belize economy and financial system

Belize

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Table of Contents

Introduction

Economic Highlights

Financial Sector

Regulatory Framework

Banking System

Presented by Belize Bankers Association 2

Belize: Location & Geography

About Belize

• Capital: Belmopan City

• Population: 356,900

• Land Area: 8,867 Square miles

• Official Language: English

• Political System: Stable Westminster style democracy

• Independence: 21 September 1981

• Major Religion: Christianity

• Currency Regime: Fixed peg to US Dollar 2 BZ$ = 1 US$

• Life Expectancy: 75 years (Men); 79 (Women)

• GNI Per Capita: US$4,660


Legal System

• Member of the Commonwealth

• Head of State: Queen of England

• Legal system based on English common law

and local statutes

• Final appellate court - Caribbean Court of

Justice


Annual GDP Growth (1990-2014)

-5%

0%

5%

10%

15%

20%

1990 1994 1998 2002 2006 2010 2014

Source: Statistical Institute of Belize


Belize and LATAM GDP

• Source: Statistical Institute of Belize and IMF WEO


-5%

0%

5%

10%

15%

20%

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

BZE LATAM

GDP Composition

19% 15% 13%

20%17%

17%

52%56% 61%

0%

20%

40%

60%

80%

100%

80-91 92-02 03-13

Servcices

Secondary

Primary

Source: Central Bank of Belize

Commodity Exports


0%

10%

20%

30%

40%

50%

60%

70%

80%

0

100

200

300

400

500

600

700

800

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

2014

Millio

ns

of

Be

lize

Do

lla

rs

Sugar Citrus Banana Other Share of SCB in Export Basket (RHS)


Commodity Exports in 2014


34%

9%

29%

11%

12%

5%

United States of

AmericaMexico

United Kingdom

Other European

UnionCaricom


Tourist Arrivals

• During the last 5 years cruise and stay-over tourist arrivals have grown

by an average of 8% and 6% p.a., respectively

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Cruise Stay Over


Major Sources of Overnight Visitors

-

50,000

100,000

150,000

200,000

250,000

300,000

2011 2012 2013 2014

USA Canada Other


Source of Imports


31%

11%

15%4%

12%

11%

15%

United States of

AmericaMexico

Central America

Caricom

Netherland Antillies

China

Other

Imports totaled US$0.9BN in 2014


Monetary & Exchange Rate Policy

• Monetary policy focuses on protection of the fixed

exchange rate and assuring financial stability

• Foreign currency flows are monitored and subject

to a system of exchange controls considered

necessary for maintenance of the currency peg

• Belize has successfully maintained its currency peg

at US$2:$1BZ since 1976

• The peg has ensured that domestic inflation remains

low which is beneficial for planning and investment


Inflation 2010-2014

Sources: IBRD, Statistical Institute of Belize

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

2010 2011 2012 2013 2014

Belize US


Official Reserves and Import Cover

0.0

1.0

2.0

3.0

4.0

5.0

6.0

0

100

200

300

400

500

600

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Official Reserves US$MM Import Cover (months) (right axis)



Foreign Direct Investment US$MM

-50

0

50

100

150

200

2501

99

0

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14



Recent FDI Projects

• American Sugar

Refinery 2012

• Sugar refining and

electricity generation

plant acquisition

• US$100MM


Recent FDI Projects

• Santander 2014/15

• Sugar growing and

refining

• US$110MM


Recent FDI Projects

• Harvest Caye Cruise

Port Development

2014/15

• US$50MM

• Cruise tourism

development


Recent FDI Projects

• Caye Chapel 2014

• US$23MM private

acquisition

• Intention to brand the

island with 5 star hotel

and resort chain


MNCs Operating In Belize


Overview of Financial System

• Total assets estimated at $US 2.7 billion

equivalent to 163% of GDP at end-March

2014

• Domestic banks dominate the financial

system accounting for 55% of total assets


Financial Sector

55%

26%

13%

4%

2% Domestic Banks

International Banks

Credit Unions

Insurance

Other

Source: Central Bank of Belize 2014


Central Bank of Belize

Domestic

Banks

International

Banks

Credit

Unions

Supervisor of Insurance

(SOI)

Insurance

Service

Providers

International

Financial Services

Commission

International

Service Providers

Development

Banks

Regulatory Structure


Institutions Type No. of Institutions % of GDP

Depository Institutions

Domestic Banks 6 89%

International Banks 5 43%

Credit Unions 12 22%

Non-depository FIs

Development Finance 1 3%

Micro lending 1 0%

Insurance Companies

Life 7 4%

Non-life 5 2%

Composite 2 1%

Source: Central Bank of Belize (as at March 2014)


Regulatory Enhancements

• In line with global regulatory trends, the CBB has

strengthened its oversight of the financial system

• In 2012, CBB formed the Financial Stability Unit to

examine institutional interconnectedness and

monitor/mitigate systemic risk

• CBB also developed a national financial crisis

management plan and signed MOUs with other

regulatory authorities


AML/CFT Framework• Financial Intelligence Unit (FIU)

Established in 2002

Cooperates with the Police Department, Customs and Excise Department, The Attorney General Ministry, Immigration Department, Income Tax and other regional and international organizations

Combats money laundering and terrorist financing

Is a member of the Caribbean Financial Action Task Force and Egmont Group

• Main legislation:

Money Laundering and Terrorism Prevention Act (MLTPA)

AML/CFT Guidelines

FIU Act

Money Laundering Prevention Subsidiary Act


AML/CFT Framework cont’

• Responsibility for AML/CFT compliance is shared among:

- FIU

Designated Non-Financial Business Professionals

- Central Bank of Belize

Domestic Banks, Credit Unions, International Banks,

other Financial Institutions

- Supervisor of Insurance

Domestic and International Insurance Businesses

- International Financial Service Commission

Trust or Company Service Providers, Portfolio Management and Securities Trading


AML/CFT Compliance

• In May 2015 Belize was found to be fully compliant

with all key and core FATF recommendations

• Belize was commended by CFATF for making

significant and timely progress in strengthening its

AML/CFT framework.

• Reforms have resulted in:1. Enhanced due diligence

2. An increase in the number of reporting entities

3. Increases in the penalties for AML/CFT offences


AML/CFT Compliance

• Legislative reforms included the modification or

approval of 6 laws and 3 regulations

• Comprehensive amendments were made to the

regulatory regime which include:

a. Established the National Anti Money-Laundering

Committee to coordinate national AML/CFT efforts

b. Strengthened customer due diligence, record

keeping and reporting requirements for F.I.s

c. Extended the AML/CFT framework to non-financial

businesses


AML/CFT Compliance

• Other notable reforms to come about include:

1. Strengthening the operational independence of

the FIU

2. Prohibiting the formation of or dealing with shell

banks

3. Prohibition of bearer shares

4. Shareholders/owners of international financial

service providers subject to fit and proper test

5. Beneficial ownership of companies maintained in

company registry


Banking Sector

Highlights

Products and Services

Asset Growth

Impact of the Global Financial Crisis

Banking System Performance


Domestic Bank Highlights

Total Deposits - US$1.3Bn

Total Assets - US$1.5Bn

Number of Banks - 6


International Bank Highlights

Total Deposits – US$650Mn

Total Assets – US$786Mn

Number of Banks - 5


Traditional Banking Services

Retail Commercial

• Loans – consumer,

auto, residential,

education, other

• Credit cards

• Deposits – demand,

savings, term

• Foreign exchange

services

• Loans - working capital and term loans, overdrafts

• Credit cards

• POS Services

• Letters of Credit

• Deposits – demand, term

• Foreign exchange services


Domestic Bank Assets US$MM

0

200

400

600

800

1,000

1,200

1,400

1,600



International Bank Assets US$MM



0

100

200

300

400

500

600

700

800

900

2007 2008 2009 2010 2011 2012 2013 2014

Impact of the Global Financial Crisis

• The global financial crisis caused a marked decelerationin credit and an increase in the non-performing loans ofbanks

• In an effort to improve systemic risk management theCBB also implemented more robust loan loss provisionstandards in 2011

• This, in tandem with the fragile economic recovery, ledto a temporary reduction in system-wide profitability

• Banks are now largely compliant with the provisioningstandards and the stage is set for a return to profitabilityin 2015 and 2016


Domestic Bank Credit Growth

-5%

0%

5%

10%

15%

20%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Credit Growth GDP



Domestic Bank Asset Quality

17%

15%

11%

9%

7%

2010 2011 2012 2013 2014


International Bank Asset Quality


20%

26%

23%

16%

8%

2010 2011 2012 2013 2014

Domestic Bank Capital Adequacy


22%

24%23%

25% 24%

0%

5%

10%

15%

20%

25%

30%

2010 2011 2012 2013 2014

Capital Adequacy Regulatory Threshold


International Bank Capital Adequacy



33%

29%

24%

19% 20%

0%

5%

10%

15%

20%

25%

30%

35%

2010 2011 2012 2013 2014

Capital Adequacy Regulatory Threshold

Summary

• Robust diversified economy

• Strong trade and commercial relationships

• Strong financial system regulatory infrastructure

• Stable and well capitalized banks

• FATF compliant

• Significant improvements made to the AML/CFT

framework

• Potential to establish long-term and mutually

beneficial relationships

Presented by Belize Bankers

Association45

Thank You For Your Attention


belize economy and financial system

Economy & Finance