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Jun 4, 2020

The Groundbreaking U.S. Dollar Treasury Note

Dean Barrow

Is a thirty million U.S.-dollar treasury note the short term fix to Belize’s foreign exchange woes? Well, tonight the Prime Minister says this first-of-its-kind Central Bank initiative has the government’s full support.  As the economic impact of the COVID-19 barrels down on the country and commercial banks place limits on credit card spending, the PM says the initiative will bolster the Central Bank reserves.  The public placement note will launched this Friday; it comes with fixed interest rate to be paid semi-annually and will be available to individual and corporate purchasers.  The government hoping to attract Belizeans with U.S. dollar accounts for the five-year initiative, which is tax free. He explains how this will work.

 

Prime Minister Dean Barrow

“I am pleased to announce now a groundbreaking initiative by the Central Bank: the first-ever public placement of a U.S. dollar-denominated Treasury note backed by the full faith and credit of the Government of Belize. With a face value of U.S. thirty million, a tenor of five years and a coupon of six point five percent, the special offering will be launched on June fifth, 2020. Interest on the Note is to be paid semi-annually and principal redemption will be settled in three equal tranches at the close of years three, four and five. Proceeds of the Note are purposed to augment the stock of official Central Bank reserves while the maturity is tailor-made to span the crisis. Hence the affordable principal payoff dates, positioned well beyond what we believe to be the temporary economic slump caused by the COVID-19 lockdown. To facilitate the remittance of interest and principal payments, successful purchasers of these Notes, whether individual, institutional or corporate, will of course be eligible for domestic U.S. dollar accounts.  The Central Bank and our commercial banks will closely collaborate to ensure a subscription process that is both efficient and diligent. It is widely acknowledged that U.S. dollar accounts have been held abroad by Belizean businesses and individuals from time immemorial. This tax-free Treasury Note now has been crafted as an exceptional, seamless opportunity to relocate this capital to a safe, fixed income asset of the highest credit quality available in Belize.”


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