By the first half of 2021 all maximum annual interest rates that are estimated by the Central Bank will decrease compared to those imposed in the second half of 2020.
On January 8, 2021 the Central Bank of Costa Rica (BCCR) published, on its website and in the official newspaper La Gaceta, the new maximum annual interest rates for credit operations in colones, US dollars and other currencies.
Between May and June of this year, the average lending rate of commercial banks has fallen from 11.52% to 10.28%, a drop that is explained by the high level of liquidity of the banks and the low placement of credits.
The pandemic that caused the outbreak of covid-19 has hit the financial system, since due to the current market conditions, the active rates have come down between the months of May and July.
Preventive reasons for unforeseen expenses in the context of the pandemic and low liable interest rates are some of the factors that explain the increase in the balance of short-term savings instruments in the Costa Rican market.
In the context of the spread of covid-19 and the restriction of several productive activities, the broad money supply (including cash held by the public and highly liquid financial instruments in national and foreign currency) showed a 35.7% year-on-year growth rate in June 2020, considerably higher than the 2.7% recorded in the same month in 2019, while the balance of term instruments fell, reported the Central Bank of Costa Rica (BCCR).
Following the entry into force of the Usury Law, the Central Bank published the maximum annual interest rates, which for credit operations in colons amount to 37.69% and 30.36% in dollars.
The law that was published on June 20, 2020 establishes the methodology to be used to set the maximum interest rate, and stipulates that the Central Bank of Costa Rica must publish on its website and on The Gazette, the maximum usury rates in the first week of January and July each year.
Setting a maximum usury rate and preventing clients from getting into debt to the extent of reducing their income below the minimum wage line are some of the changes that have arisen due to the application of the new law that has been in force since June 20.
On June 20, 2020 the Usury Law was published in the scope number 150 to La Gaceta number 147, which establishes the methodology to be used to set the maximum interest rate, from which the crime of usury will be considered to exist, details an official statement.
In recent weeks, the country's financial system has seen a considerable drop in the lending rate on new loan operations, which is partly explained by the reduction in the Monetary Policy Rate.
According to reports from the Central Bank of Honduras (BCH), between March 9 and April 10, 2020, the rate fell from 14.81% to 10.31%. This fall is being recorded in the context of the health crisis caused by the outbreak of covid-19.
This week, the Basic Passive Rate continued to fall, from 3.8% to 3.75%, while the Effective Rate in dollars also fell, from 1.94% to 1.84%.
The Central Bank of Costa Rica published on the afternoon of Wednesday, April 15 that after registering considerable drops in the previous weeks, the Basic Passive Rate fell again, in this case by 0.05% and will remain at 3.75% until next Wednesday, April 23.
As part of the health emergency generated by the spread of covid-19, the Bank of Guatemala decided to reduce the prime interest rate again, from 2.25% to 2%.
The Monetary Board considered that, in the last few days, the perspectives of world economic growth for 2020 have deteriorated considerably, due to the persistent propagation of the coronavirus, which has increased the volatility and uncertainty at a global level, informed the Bank of Guatemala.
This week, the Basic Passive Rate continued to fall, from 4.35% to 4.15%, while the Effective Rate in dollars also fell, from 2.35% to 2.25%.
The Central Bank of Costa Rica published on the afternoon of Wednesday, March 25 that after registering considerable drops in the previous weeks, the Basic Passive Rate fell again, in this case by 0.20% and will remain at 4.15% until next Wednesday, April 1.
Given the significant increase in global uncertainty associated with the economic impact of the coronavirus, the Central Bank decided to reduce the monetary policy rate from 4.5% to 3.5%.
In addition, a series of measures were adopted to provide liquidity, both in national and foreign currency, with the objective of making available to financial institutions a large amount of resources so that they can effectively meet the demand for credit from the productive sectors and Dominican households, reported the Central Bank.
The Basic Passive Rate continued to decline and for this week fell from 4.50% to 4.35%, while the Effective Dollar Rate also fell from 2.35% to 2.25%.
The Central Bank of Costa Rica published on the afternoon of Wednesday, March 18th that after registering considerable drops in the previous weeks, the Basic Passive Rate fell again, in this case by 0.15% and will remain at 4.35% until next Wednesday, March 18th.
In order to help cooperatives, cope with the emergency caused by the spread of covid-19, the National Institute for Cooperative Development agreed to reduce the interest rate on loans.
This decision was taken to support the cooperative sector, especially the agricultural sector, which has been suffering from a variety of effects. The authorities also hope to make a significant contribution to the country, in the context of the current epidemiological situation, reported the National Institute for Cooperative Development (INFOCOOP).
The Basic Passive Rate remained at 4.5%, while the Effective Dollar Rate reported a decrease, in this case from 2.38% to 2.35%.
The Central Bank of Costa Rica published on Wednesday afternoon, March 11, that after registering a decrease the previous week, the Basic Liable Rate reported no variations for the next few days and will remain at 4.5% until March 18.
The Basic Passive Rate continued to decline and for this week fell from 4.80% to 4.50%, while the Effective Dollar Rate also fell from 2.45% to 2.38%.
The Central Bank of Costa Rica published on Wednesday afternoon, March 4 that after registering considerable drops in the previous weeks, the Basic Passive Rate fell again, in this case by 0.30% and will remain at 4.50% until next Wednesday, March 11.
For the Central Bank of Costa Rica, the constant reductions in the Monetary Policy Rate that have taken place since March 2019 have been gradually and incompletely transferred to the interest rates of the financial system.