The IDB approved an operation for the Central Reserve Bank to buy a credit portfolio totalling $500 million from banks giving them more liquidity to support the production sector.
Armando Arias, President of the Salvadoran Banking Association (ABANSA) maintains that this transfer of liquid funds will be made through the sale of a loan portfolio, already placed by the local bank, to the BCR at a value equivalent to $500 million
ABANSA believes that the cost of accessing the $500 million made available with IDB funds is too high.
Armando Arias, president of the group said that the rate of the funds corresponds to the LIBOR plus 400 base points more in commissions and is practically the same as the rates offered by other international lenders.
The Association of Industrial Companies (ASI) indicated that it will need at least $200 million to reactivate the industry and investments that have been paralyzed due to lack of credit.
The proposal was made by the executive director of ASI, Jorge Arriaza, who pointed out that they are concerned about comments by the Salvadoran Banking Association (Abansa) which complained that credit from the Inter-American Development Bank (IDB) for 500 million dollars was too expensive and had short terms, in addition to the fact that certain sectors would not have greater access to the funds.
The system of designation for the IDB loan of $500 million is still under discussion by the authorities of the Central Reserve Bank.
The president of the institution, Luz Maria de Portillo, said that the Board of Directors is still dealing with the matter.
Meanwhile, the productive sectors have expressed their expectation that the funds will be channeled as soon as possible since the funds will help to inject capital into the local economy and to reinvigorate it.
Despite the measures adopted by the Executive to guarantee liquidity, the price of money continued to rise in December.
Elsalvador.com reports: "During the last of quarter of 2008 the interest rate for one year loans increase by one point to 9.58%, according to figures by the Central Reserve Bank (BCR), while for loans for more than a year, it grew 0.65%, to 10.46%.
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