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Senators discuss the 2006 annual report of the DFC

GeneralSenators discuss the 2006 annual report of the DFC
The business of the Development Finance Corporation (DFC), Government’s development bank, has been one of great public interest since 2004, and while the new administration has said that it would create a different vehicle for issuing developmental credit during its term of office, the DFC continues to exist. So what’s happening with the DFC?
 
At Tuesday’s Senate meeting, private sector senator, Godwin Hulse, highlighted some interesting information he found in the 2006 annual report of the corporation.
 
He notes that while DFC’s assets and liabilities continue to decline, the net worth of the institution remains essentially the same.   
 
He expressed that the figure for the write off of loans is “astounding” – $50.27 million in loan write-offs for ’06, compared with $4.29 million in the previous year. That’s almost 11 times the figure for the previous year.
 
Under the new guidelines, said Hulse, loans are written off, not forgiven, once the assets are sold. There is nothing else to get once assets are sold, he added.
 
He went on to say that of the 50-odd million dollars worth of loans, $40.17 million was for only 8 loans with principal balances over 1 million to companies. He did not identify exactly which loans were included.
 
On the other hand, Senator Hulse also indicated that write-offs for students loans (over 1,800) amounted to $6.5 million.
 
(The former administration had undertaken a program whereby it had lowered monthly mortgage payments for people who had gotten low-income housing loans through a monthly subsidy, and it wrote off student loans under $5,000.)
 
Hulse said the matter of the DFC write-offs needs to be highlighted, as legislators talk about a resuscitated credit agency for farmers, and parliament’s role of oversight must be vigilant to make sure this does not happen again.
 
Another issue he pointed to was the losses being incurred through subsidiaries of the DFC, specifically the DFC Investment Company and the Belize Mortgage Company (BMC) 2000-2001, which he said has been incurring losses since its inception.
 
The annual loss of $2.55 million may continue to 2012, said Hulse, noting that the bonds issued under this foreign arm of DFC are “non-callable and cannot be repaid” before then.
 
Hulse mentioned, in particular, that the loans of Intelco and Western Caribbean Properties continue to make BMC unsustainable, and Government has to continue paying them.
 
PUP Senator, Hector Silva, Sr., whose party was in power for the period of the report in question, also commented on the matter of the DFC report, saying that during 2006, DFC’s management undertook a comprehensive loan write-off exercise, and many liabilities of DFC were transferred to the shoulders of government. In effect, he said, government absorbed those losses and DFC appeared to have been doing well. He suggested that in the future, a committee should be formed to review such reports before they are put to the House, and that there should be more scrutiny.
 
Another PUP Senator, Eiden Salazar, congratulated DFC chairman, Arsenio Burgos, on what he described as “a fantastic job in consolidating affairs of DFC,” whose assets, he reports, are just over $150 million and whose net equity is $30+ million, up from a deficit.

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