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Belize City Mayor ready for new Cash Flow Plan

Rather than resorting to the high cost of overdraft bank facilities and expensive property tax discounts, the Belize City Council has devised an alternative plan to deal with cash flow issues. It intends to institute a Municipal paper, short-term financing is a useful tool for the implementation of a better cash management system.  A municipal paper, once established, could create a recurrent cash injection source that will be optimally structured to meet the seasonal volatility of the Council’s cash flow.   Belize City Mayor Bernard Wagner says that the council expects to have all these important elements of the investment in place before the end of July 2019.

Belize City Mayor – Bernard Wagner: “The bond again is something that we started those discussions since we took office and the Prime Minister has been very gracious to us in entertaining the discussion and we are at a point now where we have completed the relative legislation, it is now at the Attorney General’s Office. The discussion with the PM last week, he indicated to me that the Attorney General will look over the legislation and thereafter pass it on to the Cabinet, thereafter on to the House of Representatives. But the bond is a short term paper, it is an investment paper. We have had a substantial interest, we have not gone public as yet and we have had over 7 million dollars worth of investors who want to buy into the bond. It is a short term paper that will provide the council with savings in respect to finance charges. As you know the Council goes through flows, peaks, and valleys. We are entering our low season: June, July, August and September. We want to straighten that out, it is something that we feel that with the curtailing of finance charges, normally at this time of the year you will borrow ten percent from the banks. This bond will allow us to pay three percent, that is seven percent in savings. When you factor in something like twenty million you are looking at savings of one point three million per year and if you extend that over a period of time it is substantial savings for the council. That way we sure up our cash flow problems, we are able to meet some of the infrastructural needs of the city via those savings. Right now as a council we are reluctant to use our normal operational cash flow to fund capital projects, it eats away at your cash flow and that is why the bond is the best way to go.”

The investment is comprised of $6 million dollars in short-term securities structured over three tranches. The tranches will have maturities of 91, 182- and 364-days paying interest rates of 3.20%, 3.45%, and 3.70% respectively.