Last week Wednesday at the launch of the UDP manifesto - the Prime Minister boldly announced that he would be meeting with bankers Yesterday to hammer out, quote "the kind of agreement that will see an immediate drop across the board in the lending rates in the banks of this country."
Well, that heady prediction was tempered by the blunt force of reality when he did hold that meeting Yesterday.
At around 10:00 the bosses of all the major banks went in to meet the PM at his Belize City Office - and when they left at 11:30, all sides were cordial, but it was clear that no agreement to instantaneously lower rates had been arrived at.
The plan going forward is more measured than might have been expected:
Prime Minister Dean Barrow - Prime Minister of Belize
"It was a very useful, constructive meeting. It was agreed that my willingness to legislate should not translate into a preparedness to deploy that legislative tool, before more time is given for the discussions to continue."
Steve Duncan - Manager, Heritage Bank
"I think what we as bankers have been trying to say to the Government is that we do not feel that legislating interests rates is a progressive step. We feel that it is more a retrograde step, and we've been trying to stay away from it. The issue is more complex. All markets are now moving toward trying to have market forces determine things like rates. And we don't want to go back, and this is how we've done it for years."
Prime Minister Dean Barrow
"A menu of options was agreed for consideration. We will meet again in 3 months' time, assuming that I am back here. That would have provided a sufficient window for us to determine whether what has been talked about could help in the meantime to reduce the spread. I must say that it turns out that different banks are in fact enjoying different spreads. It's not uniform. The Belize Bank was able to claim apparently with factual justification that it has the lowest spread, followed by Heritage. The Belize Bank spread - i think - is under 6. Their prime lending rate is perhaps 10%, and their savings rate is 5%. So, it's going to be difficult to come up with a one-size-fits-all solution, and I accept that I can't just yoke everybody together. Bottom line though, nothing will be done immediately in terms of legislation even if I am back on March 7. I have agreed to give this thing a chance to work as a kind of coalition of the willing before we consider - where it would be considered in some quarters - the 'nuclear option'."
Steve Duncan
"And the banks are not averse to bringing down interest rates at all. In fact, it has been coming down, but not as fast for some people, and we do recognize that."
Prime Minister Dean Barrow
"Before this meeting, I might have been prepared to say that one of the first legislative measures a new UDP Government would take is to legislate a cap on the spread. I - quite honestly - agreed that we should give the process of consultation and dialog a chance to work. Certainly, nothing will be done before the next scheduled meeting, which would take place 3 months or so, after the date of the General Elections."
As we understand it, the president of the Chamber of Commerce was also at the meeting...
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