Editorial in The Reporter

By Harry Lawrence - Publisher
It is gratifying to note the gradual easing of interest rates on business and personal loans among commercial banks, but there is still a long way to go.

The Government of Belize has been hoping that Banks would voluntarily do what needs to be done and of their own accord bring down interest rates to help ease the economic crunch brought on failing bank, insurance and mortgage companies.

Indeed the banks have responded, but not fast enough and certainly not fully enough. We have noted Atlantic Bank’s reduction on mortgage rates and Scotiabank’s efforts to reduce the banking spread. We have noted with approval the DFC’s offering of lower-cost student loans.

If the Belize Bank has done something constructive, they must have done so quietly, without public announcement. Heritage Bank (formerly Alliance) and First Caribbean (formerly Barclays) have been equally secretive about their moves.

But all the banks today have web sites and they all tell prospective clients what a bang-up job they are doing in Belize. All of them are doing well and three of them - Atlantic Bank, Belize Bank and Heritage Bank offer private personal and corporate accounts which give them access to international funds.

The World Bank has just published a review paper looking at the recent international financial crisis and questioning whether banks should be the hub of investment and insurance and mortgage and commercial financial activity all rolled into one, or whether there should be some restrictions to limit risks and to limit greed.

In Belize the question is whether commercial banks should be allowed to do international banking as well, taking advantage of Belize’s tax haven laws. Such banks enjoy a huge advantage over purely commercial banks, but this advantage is not reflected in the way they do business here in Belize.

Credit unions in Belize charge interest of one percent per month on the remaining balance. For borrowers who pay their bills on time, this works out at a little less than ten percent a year.

Taking that as a guideline, we are of the view that commercial banks should charge interest at no more than 12 percent a year.
It will probably need legislation to make it happen, but this is far more seminal to our growth and development than the current hot debate about banning all offshore exploration.