Bear, Stearns also described DFC as ?technically insolvent.? In April, the International Monetary Fund (IMF) used the term, ?de facto insolvent? in its country report on Belize, and while Government did not then acquiesce in the IMF?s description, its own financial data now lend credence to the reports.

A substantial amount of the DFC?s funds come directly from Central Government, according to Bear, Stearns. Additionally, current SSB records show that SSB had lent to the DFC for agriculture ($5.4 mn), education ($11.4 mn), tourism ($2 mn), and housing ($18.9 mn), amounts totaling $38 million.

In fact, the largest portion of Social Security?s funds, amounting to $83 mn, is allocated to the housing sector, while the second largest portion has been stored with the banking sector.

Finance Minister Ralph Fonseca told Amandala today that the proceeds from the sale of the SSB?s shares in the Belize Telecommunications Limited ($51 million) had been deposited in certificates of deposit with the various commercial banks.

As of mid-July, the SSB had roughly $78 million deposited at the banks in savings accounts, term deposits and certificates of deposit, which carry interest rates ranging from 5% to 8.5%. However, cash flow at the end of June 2004 stood at $6.67 million, and was projected to decline to $4.9 million by the end of July, even after Fortis Inc. makes its third installment to the SSB for the shares it had sold in the Belize Electric Company Limited at a price of $7 million.

Were it not for the sale of the BECOL shares, it appears, even the SSB would be cash-strapped, since the bulk of its assets are in the form of investments in various sectors of the economy.

We note that at the end of June, 16.55% of the SSB?s portfolio was listed as ?contaminated,? and the bulk of that ?contamination? was from the DFC.

As of 2003, just under half of DFC?s portfolio was in the building and construction industry, including two pet projects – Los Lagos and the Mahogany Heights projects.

Some of the Los Lagos assets, along with assets at the Ladyville Industrial Estate in the Belize District, the San Andres Industrial Estate in Corozal, the Libertad Sugar Factory and lands, are to be sold in the Corporation?s $147 million divestment of both assets and mortgage loans.

A transaction is underway for a portion of the divestment to be taken over by the Belize Bank, but Government has so far made no official announcement on the deal.

Bear Stearns further reported that even though DFC has $300 million in assets (up from under $100 million in 1998), it has only $19.5 million in equity (or net worth), and $42.3 million in non-performing loans, therefore, it said, ?the DFC is likely technically insolvent.?

DFC, the report further noted, is ?the largest financial institution? in the country, having outgrown all the commercial banks, which together have $700 million in assets.

The commercial banks? assets include the $78 million in Social Security funds, most of which have been deposited with Glenn Godfrey?s Alliance Bank and Sir Michael Ashcroft?s Belize Bank.