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Jun 5, 2020

$30M Fixed Rate Notes are Introduced to Raise Foreign Exchange

Earlier today, the Government introduced the first-of-its-kind fixed rate notes totaling thirty million U.S. dollars, as a means of raising much needed foreign exchange.  The business community has sounded the alarm that commercial banks and other lending institutions have considerably reduced the limit of U.S. dollars on credit cards for private and corporate accounts.  This, despite, the prime minister’s assurances that the Central Bank has three months of foreign exchange cover in it reserves.  The notes are broken down into fifty thousand dollar denominations in U.S. currency and will be issued on June twenty-ninth.  The principal amount of thirty million dollars will be repaid in three equal installments in 2023, 2024 and 2025 when it reaches maturity.  According to a release issued by the Central Bank, all interest on those notes will be payable in U.S. dollars, semiannually until final maturity.  Just ahead of the prime minister’s announcement on Thursday, the Belize Chamber of Commerce and Industry had formulated a position in which it was urging government to address the growing issue of foreign exchange shortage.  While government has taken that initial step of introducing the fixed rate notes, the question is whether thirty million U.S. dollars will suffice and for how long.

 

Nikita Usher

Nikita Usher, President, B.C.C.I.

“What I can say is, you heard the prime minister, and I kept hearing that in more than one presentation that he has made, that we have, just around the COVID time we had heard that we had in excess or just about three months cover that you hear about and that three months cover is typically what happens.  You look at what is your outflows of U.S. currency or foreign exchange and you average that over a period and say okay you have about three months cover and I think they were saying at the time that we should be okay up until about June or July.  The introduction of this is a first time for Belize.  I am assuming here that we have people here who would be taking up that slack.  Certainly whether you get ten million or thirty million, it’s certainly a help; in addition to that is your hundred million.  I am of the opinion that the government is with the view that they will have tourism open hopefully very soon and so you will have inflows starting to come back and that is supposed to bridge until we reach that point.  If we don’t get tourism open back and even if we open, our airports I’m speaking about, then you still are not too certain whether you will have that same level of tourism as you had in the past.  So that again becomes a challenge and that is why the Chamber is insisting that we must look at how do we make businesses who are still able to generate that foreign exchange either increase or make it easier for them to generate it as earliest as possible.”


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