For those thousands of homeowners and business owners who are struggling
to hold onto their properties because they simply they cannot afford to continue
paying the high interest rates charged by commercial banks, tonight there is
still no good news to report and unfortunately many may be fighting a losing
battle. Already the list of homes being foreclosed, mortgaged and auctioned
has been growing in the local newspapers and if current trends continue in 2010
we should expect to see far more properties advertised.
When 7News last spoke with the governor of the Central Bank which regulates
the banks, he told us he doesn’t know what can be done. And now the Minister
of Finance and Prime Minister is saying much the same thing. He spoke on Wednesday
with 7News director Jules Vasquez about those same interest rates. He said Cabinet
is looking at it, but there’s only so much – or so little - that
can be done.
Hon. Dean Barrow, Minister of Finance
“I asked for and received a paper from the Central Bank setting out
what it is doing and the steps it feels it can take and that was circulated
in Cabinet as regards interest rates. And while we’ve been having conversations
and there are things they can do, and while there is a suggestion that one such
measure would be to move the floor that there currently is on deposit rates,
I am not entirely convinced. It strikes me that ultimately except you legislate
to give the Central Bank the absolute unequivocal power to fix interest rates,
you really are relying on moral suasion without any disrespect to my friends
in banking, I don’t think moral suasion is used by the bankers as a particularly
valuable or persuasive commodity.”
Jules Vasquez,
“So are you minded to introduce legislation which would allow the Central
Bank to fix those rates?”
Hon. Dean Barrow,
“Not at this juncture. It is extremely complex, all of these banks
are foreign owned. The leverage that they have over our system is such that
this would require extremely careful; study, extremely careful calibration before
you could arrive at a formula in terms of giving the Central Bank the power
that will work, that won’t scare off these people or that won’t
cause them to pick up their marbles and disappear.
So my point is that I am not ruling it out for the future but I can’t
in good conscience tell you that we are anywhere near to a point that would
see government saying we are simply going to give the Central Bank the power
to say you fix interest rates tomorrow.”
Jules Vasquez,
“So then what you’re saying is that there is nothing the government
or the regulator can do?”
Hon. Dean Barrow,
“Nothing that can act as a kind of big stick with which to beat the
banks into compliance. The Central Bank on behalf of the government is working
with the banks, they say that they can point to some perhaps not extremely impressive
results but things that would represent a start.
They say that it was consequence of the dialogue and the Central Bank enlisted
the Chamber of Commerce when it had this roundtable discussion with the banks
but as a result of that the Atlantic Bank has offered some kind of credit relief.
That’s of course for existing customers and it is clear that the Belize
Bank is prepared to talk about lower interest rates for particular sectors in
return for something that I will not go into that they would want to negotiate.
So an effort has been made, the dialogue continues to take place and there
is every indication that some incremental progress can be made. But to feel
that we can have a neat comprehensive solution that would mean tomorrow or next
week or next month or early next year, all the banks would be subject to some
directive enforceable directive that would say you can’t lend for more
than 11%, we are not anywhere close to that.”
We’ll continue to press to see what can be done to advocate for
homeowners and small businesses especially who have been put in a strangle hold
by high interest rates.
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