For the first time ever in Belize, the Government via the Central Bank is raising US dollars by issuing treasury notes. What this means is that the Government is looking at ways to inject new monies into the country’s foreign reserves. The way it works is that the Central Bank currently has an amount of foreign currency in reserve which is used to buy goods or services not produced in Belize and also to pay our foreign debt. With the downturn of the global economy Belize’s foreign reserve is only sufficient to take us for a few more months. This has led the Prime Minister to turn to Belizeans abroad and at home asking them to turn in their legal US currency in exchange for treasury notes. It is like a domestic loan of sorts that those who have US currency will be lending to the Government and will be paid back with interest. The Office of the Prime Minister issued a pre-recording of his announcement.
Rt. Hon. Dean Barrow, Prime Minister of Belize: “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.
Over and above these three distinct layers of foreign exchange supply, I am pleased to announce now a groundbreaking 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.”
As the Prime Minister mentioned, Belize is expecting the disbursement of one hundred million US dollars in loans from various agencies which would be paid into the Central Bank. The Central Bank will then convert it to Belize dollars and retain the US currency to inject into the foreign reserves. The treasury bonds come with a fixed rate of six point five percent and a fixed time. The treasury notes would be redeemable and will be settled in three equal tranches at the close of Years 3, 4 and 5. Interest on the Note is to be paid semi-annually.
The Belize Chamber of Commerce and Industry wasted no time in responding to the move by Government. The group applauded the Prime Minister’s efforts to bolster the country’s foreign reserves but noted that this would be only a temporary fix. The BCCI therefore calls on the Government to find ways to ensure the sustainable growth of Belize’s foreign exchange. The release from the BCCI added that the repayment of the principal within five years will require export earnings which would then need improvements in Belize’s competitiveness. The BCCI stated that they stand ready to work alongside the Government in bolstering the economy.