BELMOPAN, Belize, Thursday, December 1, 2011 – The days of the Belize Central Bank trying to convince commercial banks to reduce their interest rates through moral suasion could be over with government considering forcing the banks to bring down their commercial lending rates.
This was the message sent by Prime Minister Dean Barrow as he addressed the “Turning the Corner” Business Forum held at Old Belize recently. One of the concerns raised by private sector representatives was commercial banks’ high interest rates as a major blockade to Belize’s economic progress.
In addressing this concern, the Prime Minister stated that: “the time may also have come to legislate a cap on interest rate spreads.”
The Central Bank had made several attempts to persuade the banks to temper their interest rates; however, Barrow suggested the lack of success in that regard was due to the Central Bank’s limited power in an “ultra-sensitive situation where none of our commercial banks is truly locally owned.”
Noting that more competition is most likely the optimal remedy, Barrow said the Government of Belize may very well “turn the DFC [Development Finance Corporation] into a full-scale national commercial bank,”
He also revealed that the Central Bank, with international assistance, also plans to further safeguard the private sector by establishing a credit bureau and a “national payments system to facilitate electronic single-card fund transfers and business transactions throughout the country.”
The latter would serve to reduce the need for cash and cheques.
The private sector also identified unscrupulous practices of GST and Customs duties evasion. Tax evaders gain an unfair competitive edge over those who follow the rules.
Barrow highlighted that customs reform in Belize would mean that “the business playing field will naturally be more level, as we succeed in eliminating the disadvantage to those that virtue now holds hostage.”
Comptroller of Customs, Gregory Gibson, told the business gathering that the system would reward compliant importers, while putting the others under increased scrutiny.
Gibson said that those importers who refuse to be compliant in the payment of customs duties will have to face the full brunt of the Customs examination process.
PM Barrow said, in addition to key administrative changes at the GST Department, two proposals are currently being looked at as plausible solutions.
“One is intended to increase the flow of information from individual establishments to the GST office, while the other is intended to encourage the public to become more involved in oversight operations,” he said.