In the U.S., a person’s ability to borrow money to pay for their education, buy a car or purchase a house is in part based on their credit scores. That score is generated based on the individual’s credit history, which includes everything from how much is borrowed to whether that money is repaid on time. Since 2014, credit reporting legislation has been contemplated and drafted here in Belize and now it appears that bill may be soon introduced. We asked Ishmael Quiroz of the Economic Development Council about the reasoning behind such a law.
Ishmael Quiroz, Director, Public-Private Dialogue, Econ. Dev. Council, OPM: “The Credit Reporting Bill has already been drafted and it’s a number of years old now. The Central Bank actually commissioned and championed that and we have to understand that the Central Bank’s role as regulator of financial institutions, in between banks and credit unions is to ensure that the financial system is healthy. That the banks are, that their portfolio are robust and is not weakened by low repayment upgrades and so that’s where the Central Bank is interested in ensuring that there is a system in the country in ensuring that your debt and your credit history can be recorded somewhere so that the banks can cross reference and check to ensure that you’re not overextending yourself as a borrower and this will help the banks to have a healthier portfolio and for the entire system to be, you know, more secure and with that comes a greater confidence and the ability to relend and the idea is that if you have solid and good, a good and solid credit history, that you could be offered more affordable interest rates because your risk is reduced. And so that’s, those are some of the basic elements of why the Credit Reporting Bill is important and how it plays a role in helping small businesses have access to finance.”
However, some have argued that Belize does not have the proper mechanisms to fully implement such legislation. Quiroz offered his views on that.
Ishmael Quiroz, Director, Public-Private Dialogue, Econ. Dev. Council, OPM: “I think it certainly needs to be well thought out and ventilated to consider the impacts as well as the opportunities that could present themselves and impacts can go positive, you know mostly positive because it will create up, it will open up opportunities but of course, yes, it does have implications when we’re beginning to talk about your personal indebtedness and this is where financial literacy then comes in and helps the people in general to have more sound personal financial management practices. So it’s a long ways yet. It’s not something that is immediately going to be implemented. There’s a lot of education and awareness building that would have to complement it and so it’s something that I think still is being contemplated. It’s not set in stone yet whether they will pass it but I think the idea is to really find how it can best serve the people of Belize as well as the financial system.”
Arturo Lizarraga, the president of the Belize Business Bureau, also sits on the Economic Development Council and he told Love News today that there are simply greater priorities at this time than introducing such a bill.
Arturo Lizarraga, President, Belize Business Bureau: “I believe that package is coming out of the same pot that the recent village tax, the thing that got a square rebuttal, that got a rebuttal because it was eight years in the making. The Barrow administration which is tax and spend, they saw the government from a government perspective will tax and then decide who gets the money. So that same legislation is coming out from the same group. That legislation favours the banks only. It favours the pawn shops only. It favours the people, for example right now the problem is we need to revamp the banking sector. Between the attorneys and the banks, they eat the poor people. You know that’s the worst thing. If you do some research and you look at the early founding fathers of the Americas, they were very anti-banking and legal being them together because it can wreak havoc on the poor people. What I am suggesting is that before we contemplate and push those kinds of policies, we need to consider a Banking ACT that allows for bankruptcy. Chapter 7. Chapter 13 where you give, where a bank cannot take away the Port and gives itself the Port but allows the receivership so that that receivership can reorganise that the person who has owed the money because they have equity in this thing because it’s not just the bank’s money is at risk. It’s the owner of the business. So that a business owner can reorganise, sell off some assets, come back, pay off his debt or at least have some arrangement where the person doesn’t end up in jail or cannot. I mean you remember Aikman? The political forces came against Aikman and destroyed him and he could not come back as a productive part of the Belizean society. We should not allow that to happen to anybody. We should allow, before we start contemplating credit and helping the banks and the authorities to make money and the policeman and the bailiff, we need to make Chapter 7 laws. We need to make Chapter 13 laws.”
A draft of the actual legislation has been finalised but there is no definitive timeline yet on when that will be introduced.