Central Bank Amendment Bill Proposes Change in Profit-Sharing Ratio

At last Friday’s House Sitting, Prime Minister John Briceño presented a Bill to amend the Central Bank of Belize Act. The Bill proposes to increase the authorized capital of the Bank to fifty million dollars and to adjust the profit-sharing ratio of net profits from a ten-ninety split to a thirty-seventy split. Here’s how the PM explained what the proposed Bill would allow.

John Briceño

Prime Minister John Briceño

“Before, ten percent of the profits used to stay for the Central Bank. We are going to change that now and making it that they could remain with thirty percent of the profits and one of the reasons why we’re doing that is that the management of the Central Bank is getting a lot more sophisticated and there’s a lot more need on doing our monetary policy and monitoring the banks, financial institutions, the issue of money laundering, etcetera, and also because now we have stopped using the Central Bank to borrow (from) just for the sake of it, like what was being done previously. The overdraft that we had used to pay millions of dollars to the Central Bank; we’re no longer doing that.  So the less we borrow, the less money they make technically from government. The Bank must be in a healthy financial position to have funds readily available for on lending to support the currency peg and exchange rate stability. The holding of foreign assets is important on the balance sheet. The Bank therefore seeks to hold sufficient foreign reserves that are more than forty percent of the total currency in circulation and domestic banks’ deposits with the Central Bank. What we’re doing is to make the Central Bank stronger to be able to meet any future crises because of the end of the forbearance and secondly, is to protect the Belize dollar against the U.S. (dollar) – the peg of two Belize dollars to one U.S. dollar, and this government will never allow for us to have a devaluation, Madam Speaker.”