IDB Loan Promises to Strengthen Ministry of Finance Operations

As we reported on Wednesday, the Government has secured a US eight-million-dollar loan from the Inter-American Development Bank to upgrade the technological features of the Ministry of Finance. It’s all designed to strengthen public financial management and speed up business so that Belize can start to realize a healthier economy as quickly as possible. Minister of State at the Ministry of Finance, told News Five today that the investment is geared toward quick recovery so that more emphasis can be placed on social development.

Chris Coye, Minister of State, Finance (via zoom)

“Coming into Government, this new administration identified a lot of weaknesses in financial management. The means of procurement is highly decentralized across many ministries and other statutory bodies that really in its most basic – does not permit for efficiency.  There are no economies for scale, value for money – all of those things are not really accounted for. At the same time, we have very old processes. We have financial orders and other stores orders from like 1965 and 1968, really some outdated regulations that we have in place. With all those outdated rules, we have difficulty in terms of internal auditing. Internal audit controls really need to be enhanced; we need to have proper process audits, all these things to ensure the efficient use of scarce government resources, rather than the abuse or the squandering or the loss of those resources. So, those are some of the funding that this kind of funding seeks to address. In terms of financial management, another area that is quite interesting to see is cash management. The cash management for the government is really non-existent. Looking at something as basic as the US Treasury note. I don’t know if you recall last year, the government tried to raise thirty million dollars in treasury notes. They in fact raised only twenty million in treasury notes and those monies were, in effect, held at Central Bank. So, rather than trying to address the overdraft situation, which is costing us about seven percent per annum with the Central Bank, we’re paying six and a half percent on that twenty million-dollar treasury note. Why not sell that to Central Bank? If we need to buy it, we can buy it anyway and apply it to a reduction of our overdraft? You’d save millions of dollars in interest costs. So basic cash management was lacking and those are the things that we have already started acting upon. The procurement we’ve already started developing that unit and likewise with internal auditing. If we are able to save by way of efficiency gains fifty million dollars, then what we see then is a worthwhile investment and that will be an ongoing basis, if we are able to enjoy economies of scale if we can save twenty million dollars a year, you’d think sixteen million dollars – a one-time cost – would be worthwhile in that circumstance and when you have all those savings, that creates fiscal space and with that fiscal space that you have of monies that you ultimately gain by way of those efficiency gains, then you will be in a position to invest in public services and provide more public goods than you would have had otherwise before. So my eliminating leakages or minimizing the opportunity for corrupt behaviour, you’ll have more resources available for the general public.”

Coye also said that a fifty-million-dollar low-income loan facility that the government had announced the Central Bank would make available through the various lending institutions for business people who have lost out due to COVID-19 should come on stream as early as next week.