BELIZE-Central bank says the money supply in Belize grew significantly during the month.

BELMOPAN, Belize, CMC—The Central Bank of Belize (CBB) says that from January to September this year, the broad money supply in the country grew by BDZ$280.8 million (One Belize dollar = US$0.49 cents), driven by a substantial rise in the banking system’s net foreign assets, while net domestic credit declined.

In its Monthly Economic Highlights for September, the central bank said that during these nine months, the banking system’s net foreign assets rose by BDZ$326.1 million, reaching BDZ$1,926.1 million.

“This growth was primarily attributed to a BDZ$258.8 million increase in domestic banks’ net foreign assets, which climbed to BDZ$909.9 million, spurred by heightened tourism earnings and rising inward foreign investments. Additionally, the Central Bank’s net foreign assets rose by BDZ$67.3 million to BDZ$1,016.2 million due to increased foreign currency purchases from domestic banks and a major sugar exporter.

However, the central said that, in contrast, net domestic credit from the banking system decreased by BDZ$41.8 million to BDZ$3,568.5 million from January to September.

It said this decline was due to reductions in credit to the central government and other public sector entities, which fell by BDZ$63.6 million and BDZ$7.4 million, respectively, while credit to the private sector rose by BDZ$29.2 million.

The CBB said domestic banks’ holdings of excess liquid assets grew by BDZ$52.5 million between January and September to BDZ$796.6 million, 89.2 percent above the secondary reserve requirement.

In contrast, domestic banks’ excess cash holdings decreased by BDZ$16.3 million to BDZ$493.5 million because of a heightened take-up of Treasury bills (T-bills). However, they were still 178.6 percent above the primary (cash) reserve requirement.

The CBB said domestic export receipts rose by BDZ$ 21.7 million to $359 million between January and September, driven by significant increases in revenues from bananas, molasses, and citrus products. The boost from these commodities was partially offset by lower earnings from marine goods and “other” domestic exports.

Concurrently, the value of gross imports increased by BDZ$178.3 million to BDZ$2,244.3 million, primarily due to heightened expenditure on “Machinery and Transport Equipment” (BDZ$107 million) and, to a lesser extent, “Fuels, Lubricants, and Crude Materials” (BDZ$33.9 million) and “Manufactured Goods and Other Manufactures” (BDZ$27.6 million).

The central bank said that stay-over arrivals increased by 21 percent to 396,386 persons during the review period, owing mainly to a surge in air arrivals.

“This outstanding performance elevated stay-over arrivals above the pre-pandemic level for 2019 by 12.1 percent. Conversely, cruise ship disembarkations fell by 6.2 percent to 566,743 passengers, marking a 29.1 percent decline below the comparative period of 2019.”

The CBB said that the Consumer Price Index (CPI) remained unchanged in September compared to the previous month. Notwithstanding, the all-items index averaged a 3.6 percent increase over the nine months, primarily due to rising costs of food and restaurant services.

For the first three quarters of 2024, the total public sector debt rose by BDZ$30.3 million to BDZ$4,396.5 million, or 64.4 percent of gross domestic product (GDP). The CBB said the rise in liabilities was due to a BDZ$43 million increase in the public sector’s external debt to BDZ$2,901.3 million (42.5 percent of GDP), as the central government’s domestic debt decreased by BDZ$12.7 million to BDZ$1,495.2 million (21.9 percent of GDP).

Between January and September, the banking system’s net foreign assets grew by BDZ$326.1 million to BDZ$1,926.1 million, outpacing the BDZ$219.3 million expansion recorded over the same period last year.

Domestic banks accounted for 79.4 percent of the overall increase, while the Central Bank accounted for the remaining 20.6 percent.

The CBB said that the domestic banks’ net foreign assets rose by BDZ$258.8 million to BDZ$909.9 million, almost double the BDZ$135 million growth registered during the comparable period of 2023.

“The increase in foreign assets was attributed mainly to a surge in tourism earnings during the high season and a rise in foreign investment inflows, particularly in real estate and tourism-related activities. However, domestic banks’ net foreign assets have declined over the last four consecutive months after peaking in May 2024, which coincided with the end of the tourism high season,” the CBB added.

It said that the banking system’s net domestic credit declined by BDZ$41.8 million to BDZ$3,568.5 million in the first nine months of 2024, reversing the BDZ$44.4 million increase recorded in the same period of 2023.

“This outcome was due to reduced credit uptake by the Central Government and other public sector entities, while credit to the private sector rose,” said CBB, adding that between January and September, domestic banks’ holdings of excess liquid assets increased by BDZ$52.5 million to BDZ$796.6 million.