Continued Obstacles at the Development Bank

Money is not reaching the productive system in Costa Rica because of defects in the law, for which reforms are still being studied by the Advisory Council.

Friday, June 26, 2009

The guidelines that regulate the Development Bank System contain inconsistencies that have impeded the allocation of a good part of the abundant financial resources available. Because of this, the Advisory Council will send a reform proposal to the Legislative Assembly.

Reform of interest rate levels and the conditions of loans are among the most needed modifications.

Maria Siu Lanzas writes in her article for Prensalibre.com that “although the reforms to the Development Bank law were expected to be submitted to Congress this week, it’s clear that the initiative does not actually exist, according to sources close to the Advisory Council. At this time, they are still studying suggestions from the banking sector and some members of the Advisory Council are against making changes to the law without considering all the indications.”

More on this topic

Central Bank Does Not Want to be Lender to SMEs

October 2012

The idea that the Central Bank of Costa Rica be a fund manager for the Development Bank has been rejected by its President Rodrigo Bolaños.

An article in Nacion.com notes that the strange idea originated in the office of the second vice president of Costa Rica, Luis Liberman, where it probably passed by the Economy Minister Mayi Antillon, who most likely presented it at the Development Bank Commission of the Legislature.

Development Banking Ineffective in Costa Rica

June 2010

Millions of dollars earmarked for developing banking are standing idle in Costa Rica, because of legal, administrative and financial oversight problems.

The very laws that created these credit instruments are the reason of their lack of use. They end up not fulfilling their role of providing low cost financing for small and medium companies.

Costa Rica has $320 Million for Development Frozen

March 2009

The money is intended for loans to small and medium sized businesses at preferential rates, but Bancrédito, the state bank which manages it, alleges legal flaws that prevent it from granting them.

For Bancrédito, the problems are that these funds require separate supervision and that the interest rates at which the loans need to be made as provided by law would cause the bank losses.

Costa Rican Development Banking will finance up to $100.000

November 2008

Based on consultations and technical studies, it was determined that this is the adequate maximum amount for SMEs to loan.

Additionally, the system should begin to operating in the first few days of December, even though it just has half of the necessary funds as the transfer and settlement of previous trusts have not been completed.

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