Bleeding the Central Bank


The Government of Belize issued a release stating that, “Cabinet approved the introduction of legislation at the next sitting of the House of Representatives, scheduled for Friday, January 8, 2021, to empower the Central Bank of Belize to provide for emergency programs and facilities to assist during unusual and necessary economic circumstances.” Those in the know tell us that what the PUP government is in effect doing is seeking permission to borrow more from the Central Bank. Basically, they are jumping the hurdle of prudential limitations on the Government’s ability to borrow from the Central Bank. The long and short of it is they are seeking permission to be able to simply ‘print money’. This is especially important since Government’s revenue streams are at an all-time low. The problem with this is that printing more money would erode the foreign reserves and renew fears of devaluation.
One pundit declare that “He is just raising the limit on the credit card.”
There is an intrinsic problem with the move, however, as there are questions on how or if the Government will be able to repay. The reality is that what will be happening is that the government will simply be adding to the debt which PM Briceno says is already out of control. More important is the question of what will the money be spent on. Productive activities that will yield a return or just political gimmicks to reward financiers?