New Municipal Securities Bill would regulate local governments’ access to capital markets

Published by BBNTEAM at October 16, 2023

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Posted: Monday, October 16, 2023. 12:46 pm CST.

By Aaron Humes: The Government has proposed a Municipal Securities Bill which will provide for the regulation of municipal securities, that is, bonds, notes or papers on the market to finance public investments and stimulate economic development and allows for public disclosure to protect investors.

Traditionally, Belize’s two cities and seven towns obtain funds to manage their governments directly from Central Government by subvention, or through taxes and trade license fees, and in the area of infrastructure, from the banks, though this comes with additional costs.

But according to Prime Minister and Minister of Finance John Briceno, to undertake large-scale infrastructure projects, the municipality will raise money through such municipal securities, as Darrell Bradley’s Belize City Council first did in 2012 and which Bernard Wagner followed years later, as did Belmopan under Khalid Belisle.

Civic infrastructure has not kept up with either the growth of municipalities in population or the individual growth and development of families who require proper streets, drainage, parks and other amenities. Meanwhile, continued high excess liquidity of $800 million highlights the need for greater investments.

The P.M. told the House that “The development of the municipal securities market will go a long way in providing the availability of municipalities to obtain long-term finances, access to financing and better capital allocation. The Municipal Securities Act will streamline the process or issuance of municipal securities… The Municipal Securities Act will eliminate the need for new legislation for cities and towns each time any municipal securities are intended to be issued.”

The first ever Municipal Bond was done in 2012, and had raised twenty million dollars in capital for public works encompassing streets and drains. It and follow-up efforts had to come to the House for special legislation or amendment to existing legislation in the case of Belmopan.

Councils would be subject to appointment of an internal auditor or financial controller answerable to the Financial Secretary as has been seen in Belize City under multiple administrations; sinking funds for securities beyond five years to ensure repayment; statutory debt limits to protect cash flows and restricted list of authorized purposes for use of funds, particularly infrastructure, acquisition of lands and dealing with public buildings.

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