So, after the Government officials were given this very detailed picture, the Prime Minister, the Agriculture Minister, and the Governor of the Central Bank started to come up with a plan of action to alleviate the financial pain that the farmers are facing. They've gotten the support of all the local financial institutions to give those impacted by the drought a little relief from their loan payments, given that they are facing these 10s of millions of dollars in losses.
Here's what the Central Bank Governor, the Representative for domestic banks, and the Development Finance Corporation have decided to implement so that the farmers can get a little ease:
Joy Grant - Governor, Central Bank of Belize "On September 2nd, we at the Central Bank realized that something had to be done, and done early for the farmers. We decided that to do this, we would have to form a working group and that working group comprises the Ministry of Agriculture, the domestic banks, also the credit unions who signed on immediately to change their rates and terms of their loans. The Social Security Board had a representative, the DFC, and I think those were the key people who came together immediately. And we started to consider several options that we could take to help the farmers and the ranchers. We went to our records, and we found that at least 10% of all the outstanding loans in the country, some 277 million dollars are for agriculture. So, if you have any kind of failure within this sector, it, of course, will have ramifications all over the country. Immediately, the domestic banks, the credit unions said, we will be involved. We will do what we have to do; this important. And that was so refreshing because there was no sell-job at all, it was what are we going to do and how soon can we do it."
Rt. Hon. Dean Barrow - Prime Minister "This old saw about [being] cold as a banker's heart', certainly was put paid to, in terms of the response from the Commercial Banks. They immediately were all in with respect to their agreement to and support for the measures that ultimately were agreed in order to provide relief for the farmers."
Joy Grant "One of the first things that we suggested, and everybody was happy, was to change the classification period by 12 to 18 months for agricultural loans. The agricultural sector is a risky sector. We also understood that if we were to help the farmers, and the ranchers, that they would have to be given additional time to repay the loans that they now have on the books. So, we're giving another 12 months; we think that is good, but there are exceptional cases where we may have to go to 18 months. So, the farmer no longer has to be worried that if I don't pay, they will come after my land or something. They can continue to meet their obligations, and that the bank will be working with them."
"Because, as I said earlier, agriculture is risky, we have told the financial institutions that if something goes wrong, they have to provisions - they have to put aside for 100% of what is on the books. We looked at that, and everybody agreed that we would reduce that from 100% to 50%. And that allows the banks than to have a capital buffer for them to do additional lending, etc. So, we talked about moving from a 100% risk ratio to a 50% risk ratio, which is good for both parties going forward. This will have a really positive impact on the farmers and the ranchers because it allows them to repay their loan, to continue living the life they're living now, and also access funds to be able to replant."
Sandra Bedran - Chair, Belize Bankers Association "We're very pleased that the Central Bank has agreed to give us the time to work with the farmers. And we can't go out there and do it as a blanket. We'll have to literally visit each one of our customers."
Natalee Goff - General Manager, DFC "Our Board approved some interim measures, and they might have to be tweaked as we go along. But, with the sanction of the Central Bank, our board has said that they're willing to up to 24 months in interest. But, of course, we have to have that discussion with the Central Bank because we know the approval is only up to 18 months. We're looking at very subsidized rates. If we can get cheaper financing, if we can get it one percent, the interest rate can be much lower because all we're looking on is to add the admin cost of putting a loan on the books. And of course, they will be some risk. So, it will be at - we don't want to say a rate at this time, but it will be at very subsidized rates. It's in our best interest to see these loans repaid. If we don't do this now, the investment we have on the ground right now, we will not recover."
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