Yesterday a loan motion to the tune of fifty million Belize dollars was presented in the Senate. The loan is from the Government of the Republic of China on Taiwan. The loan is categorized as a sovereign bi-lateral loan which is being facilitated by Mega International Commercial Bank Company Limited. The loan is for twenty years with a three year grace period. Government has agreed to make thirty five consecutive, almost equal semi-annual principal installments commencing 36 months after the signing date of the agreement. Financial Expert and UDP Senator, Dr. Carla Barnett, explained more.
Senator Dr. Carla Barnett
“And the issue of the interest rate, it’s a six month libor so that is the rate at which banks in the London Market lend each other for six months and so if you want to borrow a six month loan one bank to the other, that is the rate at which and that rate its always available, you can Google it on the net to see what it is; it’s somewhere around 1% a little bit more right now but it generally is the lowest rate on the market because its the rate at which banks lend to each other and many credit facilities use Libor as the base rate and then add, that is just what we do.”
According to the order papers, the loan is for general budgetary support. Dr. Barnett explained what that means.
Senator Dr. Carla Barnett
“Let me just say that more and more governments and institutions are moving towards budget support lending rather than lending tide to projects. Because if you think about it, it reduces, it ought to in theory, create greater efficiency in terms of how government funding takes place so more and more we are seeing the move towards budget support. Countries have to demonstrate in many instances that they are capable of managing money through that process. Some countries prefer to use general budget support rather than get into the nitty gritty of dealing with individual projects so there is nothing by definition negative about general budget support; it’s a way in which financing is provided from time to time by some institutions and by some countries on a bilateral basis. Of course when you borrow commercially, commercial lending tends to be general budget support but because you just borrow it and it goes in and you don’t really know what its tied to and we’ve had that experience in the past as well. So just to say that general budget support is not by definition anything negative in fact moving towards general budget support is a way in which lenders are seeking to get greater efficiency in the allocation and use of their resources rather than becoming involved in the nitty gritty of managing a lot of little projects on the ground on a bilateral basis with countries.”
The loan will be disbursed in advances within one calendar year from the signing of the agreement.