PM Barrow says excess liquidity should send loan interests rates down

The House of Representatives met in Belmopan this morning; two bills were introduced and passed, but we will have more on that later. The sitting ended by midday and we were gratefully spared of the usual theatrics. Outside the House, the Prime Minister fielded questions on a wide range of issues. In our newscast on Thursday we reported on the dismal state of the economy as it pertains to an excess cash reserve at the Central Bank.  Over the past thirteen months liquidity has ballooned from forty-eight and a half to almost a hundred and ten million dollars, forcing several commercial banks and credit unions to refuse fixed deposits. The situation at hand is such that the rate of deposits are greater than the loans being approved.  According to Prime Minister Barrow, that imbalance has created a fiscal environment where banks are now reducing their lending rates.  While those fees are in the range of eight point five to nine point nine percent, consumers remain skeptical in accessing the surplus in light of the weak economy. But P.M. Barrow, in an interview this afternoon, said that he was unaware of a freeze in deposits.

Dean Barrow

Dean Barrow

“I am not aware that the banks are not accepting deposits but I have spoken from time to time about excess liquidity, most recently at the economic forum that we had and I’ve said that to me the fact of excess liquidity ought to be driving down lending rates.  I was told that Heritage Bank is offering loans at 9.9% and that’s a step in the right direction.  I don’t know that, I really would have to look at what you’re telling me, if the banks have stopped accepting money.  That makes no sense to me at all.”

Isani Cayetano

“First Caribbean International being one of those banks.”

Dean Barrow

“I really have to check on that but the question of the deposit rates is altogether another matter except there’s a temporary halt while they realign the rates.  While they say to people well look, we use to offering you 6% or 7% now we’re going to be offering you three.  There’s a floor, as I understand it, on the deposit rates but if deposits are not being accepted I am sure that is temporary while this whole question of rates is being sorted out by the commercial banks.”