BELIZE CITY, Fri. June 5, 2020– The COVID-19 pandemic and the consequent lockdown has devastated Belize’s economy, and tourism, which was the country’s main foreign exchange earner, has been shut down, dealing a massive blow to the country’s ability to earn foreign exchange.
It is against that background that today the Central Bank of Belize launched the country’s first ever US dollar Treasury Note.
Through the offering of the new US dollar Treasury Note, government plans to raise some $30 million to boost the country’s foreign exchange reserves.
Subscription to the Treasury Note begins at US $50,000. The principal amount will be repaid in three equal tranches in US dollar payments on 29 June 2023, 29 June 2024, and on the maturity date.
In making the announcement yesterday, Thursday, Prime Minister Dean Barrow, in a recorded video, said, “In the next few days, the first disbursement from the IDB’s package is expected; and thereafter, in rapid succession during the ensuing months, the flows will come from Taiwan, the World Bank and OFID, in a total amount of some US$100 million.”
“These fresh inflows will augment the Central Bank’s official reserve position, which currently surpasses the traditional 3 months of import cover. And the renewal of tourism earnings will commence during the third or, at the latest, fourth quarter of this year,” the Prime Minister explained.
He then went on to tell the Belizean public: “I am pleased to announce now a ground-breaking initiative by the Central Bank: the first-ever public placement of a U.S. dollar-denominated Treasury Note, backed by the full faith and credit of the Government of Belize. With a face value of US$30 million, a tenor of 5 years and a coupon of 6.5%, the special offering will be launched on June 05, 2020. “
Barrow explained that interest on the Note is to be paid semi-annually and principal redemption will be settled in three equal tranches at the close of Years 3, 4 and 5.
“Proceeds of the Note are purposed to augment the stock of official Central Bank reserves, while the maturity is tailor-made to span the crisis. Hence the affordable principal payoff dates, positioned well beyond what we believe to be the temporary economic slump caused by the COVID-19 lockdown,” said Barrow.
He added, “To facilitate the remittance of interest and principal payments, successful purchasers of these Notes, whether individual, institutional or corporate, will of course be eligible for domestic U.S. dollar accounts. It is widely acknowledged that U.S. dollar accounts have been held abroad by Belizean businesses and individuals from time immemorial.
“This tax-free Treasury Note now has been crafted as an exceptional, seamless opportunity to relocate this capital to a safe, fixed income asset of the highest credit quality available in Belize.”
Barrow also explained that, “The Central Bank and our commercial banks will closely collaborate to ensure a subscription process that is both efficient and diligent.”
The details of the offering are available on the Central Bank of Belize website.
Feature photo: Prime Minister Dean Barrow