Costa Rica's state-owned banks raise rates for credits

State-owned banks in Costa Rica raised lending rates in colons by 1-1.5 percentage points in the last week of April and by half a percentage point for credits in dollars, according to central bank statistics.

Wednesday, May 14, 2008

Private-sector banks, meanwhile, have kept their lending rates steady.

More on this topic

New hike in Costa Rican interest rates puts banks on alert

June 2008

A new increase in interest rates has put Costa Rica's banks on a contingency footing.

Two banks – Nacional and de Costa Rica – have cut back on credits, while others are on standby for a possible change in strategy.
Several economists say that the impact of dearer money could be considerable, leading to a growth in bad debts. But banks remain optimistic; existing portfolios are unlikely to be affected, they say.

Costa Rican roller-coaster on interest rates

June 2008

Interest rates in Costa Rica have risen by 1.25 percentage points in recent weeks. The increase follows a drop over the previous two and a half years from 15.25% to 4.25%.

At its last meeting, the central bank board said current interest rates were incompatible with the need to tighten the money supply. It redefined the reference rate as the rate on 24-hour loans and raised it to 8 percent.

Higher interest rates forecast for Costa Rica

May 2008

A period of low interest rates in Costa Rican colons appears to be coming to an end as analysts foresee increases in the coming months.

Some banks are already using higher lending rates to slow down the growth in credit. "Higher rates will give the central bank its most effective weapon in controlling inflation," said Fernando Estrada, a trader with Mercados Internacionales.

Costa Rica development loans to have subsidized rates

June 2008

Costa Rica's development bank program, which is to get underway in January, will provide loans at subsidized interest rates.

Credits for development loans in colons will pay only half the base rate plus 4.5 percentage points. In dollars the rate will be half of Libor plus three percentage points.

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