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PM Says No Devaluation Threat

Posted By: Marty

PM Says No Devaluation Threat - 05/30/20 11:10 AM

Without tourism's hard currency earnings, does Belize run a real risk of devaluation?

Tourism is the country's top foreign exchange earner, its largest employer, and accounts for half of the country's GDP.

In 2019, total tourism expenditure in Belize was half a billion US dollars. Between January and April of this year, tourist spending in Belize fell by 82 million US dollars compared to the same period last year.

But despite this massive hit for foreign exchange earnings, the PM says the currency peg will be maintained:

Rt. Hon. Dean Barrow, Prime Minister
"We are confident if nothing else and that is that we will maintain the peg. I have every confidence in saying that we will not reach the rock bottom that you project that would raise any specter of any kind of devaluation. That is not on the cards. In terms of foreign exchange and where we are now, government has its plans, there are the central bank reserves ultimately to backstop what the commercial banks have and we have our plans as to how in fact we will be able to boost the foreign exchange situation. I don't want to get into the details right now, we are still finalizing with the central bank the initiative that we are going to launch, but I can give you every assurance that we will not go through to the end of the year, absolutely not completely run out of foreign exchange. Ain't going to happen."

PM Banking on Benjamins

Ain't going to happen? Well, tell that to the banks. Form the looks of things, the largest commercial bank is already getting jumpy. Atlantic Bank sent a notice to customers yesterday saying that it's cutting their credit card limits, so it can keep the hard currency for, quote, "our essential service providers."

Essential services that need hard currency are purchasing power, purchasing fuel, and purchasing wheat for bread.

Today, the PM said that the banks have enough hard currency to hold them over for some months:

Rt. Hon. Dean Barrow, Prime Minister

"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 then 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 are up to, but I assure you in the most sincere and transparent fashion possible that we do have a plan and so 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."

Channel 7

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