The Executive and the banking sector agreed to extend until December 31st of this year the moratorium on credit payments, a measure that applies to mortgages, personal loans, the agricultural sector, commercial, transportation, auto and credit cards.
The government also reported that in the context of the covid-19 outbreak, President Cortizo sanctioned Bill 295 which adopts special social measures for the temporary suspension of payment of public services such as electricity, fixed and mobile telephony and Internet.
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 Inter-American Development Bank approved a loan to implement a financial inclusion program that will address business initiatives in several of the country's territories.
The Inter-American Development Bank (IDB) approved a $40 million loan to Panama, complemented by a local contribution of $3 million, to implement a program of financial inclusion and indigenous entrepreneurs in the country's 12 indigenous territories, according to the international organization.
Between May and September 2018, an increase was reported in the proportion of loans with payment arrears greater than 90 days, but between October and December the trend was downwards.
Data from the General Superintendence of Financial Entities (Sugef) indicate that between September and December 2018, the proportion of loans with payment arrears greater than 90 days, or in judicial collection, decreased from 2.58% to 2.14%.
Up to December 2018, the gross portfolio of the financial system in Nicaragua totaled $4.464 million, 9% less than in the same month in 2017, partly because of the performance of commercial and personal credit.
From the Central Bank of Nicaragua report:
For commercial credit, there was a 10.7 percent reduction from last year and for personal loans, the reduction was 14.1 percent.
CABEI granted a loan to Banco de Costa Rica, which will be used to finance operations by SMEs and business clients in the industrial, agricultural, and cooperative sectors.
The financing was made under the modality of disbursement of global line of credit, intended for working capital and boosting Costa Rican productive sectors, informed a source of the executive.
Limiting the fees charged in Costa Rica and establishing a law that defines market limits in Guatemala are part of the attempts being made in the region to regulate the use of credit cards.
A law proposal presented last January before the Legislative Assembly of Costa Rica, aims to regulate the percentage of the commission paid by businesses for credit or debit cards.
Mortgages and personal loans were largely responsible for the increase in domestic credit to the private sector, registered between March 2017 and the same month of 2018.
The most recent figures from the Superintendency of Banks reported that in the third month of the year the private sector's credit portfolio totaled $51.668 billion, which is equivalent to an increase of 6.2% compared to the $48.665 billion reported up to March 2017.
For this year, growth in banking credit to the private sector is projected at between 6% and 9%, but the year-on-year increase registered up to March was only 4%.
Figures from Banco de Guatemala show that during the year 2017 credit to the private sector grew at a monthly average of 5.17%, and the lowest increases were reported in November and December when the amount increased compared to the same months of 2016 by 4.9% and 3.8% respectively.
During January in Nicaragua, the gross portfolio of the financial system totaled $5.371 billion, 14% more than in the same month in 2017, explained in part by the performance of commercial credit.
The Central Bank of Nicaragua reported that "...The sectors with the highest representation in the portfolio are commercial credit and personal loans, with both sectors accounting for 55.4 percent of the total portfolio. On the other hand, the portfolio at risk and the past due portfolio continue to register levels below the rest of the Central America, Dominican Republic and Panama (CAPARD) region."
In an environment with a complex investment climate, between 2016 and 2017, credit to the private sector in Guatemala grew by 4%, less than the 6% registered between 2015 and 2016.
Authorities at the Bank of Guatemala (Banguat) reported that the recent judicial decisions on mining and hydroelectric projects have become the main factors that explain the environment of uncertainty that is affecting the country.
Due to an increase in commercial credit and personal loans, the gross portfolio totaled $5.480 billion up to November 2017, 15% more than in the same month in 2016.
According to a Report on the Performance of the National Financial System, published by the Central Bank of Nicaragua in November 2017, the financial system increased its financial assets by 16%, while the credit portfolio grew by 15%, both in year-on-year terms.
Confirmation of the decline in the financial capacity of the construction company has strengthened arguments by those calling for the revision of their contracts and that the firm not be awarded others.
From a statement issued by Standard & Poor's:
SAO PAULO (Standard & Poor's) March 29, 2016--Standard & Poor's Ratings Services lowered its global scale corporate credit rating on Odebrecht Engenharia e Construção S.A.
The drop from 20% to 6% in the annual growth rate of bank lending to companies as of June, illustrates the direct link between confidence in the future and demand for business loans.
Cathay Bank estimates that slower growth in bank loans for business activities is due to the uncertainty regarding the near future of the economy. The possibility of a tax reform, coupled with the lack of action by the government to reduce spending and increase public investment are factors that are raising questions and forcing companies to delay projects.
Between January and November 2013 credit to the private sector increased by 14% compared to the same period in 2012.
Personal consumption and trade were the sectors that experienced the largest growth in the period under review, beating construction loans and mortgages. Overall, the banking system awarded $24,815,000 in loans to the private sector.