Tight Credit May Result In Massive Layoffs

The business sector is warning that the Costa Rica could enter a crisis of massive layoffs if they cannot finance their activities.

Tuesday, October 28, 2008

The warning is based on the scarcity of credit both from the public and private banks, which is causing many companies not to have sufficient financial resources to continue operations or expand.
Representatives of the Unión Costarricense de Cámaras y Asociaciones de la Empresa Privada (Uccaep) met with their associates to explain the urgent need for credit.

According to the entrepreneurs, the Banco Central de Costa Rica (BCCR) - Central Bank - and the Superintendencia General de Entidades Financieras (Superintendent of Financial Institutions) have a huge share of responsibility in the labour crisis, because before the international financial crisis issued guidelines to banks to be more strict with their credit portfolios.

More on this topic

Further Reforms for Credit Flexibility

April 2009

CONASSIF (National Council for Financial System Supervision) of Costa Rica tempered several risk indicators that would allow banks to offer better repayment terms to their customers.

The Chamber of Banking and Financial Institutions of Costa Rica (CBF) had requested a long series of amendments tending toward more flexible criteria for banking supervision in February and the CONASSIF had already made some concessions with regard to risk indicators three weeks ago.

Return of Goods Purchased on Credit Increases by 77%

March 2009

The Superintendent of Financial Institutions of Costa Rica reported that the repossession of property for unpaid debts rose 77% from February 2008 to February 2009.

The increase in auction advertising for goods recovered by the banks is well-known, especially for real estate and cars whose owners cannot continue to make the monthly payments due to loss of income, unemployment and primarily because of the increase in interest rates.

Costa Rica: Late Payments Growing in Tourism and Real Estate

March 2009

In January, 2009, 15% of the payments in real estate and tourism loans were late, more than double the amount in August, 2008.

The figures reported by the Superintendent of Financial Institutions indicate that in August of last year, 7% of the payments on loans to the hotel and restaurant sector were late, whereas they were 15% in January of this year.

Tight Credit May Result In Massive Layoffs

October 2008

The business sector is warning that the Costa Rica could enter a crisis of massive layoffs if they cannot finance their activities.

The warning is based on the scarcity of credit both from the public and private banks, which is causing many companies not to have sufficient financial resources to continue operations or expand.

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