Posted: Monday, June 8, 2020. 5:16 pm CST.
By Aaron Humes: Anticipating that revenues from tourism will return to “normal” by December 2021 if not later, the Belize Tourism Industry Association (BTIA) has addressed the Development Finance Corporation (DFC) as the national development bank to establish a dedicated tourism industry loan window that can provide long term financing (7-10 years) at below-market rates (3-6% interest) to established tourism businesses to get them through the unprecedented COVID-19 crisis and return themselves and the country to prosperity.
DFC has already committed to looking for lines of credit in the Caribbean (Caribbean Development Bank) and Europe (European Investment Bank), per Prime Minister Dean Barrow.
The BTIA insists it is not looking for a bailout and insists that borrowers satisfy the usual lending conditions – reasonable collateral, realistic business plans, strong track records, and perhaps other considerations such as target levels of local employment and monitoring of foreign exchange inflows. There may even need to have two windows: one for smaller clients and one for the larger players.
With international tourism covering approximately 40 percent of Belize’s gross domestic product (GDP) and employment, direct and indirect, covering much of the wider economy including agriculture and fisheries, transport, construction, and manufacturing, there is no time to lose.
But the tourism organizational representative admits it doesn’t know enough about the scale of the COVID-19 pandemic and related economic crisis to plan as compared to other disasters such as hurricanes, floods, or fires which are events of specific duration and limited geographic impact.
Among other things the industry must gauge are whether North American visitors, in particular, will come and in what levels, and can they safely be screened? The answer to the former as quizzed by BTIA members is a yes, but the wider public isn’t so sure, whether by airplane or cruise ship.
Thus, the BTIA is anticipating lower arrival numbers and lower prices for lodging and tours. Domestic tourism is not expected to fill the gap for too long.
The BTIA observes that when the crisis hit at the high point of the season, businesses had ample cash revenues and believed they could ride out the storm with support from the banks. Many declined to reduce staff size or make radical reductions in expenses, thinking that the crisis would be short-lived. But the measures are short term – only three to six months.
The BTIA says the negative impact on the industry will be greater than anticipated and that there will be a much larger need for long-term financial assistance for the industry than anticipated.
The resulting shutdowns of many businesses and loss of employment at most others represent a real threat to the nation’s economy; the resulting loss of tax revenue will further handicap the Belize Government from playing a larger role in economic recovery.
And the BTIA says, “While we realize that the DFC cannot bear the entire burden for Belize’s economic recovery it can play a larger role in helping the tourism industry—the driver of the economy—to get back on its feet. If that is not the role of a development bank then what is?”
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