds that ended up in the Belize offshore banks played a key role in tourism investment in Belize. It also played a key role in financing citrus, shrimp and major export industries in Belize among others. This will all now dry up, thereby negatively affecting these key industries in our economy, and this will mean reduced investment in these industries and most certainly loss of jobs. And the loss of correspondent banks by domestic banks, this is critically important, can have an even more severe adverse impact on our economy. We know that FCIB is gone. They are gone. Ordinary everyday transactions may be impaired, if not curtailed. Just the purchase of consumer items from abroad, like imported food or imported electricity or imported fuel, not to mention capital items like steel, cement and equipment, will become difficult. We cannot allow our domestic banks to lose their correspondent banking relationships with the US, and we cannot concede as this government appears to have conceded and this Central Bank we have now, that we have to lie with this situation like we live with hurricanes. That is absolute nonsense. Belize is not a risky place to do business with. The banks in Belize are not risky to do business with. What we have to do, and what the government’s obligation is to do, and what the Central Bank’s obligation to do, which they are not doing, is to convince the United States and other developed jurisdiction who are blacklisting us that Belize is not risky. If they believe we are not risky, then there is no de-risking to be done. It is as simple as that.”

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