Belize CitCo Introduces Municipal Paper to Address Seasonal Cash Flow Problem

The Belize City Council is facing cash flow problems. It’s a recurrent financial hurdle that all municipalities go through and it is caused by the ‘seasonal nature of tax collections’. During this time, because tax collection is low, the councils are tasked with exploring alternative options to alleviate such short-term seasonal cash flow challenges. This year, instead of resorting to high-cost traditional overdraft bank facilities and expensive property discounts, the Belize City council has decided to float a municipal paper. This, according to Mayor Bernard Wagner, will provide the Council with the opportunity to improve its cost structure by substantially lowering its financing costs.

Bernard Wagner

Bernard Wagner, Belize City Mayor

“The key thing in the municipal paper is that it gives us savings in respect to finance shortages. Normally when the season becomes very slow or we go into that down period, you would normally access financing through many of the other financial institutions. And you would borrow more than likely at ten percent. We felt, to be more and creative, why not float a municipal paper. It is a short term investment paper where you would be paying out roughly three percent on an average. That would give us substantial savings and if you do the math its gives us savings of roughly one point three million per year and if you expand that over a period of five, six, ten years it is substantial savings for the council. And these savings could be used for other areas in developing infrastructure, maintaining streets and drains and that sort of things.”

Hipolito Novelo

“What does this municipal paper means for the municipality and the residents here?”

Bernard Wagner

“Aside from giving us a smooth cash flow, it will aid us in realizing our infrastructural needs of the city. People are always complaining about streets, drains and we feel committed that we must at some point in time give the residents of the city a better quality of life. So that will certainly aid us in that area as well.”