Monday, Sept.14, 2009
Dear Editor,
Much has been written and much has been said against Belize’s high interest rates that are destroying Belize’s economy and contributing to Belize’s increase in crime. Though those high in politics have stated that interest rates should be reduced to save the economy, none has moved to do so.
In a speech before the House of Representatives July 24, 2009 the Hon. Said Musa referred to the necessity for lower interest rates to save Belize’s economy. The Prime Minister did not respond. Later he acknowledged that the high interest rates were a problem, but stated that it was difficult to do anything about them. It could be difficult as to existing loans, but not as to any future loan.
It is not difficult to introduce a usury law to protect the people of Belize as to all future loans. It would not take 5% of the time and effort that was expended in taking over Telemedia. It would cost the Government nothing and benefit Belize 100 times more than the Telemedia takeover. There are usury laws in existence that can be followed.
People are losing their homes and businesses, unemployment is increasing, people are going without and the Government does nothing to alleviate the problem.
Many of the banks that operate in Belize also operate in Honduras, El Salvador and Guatemala. In Guatemala, home loans can be obtained with interest rates as low as 8%. Banks in El Salvador and Honduras also have interest rates much lower than their rates in Belize. The same banks that provide low interest rates in other countries commonly charge 14% on home and business loans in Belize, with an option to raise the loan to 18%.
Why does the same banking system charge higher interest rates in Belize than in other countries? Why are Belizeans treated differently and condemned to poverty? To have a healthy economy, Belize must first have self-sustaining bases for its economy. For such bases it must have businesses that provide the jobs by which Belizeans can sustain themselves. Such businesses will never exist while high interest rates prevail.
In other jurisdictions, 70% of their employment is through small businesses, businesses that cannot come into existence when interest rates are high.
Politicians do nothing to prevent the outrageous interest rates that are destroying Belize’s economy. Politicians are content to borrow money and operate off the loans, which further depresses the economy. These loans must be repaid by Belizeans and their children, and their children’s children, thus making a difficult future for them.
Low interest rates would provide for more businesses and higher employment, making it unnecessary for the Government to borrow money.
To better their economy, the United States of America reduced their interest rates on 6% variable interest loans to 3.25%, with home loans in the vicinity of 5%. Peru has reduced its interest rate to 1.2% to bolster its economy.
The move to limit interest rates in Belize on future loans is simple. All that is required is a usury law to limit interest rates on future loans, similar to those utilized by many other countries. Without such a law Belize’s economy will further decline, and unemployment and crime will continue to increase.
Those against lower interest rates are guided by self-interest. Among these are attorneys who have made fortunes through foreclosures. One of the most lucrative foreclosures occurred a number of years ago. It involved a property valued at $2,000,000. The owner, who owed $200,000, became ill and was hospitalized. The mortgage became in default and was foreclosed. There was a bid of $1,000,000 for the property, but the bid was disqualified and the property was sold to two attorneys for the sum of $200,000.
How many business and homes must be foreclosed on and jobs lost before the Prime Minister and other politicians do that which they were elected to do? Is the Government failing to do what is right and protect the people because the Government’s Development Finance Corporation (DFC) wants to continue making loans at the same high interest rates set by banks?
The Prime Minister has shown that he has both the ability and integrity to resolve the high interest rate problem. The process is simple; why doesn’t he proceed to do it?
Kenneth Gale