Interest in El Salvador continue to rise

Despite the measures adopted by the Executive to guarantee liquidity, the price of money continued to rise in December.

Monday, January 26, 2009 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%.

Of the $400 million loaned from the Inter-American Development Bank (IDB) to help drive production, some $37 million has been used so far, according to the BCR."

More on this topic

$500 million for Salvadoran financial sector

November 2008

In an unprecedented move since the dollarization of the country's economy, the BCR will inject ready money into the local financial sector.

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.

Salvadoran Banks ask for lower credit rate from the IDB

December 2008

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.

Designation of $500 million in El Salvador still undefined.

December 2008

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.

$290 Million to be Returned to Salvadoran Banking

March 2009

Banks in El Salvador will receive $290 million that where frozen as a liquidity reserve.

The Salvadoran Central Reserve Bank (BCR) had implemented a liquidity reserve of 3% of all deposits as protection against capital flight during the last presidential election.

According to what Daniel Choto wrote in, the BCR will begin returning the money gradually, freeing $58 million every fourteen days, in 5 installments.

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