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Jun 10, 2020

P.U.P. Says U.S. Treasury Note is Illegal and Expensive

Chris Coye

On June fourth, Prime Minister Dean Barrow released a pre-recorded video statement announcing the launch of a thirty-million U.S.-dollar treasury note. The PM said it is the first-of-its-kind Central Bank initiative that aims to fix Belize’s foreign exchange woes. Barrow said that the monetary instrument is a special offering with a tenor of five years and a coupon of six point five percent.  The announcement caught the People’s United Party off guard as it was the first time that Opposition Leader John Briceño heard of the initiative.  But while Barrow said it should address the “temporary economic slump caused by the COVID-19 lockdown,” the P.U.P. says that the government has no authority to issue the notes.  In a virtual press conference today, Briceño, flanked by Party Chairman Henry Charles Usher and Financial Advisor Chris Coye, questioned the legality of the treasury note.  According to Coye, the government’s action contravenes the Treasury Bills Act and the Financial and Audit Reform Act. Coye also stressed that the coupon is way too expensive, especially during COVID times.


Chris Coye, Financial Advisor, P.U.P.  

“The legal advice that we have gotten so far suggest that government is not authorized to issue these treasury notes both under the Treasury Bill Act and under the Financial and Audit Reform Act. So there would have to be an amendment to the Treasury Bill Act and then there will have to be approval under the Financial Audit Reform Act. So although the notice has apparently been put out there and the intended closing is around the twenty-third of June, I am not sure if there is enough time to go through that process to get those legal authorities in place. So it does like we’ve said present a significant concern and really a concern for anybody who may be interested in these notes. The interest rate being six and half percent I think one economic advisor highlights the fact that that is one of the if not the most expensive debt financing in the entire hemisphere at six and half percent. They have interest rates at all time lows right now because of the current situation and the efforts of all these monetary authorities across the world. So for Belize to be putting out a note with that kind of interest rates immediately raises some questions. If we go about issuing treasury notes in Belize US dollars treasury notes in Belize and we have our domestic banks or even the Central Bank buy out those notes, then there is no new money that was raised. It is the same money that is circulating.”

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