Central Bank of Belize Amendment Act an optical illusion

The next bill that is expected to be passed by the U.D.P.’s majority in the House is the Central Bank of Belize Amendment Act. The Barrow administration hopes that it will bring down interest rates but the PUP’s deputy leader says that it is only an optical illusion that won’t have any impact on lowering interest rates for consumers.

Mark Espat, Deputy Leader of the Opposition

“The amendment to the Central Bank Act has profound ramifications. As you know, the Central Bank lends money to government and the government is changing the manner in which those monies are borrowed. The goal, in our view, is to reduce the cost of borrowing but at the end of the day we feel it’s an optical illusion because the Central Bank’s profits are plowed back into the government coffers. So at the end of the day this change of reducing the Central Bank overdraft but, on the other hand, increasing the debt instruments in the form of treasury bills and notes which the central bank can hold will have a neutral effect. That aside the other very serious changes that the Central Bank is now going to be allowed, in effect to force commercial banks to lend government money via these bills and notes. Now we are concerned that this will crowd out the private sector and at the end of the day will have no net effect on the high level of interest rates which I think most Belizeans care about, about bringing interest rates down. So those are the principal changes to the Central Bank Act.”

Jose Sanchez

“What would be the purpose then, if it seems to be pointless?”

Mark Espat

“I am sure the government will give their usual fancy and elaborate explanations. It seems to us a thinly crusted attempt to give the impression of bringing down interest rates. It will not happen and that will be I believe proven in the coming months and years.”

We’ll have all the details of the budget presentation from the capital in Monday’s newscast.