Belize's leading foreign exchange earner, tourism, is on an extended
hiatus, and no one can say for sure when it will return.
In the interim, the economy is in a nosedive, and many are getting
concerned - especially about foreign exchange shortages.
The banks are cutting back on credit card limits; last week we told you
about Atlantic Bank, and today we saw that Heritage Bank was also
cutting credit card spending to $5,000 Belize per month.
And that's why today, the business, institutional investor and
expatriate community viewed with great interest the launch of an
unusual and unprecedented monetary instrument by the government. It's
a U.S. dollar-denominated, tax free Treasury Note - backed by the
government of Belize, and those who invest in it will be able to hold
US dollar accounts in Belizean Banks.
The Prime Minister explained this novel new instrument in a special
message this evening, where ehe outlined the hard currency inflows that
are now coming in from international financial institutions:
Rt. Hon. Dean Barrow - Min. of Finance
"In the next few days, the first disbursement from the IDB's package is
expected; and thereafter, in rapid succession during the ensuing months,
the flows will come from Taiwan, the World Bank and OFID, in a total amount
of some US$100 million. These fresh inflows will augment the Central Bank's
official reserve position, which currently surpasses the traditional 3
months of import cover. And the renewal of tourism earnings will commence
during the third or, at the latest, fourth quarter of this year. I am
pleased to announce now a ground breaking initiative by the Central Bank:
the first-ever public placement of a U.S. dollar-denominated Treasury Note,
backed by the full faith and credit of the Government of Belize. With a
face value of US$30 million, a tenor of 5 years and a coupon of 6.5%, the
special offering will be launched on June 05, 2020. Interest on the Note is
to be paid semi-annually and principal redemption will be settled in three
equal tranches at the close of Years 3, 4 and 5. Proceeds of the Note are
purposed to augment the stock of official Central Bank reserves while the
maturity is tailor-made to span the crisis. Hence the affordable principal
payoff dates, positioned well beyond what we believe to be the temporary
economic slump caused by the COVID-19 lockdown. To facilitate the
remittance of interest and principal payments, successful purchasers of
these Notes, whether individual, institutional or corporate, will of course
be eligible for domestic U.S. dollar accounts. It is widely acknowledged
that U.S. dollar accounts have been held abroad by Belizean businesses and
individuals from time immemorial. This tax-free Treasury Note now has been
crafted as an exceptional, seamless opportunity to relocate this capital to
a safe, fixed income asset of the highest credit quality available in
Belize."
Early indications are that the Treasury Note is generating interest in
the business sector - but, of course, now we will have to wait and see
when the IFI funds actually start coming in.
Email
Print