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Nov 8, 2017

If All Goes Well, Long-Term Reserves Will Recover in 2 Years

Joseph Waight

The removal of seventy-eight million U.S. dollars or the equivalent of a hundred and sixty million Belize dollars from the country’s foreign assets is nothing to sneeze at.  And the timing – as retailers go into high gear for the Christmas season – is going to have an impact. But Financial Secretary Joseph Waight told us today that while the long-term effects are going to be carefully watched, there should be no immediate effect on buying power.  However, just about everything must go right for the government for the next two years, at least to ensure that Belize successfully recovers from the B.T.L. misadventure – not to ignore continuing litigation on related aspects such as arbitration.

 

Joseph Waight, Financial Secretary

“It will not wipe out; it will reduce the reserves by about twenty, twenty-five percent. Remaining after that will be about three months of import cover which is fairly comfortable. Reserves are built over time, generally from surplus between your import and exports. It will take time to rebuild, but it is in a positive direction because the balance of payments is largely in equilibrium – some months you’re in, some months you’re out -  but it’s largely, over the period of time, the current account of the balance of payments as it is called, your trade account is largely positive over time. It will take some time, and we hope that production remains and prices remain and we don’t have natural disasters. But we don’t use the reserves for day-to-day financing of our trade activity; the reserves are reserves.  Certainly the balance remaining in the bank will be lower by seventy-eight million [U.S.] dollars; but that will not create any shortage or pressure on importers wanting to purchase foreign exchange for their imports because the system is largely in equilibrium, and they get that from their commercial banks in any event, not from the Central Bank.  It all depends on your level of exports, how well tourism is doing; hopefully you will have no natural disasters, it depends on the price of oil in the world market because those are our big imports, machinery and things, so it’s a little difficult. I would figure about two years.”

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