Bank lending curtailed by liquidity crunch

The Central Bank of Belize today moved to calm fears over the lack of money in the private banking system available for lending. A Central Bank release issued this afternoon admits that liquidity is tight and that the commercial banks have been asked to shift their lending priorities from consumer loans to the productive sector until the situation eases. Central Bank Governor Sydney Campbell, in a telephone interview, told News 5 that liquidity decreases each year at this time as merchants fill their shelves with Christmas inventory. When those goods are sold, funds move back into the system. Asked if there were any unusual contributing factors this year, Campbell said that statistics do not show any major problem with bad loans or that any large amount of deposits had suddenly been removed from the country. He added that the request to banks to balance their portfolios was a realization they had come to on their own through their ongoing meetings with Central Bank officials. The one class of financial institution not covered by the present initiative is the credit unions. While these major money players are not governed by banking legislation, Campbell did say that they too would be encouraged to re-order their lending priorities through government’s statutory supervisory mechanisms.