While government works at bringing the country's debt under control there is the question of how effective they are being. Today Governor of the Central Bank Sydney Campbell told the press that the country's reserves are at less than ideal standards of having only one and a half months worth of reserves.
Sydney Campbell, Governor of Central Bank
"The last check I had, about a week ago, it was, the number would have been approximately one point five months of imports we would have and that is based on how we estimate what would be the coverage for Belize going forward and therefore to put it in dollars term, it would be approximately close to, without trying to be wrong, it would be about sixty one million U.S. dollars we would have."

Alfonso Noble,
Is this a critical level?

Sydney Campbell,
"Well the higher it would be the best it would be for us, the higher the reserve we have. There is a rule of thumb which says that you should always try to maintain, reach a target of three months of imports. So that is where we are trying to achieve. I could say that if we do a projection forward, we would expect that that one point five months of imports would substantially improve over the next six months to a year."

Campbell says that acceptable rates for reserves should be at least 3 months. And while that's the ideal our information that in the past the reserves have dipped to as low as 3 weeks. That's not projected to happen with the bolstering of the IDB loan coming later this month as well as the Venezuelan loan coming on stream.

Marty, should anyone that has money in the Belize Bank be worried about this situation?

i am not a monetary expert, but i will keep my ear out. i wouldn't think its a real dramatic difference tho

The first sign that we've crossed the threshold may be that the lights go out, when BEL can no longer pay the electricity bill. Or we can't buy drinking water, because there's no electricity to run the plant. This country is heading for disaster, and the cause really does seem to be large scale corruption and theft at political levels. There does seem to be a lot of foreign currency coming in, but it seems to vanish. Anyone disagree?

Darn, I guess I have to redeposit all that cash I took out for Xmas shopping!

Has the solvency of the Belize Bank ever been in question?

You might as well ask if Michael Ashcroft is about to go broke.

There is no correlation between the solvency of a bank and the personal net worth of the major stockholder.

People with Belize dollars, no matter where they are held, will loose substantially when the economy of the country finally crashes. And, that is "when" not "if".

Byron - I know we agree on the inevitability of a crash (and my comment above was tongue-in-cheek). But what do you see as the underlying cause? Is it that fraud and theft are on such a massive scale, or is there a more subtle yet more inexorable cause?

All of what you mentioned. Peter. You have a country that has been badly mismangaged along with the corruption. A country with a huge national debt without the gnp to service even the interest. The taxing initiated will only compound the problem and put more of a strain on those who generate the income to the country. When other countries no longer give loans and forgive loans and interest, the economy will colapse. It is just a matter of time. The Argentina collapse has many similarities. There was an article in the Houston Chronicale when Argentina collapsed. Everywhere it said Argentina, you could substitute Belize. They talked of a country with a corrupt and ineficient goverment that borrowed more money than the economy could support and that eventially caused the inevitable collapse. The bright side is Argentina is improving and that can happen to Belize, but it will be very painful to the people of Belize who will loose alot.

bywarren, you say "People with Belize dollars, no matter where they are held, will loose substantially when the economy of the country finally crashes." Are you referring to the purchasing power of the Belize dollar or the actual loss of the dollar itself. For example if I have $60,000 Belize dollars sitting in the Belize Bank and the economy crashes, will I wake up to less than $60,000?

One important factor for Belize to recover is to have currency that is accepted on the international market. Right now, the only thing that the Belize dollar is good for is to buy rice and beans or a joint. The Belize dollar has no value other than in Belize and the artifical value of 2 to 1 is just that, artificial. That is what I mean when I say the people of Belize will be hurt. Their Belize money will be practically worthless.

Individual Argentines lost big when their peso was devalued. To this day, they don't trust banks. When they are paid wages, they cash the check and convert the pesos to dollars (likely Euros of late) and they stash the cash at home. At least they are able to convert their money. Argentina's comeback from the brink is remarkable and Belize won't be so lucky.

I think I read somewhere an estimate that the true value of Bz$1 is US$0.06. Imagine what that would mean if it happened - Mexico would demand full value for its electricity, with maybe an 8-fold increase in costs. Same for any other "internal" costs actually denominated in hard currency.