Hard Currency Scarce, Atlantic Bank Lowers Credit Card Limits
Dear Valued Customer,
Thank you for your continued cooperation and support through these difficult times.The effects of COVID-19 on both the local and international economies are significant,thereby requiring changes to how we all manage our personal and business affairs. In response to the new reality, we now live and work in, Atlantic Bank has made certain changes to our products and services in order to ensure that we continue to efficiently and effectively serve your best interest.
Locally, with the borders having been closed, foreign currency
revenue earnings have all but come to a halt. At the same time, the Bank is obliged to ensure that we meet the foreign currency needs of our essential services providers.
A few weeks ago, the Bank limited the use of full credit card
limit to only once per month. In continuing to support our efforts in this area, we now advise that, effective June 1,2020, your credit card limit will be reduced, in line with your recurrent needs.
Should you wish to obtain a better appreciation of the logistics of this change, how the changes will both benefit and affect you, or discuss options to best address the present balances you are carrying, please feel free to contact your relationship officer directly by telephone or email, or online via Contact Us through our Atlantic Online portal.
Atlantic Bank thanks you for your continued support! Stay safe.
Local banks restrict the use of credit cards to secure foreign exchange; PM says Belize’s reserves are more than enough
The COVID-19 pandemic has significantly affected the flow of foreign exchange into Belize, and in order for local financial institutions to effectively and efficiently continue providing their services, banks have been forced to place restrictions on the use of credit cards. These restrictions limit credit card holders on the amount they can use monthly, and priority is being given to the importation of essential needs. On the other hand, the government assures Belizeans that the reserves at the Central Bank are good enough for the rest of the year.
To further secure their reserves, the Belize Bank Ltd. is known to have been one of the first financial institutions to place restrictions on the use of credit cards in April. The announcement posted on their social media account says. ‘Further to our Customer Notice advising you of the temporary reductions in credit limits for international credit cards accounts, we would like to clarify that you can only repay the balance on your Credit Card once during the payment cycle. Also, please be reminded that your monthly purchases/usage is limited to a maximum of your approved credit card limit during your payment cycle.’ Speaking to a representative of the bank, they told The San Pedro Sun that this norm will be in place until further notice.
On Friday, May 29th, Prime Minister Right Honourable Dean Barrow, told the media via a virtual press conference that to his knowledge, banks in Belize can go for another couple of months before their foreign exchange starts to run out. According to him, when and if that happens, the other option will be to turn to the Central Bank of Belize and start using its reserves. “I can say that there is no way the country will completely run out of foreign exchange, no way even close to that before the end of the year,” said Barrow. He added that during this window of time, the tourism industry could restart, and the government can also focus in making a push to stimulate other productive sectors like agriculture.
Click here to read the rest of the article in the San Pedro Sun
Is a Foreign Exchange Crisis Also Looming Ahead for Belize?
The COVID-19 pandemic is having a catastrophic toll on the tourism sector. Tourism receipts, which represent up to forty percent of foreign exchange earnings, have plunged due to the downturn in the industry. Earnings in the export sector have also declined. It is resulting in a foreign exchange crunch at commercial banks, which are now reducing limits in credit card spending. Here is News Five’s Isani Cayetano with a report.
Isani Cayetano, Reporting
International trade and investments are facilitated through the foreign exchange market by enabling currency conversion. It allows a local company, for example, to import goods from the United States and pay in U.S. dollars, even though its income is in Belize dollars. Foreign exchange is extremely important because of its huge trading volume. It also represents the largest asset class in the world, leading to high liquidity. In Belize, however, there seems to be a strict rationing of U.S. currency amid the economic crisis brought about by the coronavirus pandemic.
Mark Lizarraga, Senator, Business Community
“This morning I got a call from one of the banks, dropping my limits to ten percent. Ah noh shame fu tell yoh, dehn drop mi down to a thousand dollars. If somebody have to travel, do business, somebody gets sick, whatever. One software license I have to pay for the year would consume all of that.”
That is on an individual and personal level. Across the country, businesses are also feeling similar constrictions. The prime minister reiterated during a recent press conference that foreign exchange is not an issue. The private sector, on the other hand, says that local commercial banks are severely limiting access to U.S dollars.
Anil Hotchandani, Vice Chairman, Corozal Free Zone
“When it comes to general businesses, let’s say you are a merchant trading shoes and clothes and electronics, I think they are not going to be getting foreign exchange as quickly as someone who is dealing in essentials. Also remember that the banks had to cut limits on credit cards. People who had a generous limit of ten, twenty thousand dollars are now at a thousand dollars. So that’s where the banks are tightening the belt on businesses and a lot of these businesses were using credit cards to do business in order to procure stock and whatnot.”
It’s an indefinite state of affairs that, according to Senator Mark Lizarraga, began well before COVID-19 and the resulting financial catastrophe. The present economic meltdown only amplifies the situation.
“We’ve known for a long time that the formula that we’ve been seeing in this country has been a flawed formula. We have been relying on our foreign exchange supplies coming heavily from borrowed money. Where do we get foreign exchange from? We get foreign exchange from tourism which is a big contributor. We get from agriculture or exports. We get from fisheries, we get from services, the BPOs, we get from the free zones.”
Notwithstanding those various sources, tourism being the chief foreign exchange earner, importers contend that there is a dearth of U.S. dollars and the banking sector is apportioning what is left on a priority basis. Prime Minister, albeit circumspect in his response, says that they are already looking at ways to attract foreign exchange.
Prime Minister Dean Barrow
“Roughly speaking, it is my understanding that we have at least another couple of months to go before the commercial banks would be close to running completely out of foreign exchange. If and when we get to such a point then of course we have to turn to our Central Bank reserves. I repeat that we have some plans as to how we can attract some additional foreign exchange from abroad. I don’t want to get into the details of those plans at this juncture for fairly obvious reasons. We’re not quite there yet and we don’t want to give away what we’re up to.”
In a report compiled by the Central Bank of Belize back in mid-April, Deputy Governor Kareem Michael explored the potential impact of the “The Great Lockdown” on GDP and the Foreign Exchange Market. That report indicated that foreign exchange inflows were down by 1.3 billion Belize dollars. Its outflows were also down by 0.6 billion Belize dollars.
“We saw the trade deficit grow over the last years, COVID-19 is just now bringing to a forefront in a rash and brash kind of way, suddenly, all the ills that we have had in our economy for so long. The prime minister keeps saying we’re okay with foreign exchange and somebody is afraid to tell him that we don’t have any clothes because the banks have known it and the banks have been cutting back on access to credit cards.”
Prime Minister Barrow assures that there is no way the country will run out of foreign exchange.
Prime Minister Dean Barrow
“I assure you in the most sincere and transparent fashion possible that we do have a plan and so I don’t, I can say that there is no way the country will completely run out of foreign exchange, no way we will get even close to that before the end of the year.”
***NOTICE TO CREDIT CARD HOLDERS OF BELIZE BANK***
Kindly note that if you have any questions regarding this notice, contact the bank for further info.
Further to our last announcement informing you of reductions in Credit Card limits, we are now advising of a further reduction which will take effect on June 9, 2020. The worldwide Covid -19 pandemic continues to negatively impact the inflows of foreign currencies, and in particular United States Dollars, to our region. Consequently, local banks are now required to take additional steps to reserve the sale of United States Dollars to facilitate payment for the importation of essential goods and services.
The new limit adjustments will be as follows:
• Existing limits greater than US$5,000 will be reduced to (USS5,000). • The new limits for accounts with balances greater than US$5,000 will be reduced to the existing balances as at June 5, 2020.
The situation is being carefully monitored and as soon as the supply of United States currency normalizes, your previous limits will be restored.
For customers who currently receive electronic Credit Card statements, via Online Banking services, your new temporary limit will be reflected on your upcoming statement. All other customers are asked to please call their respective branch to confirm their new temporary limit or enroll now for The Belize Bank free Online Banking Services.
Thanks for your understanding and please continue to be safe.
Restrictions on credit card usage also affects collateral accounts
Further reductions in the use of credit cards are expected to come into effect on Tuesday, June 9th, as the COVID-19 pandemic continues to change the flow of foreign exchange into the country negatively. These restrictions, limiting credit card holders on the amount they can use, also apply to collateral card accounts.
Some of the local financial institutions like Atlantic Bank made it public on June 1st that it was placing restrictions on the usage of credit cards, limiting the usage of the full credit to once a month only. These reductions on the card limits were also observed in other banks such as Belize Bank, who shared the new policy via Facebook. Some of Belize Bank’s new regulations state that existing limits greater than US$5,000 will be limited to $5,000US.
Reductions have also been reported in collateral accounts, even though the funds credited to the card’s limit is the customer’s personal savings. Concerned customers have shared that the reductions on their collateral accounts have caused many inconveniences. The San Pedro Sun was made to understand by the financial institutions that such measures are deemed necessary because of the limited foreign exchange available. Banks are claiming that there is no influx of US currency; thus, they need to take additional measures to protect what foreign exchange exists. These restrictions are being considered necessary to facilitate the payment for the importation of essential goods and services.
Click here to read the rest of the article in the San Pedro Sun
There is a lot of talk about the foreign reserves and the impending crisis that would ensue should the reserves be depleted. In an effort to educate our viewers on the national conversation we invited Kay Menzies, Past President of the Belize Chamber of Commerce & Industry, to help us understand how foreign currency impacts the economy.
Tackling the Foreign Exchange Quandary
The government’s U.S. thirty-million-dollar treasury note is a means to attract much needed foreign exchange. The aim, according to the PM, is to attract Belizeans who hold U.S. dollar accounts overseas to “relocate this capital to a safe, fixed-income asset of the highest credit quality available in Belize.” According to the Belize Chamber of Commerce and Industry, the government should revise policies and procedures affecting the export sectors, to reverse the sharp decline in foreign currency. Belize’s biggest foreign exchange earner is the tourism industry and with that industry at a standstill, U.S. dollars are in low supply. Opposition Leader John Briceño says that a prudent government should focus on enhancing and transforming new industries to become a viable foreign exchange earner.
John Briceño, Leader of the Opposition
“We do plan to sit with the Chamber shortly. But we do believe that there are certain options and we are working on our economic plan. We will be presenting it quite shortly. We are going to make it public so that everybody can see what is it that is going into the plan, how is it that we are going to create jobs, how it is that we are going to grow the economy. How is it that we can ensure that while tourism will continue to be an important industry in this country but for us to be able to ensure that we would never be faced with this crisis again where one industry represents over forty prevent of G.D.P. It is not that we want to reduce of what the tourism industry gives to Belize but what we have to grow the other sectors of the industry so that then tourism while it can continue to continue will not remain at forty percent but hopefully reduce to a small number so that we are not solely dependent in any one industry at any one time.”
Letter to the Editor: Atlantic Bank credit card spending limits
Dear Editor, I have a US$ Atlantic Bank Credit Card with spending limit of $3000USD. To ensure I have that spending limit I gave the Atlantic Bank $3000USD to hold in a Collateral Account. I collect a wee bit of interest on that Collateral Account but cannot touch it if I want my spending limit. So, it is not really a Credit Card (credit gifted from the bank – based on my income and other regulations), it is a Collateral Card.
Now, Atlantic Bank (via Central Bank) has reduced my spending limit to $1000USD because of COVID-19 and the government needs access to US Dollars. They tell me it was a unilateral reduction of spending limits – meaning it was done to everyone. Well, they have my money. They always have had my money and full access to it, or I would not have my US dollar Collateral/Credit Card. It’s my back-up plan in case my parents in Canada die, or I need medical treatment. In an emergency, I can’t buy anything for $1000USD.
This is not right. IF I owed a balance, maybe I can understand. IF my spending limit was a gift of credit from the bank, then too, I could understand it. I just don’t understand how they can access or spend my $3000USD and I can only spend up to $1000USD. The Bank’s Representative has told me that I can withdraw my Collateral Fund, but that wouldn’t guarantee me my former spending limit if I wish to keep the card. He also told me that things ‘should’ go back to normal rates and spending limits when COVID-19 is over. Then the Reprehensive told me I can apply for a Loan! Really?! They have my money!!! Why should I get a loan to cover my emergency plan???
Click here to read the rest of the article in the San Pedro Sun