The second and third reading of the Education and Training Bill received all the attention at the first sitting of the House of Representatives for the year 2010. This is understandable because it was the subject of a year’s consultation, back and forth accusations in the media and a demonstration by one of the country’s most powerful unions, BNTU. It had all the sensitive issues viewers love. However,

Regulating the Flow of Foreign Exchange

These Bills repeal fiscal irresponsible actions executed by the People’s United Party in their effort to bleed the Central Bank of Belize and deregulate the financial market making it susceptible to corrupt foreign exchange trading and hiding. The intention of the package is to reestablish a single currency system; whereby, transactions in Belize no longer need US dollars but could be done with our own currency. It also allows the Government to monitor the flow of foreign exchange in and out of the country. The period of deregulation under the PUP reign made Belize a haven for money launderers.

An End to the Bleeding of Central Bank

The package also decreases the amount of direct credit that Government could access from the Central Bank. Under the PUP, this amount was 20% of Total Revenues from the previous year. Just before the last election, the PUP accessed this entire amount, over $140 million. This bleeding is what caused the economy to be vulnerable. The Prime Minister’s Bill cuts the amount of direct credit from Central Bank to 8.5% of TR from the previous year. Through the package of Bills, the Government will now use Treasury Notes and Bills to finance its social programs. This is a more accountable practice.

Lowering Rates at Commercial Banks

Most economists will admit that when a country is in a recession, especially one caused by the banking system, the right move is to lower interest rates on both savings and loans. When the interest rates for savings is lowered, it prompts individuals to withdraw there funds and invest in the market. When interest rates for loans are lowered, it encourages individuals to borrow and spend.

Therefore, the market is active and the economy picks up. Belizeans have been deserving of lower loan rates for a while now, but it is yet to come. Even after the Global recession hit home the banks have refused to make the right move. There are no regulations on commercial banks that allow the Government to force an interest decrease. The banks are saying that they are struggling because of excess liquidity; basically, they have nothing to invest their money in- people are not borrowing much and because of this no profit is being made on their assets. The package includes the Treasury Bills (Amendment) Bill which allows the Government to issue more Treasury Notes and Bills. This will give the banks an instrument to invest in. They will now be able to invest in more Treasury Bills and Notes which will earn them an interest over time. Therefore, that is one less excuse for not lowering interest rates.

The move by the Prime Minister of Belize is a great gesture. He understands Belizeans’ frustration with the commercial banking system in Belize. It is a great gesture because he could have forced them to lower rates through the introduction of legislation; however, he listened to their reasons and now offers an opportunity. If the banks do not reduce interest rates after such a gesture, then the Prime Minister will once again stand up for Belizeans and force them to do so through the legislative process.