Nicaragua: Bank Lending Continues to Fall

During the first six months of the year reduction in the loan portfolio was $59 million.

Monday, August 1, 2011

Banks stricter attitudes to granting financing seem to be one of the main reasons behind the decrease in loan funding in recent months.

The reduction is striking especially at a time when the country's economic activity is vigorous, with a strengthened consumer sector explaining an important part of overall growth.

An article in Laprensa.com.ni states: "bank lending in January was $2099.62 million. However, in June it dropped to $2040.73 million, according to an official report.

"The factors we can analyze are various. One is the tendency of the financial system to go against real economic activity in the country, which is demonstrating growth in production", said economist and ex finance minister Rene Vallecillo.

He said that the dynamism of productive activities "is not based on getting more credit from the financial system, but instead comes from investments made from producer’s and entrepreneur’s own resources."

This year, the government plans for national economic growth of 4.5%, in other words, a rate similar to that achieved in 2010 when the Gross Domestic Product (GDP) recovered after the fall of 1.5% in 2009. "

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