Warning about credit restriction in El Salvador

The export and industrial sector in the country has indicated that market conditions have worsened.

Thursday, September 18, 2008

"We are now feeling a reduction in credit access, with the consolidation of the banks there is now a restrictive policy, and the international financial crisis is causing more credit to be closed due to the demand for capital in other markets," Jorge Arriaza, executive director of the Salvadoran Industrial Associacion (ASI), manifested.
Armando Arias, president of the Salvadoran Banking Association (ABANSA), believed that there is the possibility of a limitation in the access of sources of external financing by the banks and a tightening of credit conditions.

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Credit Supply Stagnant in El Salvador

June 2011

Since the fourth quarter of 2008, credit extended by banks has been declining consistently.

An analysis published by the Salvadoran Foundation for Economic and Social Development reads:

“This decline has various interpretations, from suggestions that it is the result of reduced demand due to the lack of investment opportunities, to the internationalized banking system’s lack of identification with the needs of local businesses. Regarding the first scenario, this is a very limited conclusion and the second case offers an interpretation that doesn’t have an economic foundation.

Salvadoran Banks: Few Loans, Excess Liquidity

March 2010

Banks have been very cautious when granting loans; as a result, their liquidity is 24.4% above the legal requirement.

Abansa, the country’s banking association, reported that in January the index measuring liquidity stood at 41.42%, more than in January 2009 (36.51%).

Economists and business leaders criticize banks for not lending these resources to the productive sectors of the country.

El Salvador: Credit Portfolio Shrinks 6.3%

February 2010

During 2009, the banks’ credit portfolio lost $583.5 million; it is the first reduction in 5 years.

By the end of 2009, banks had $8.6 billion in loans, down from $9.2 billion at the end of 2008.

“Armando Arias, president of the Salvadoran Banking Association (ABANSA), explained that the contraction is relative higher than the performance of the economy, which shrank 3.3%”, reported Laprensagrafica.com.

The Credit Situation in El Salvador

February 2009

An analysis of the changes in the dynamics of granting credit, in an interview with the Superintendent of the Salvadorian Financial System.

Luis Armando Montenegro, Superintendent of the Financial System, in an interview published in La Prensa Gráfica, responds to questions about the liquidity of the Salvadorian financial system, the contraction of external credit to the local banking system, changes in the granting of loans, and interest rates, among other issues.

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