The Ministry of Economy is discussing the creation of a contingency fund of between $2.5 and $2.8 million to provide support to banks that have liquidity problems.
Addressing the issue, the Minister of Economy, Frank De Lima, said that the idea is to provide a contingency line with the International Monetary Fund that would be used to inject liquidity into the banking system if necessary.
In the past year, foreign direct investment represented only 0.41% of the gross domestic product (GDP).
Details of foreign investment ranking in relation to GDP in 2010, conducted by the Latin Business Chronicle, position El Salvador in front of Ecuador (0.28%) and Venezuela (-0.48%) alone.
"The data confirms, once again, that the country is at the back of the line in terms of economic development, and that the legal and political uncertainty coupled with crime are putting the brakes on recovery." stated an article in Elsalvador.com
With the loan, the Central Bank will face "temporary liquidity contingencies” and give backing to public bank deposits in the domestic financial system.
The loan was granted by the Central American Bank for Economic Integration (BCIE) so that Nicaragua could face up to the consequences of the international financial crisis.
Elnuevodiario.com.ni reported that Antenor Rosales, president of the Central Bank of Nicaragua, said: "The interest rate at which the loan will be given is still under negotiation as is the commission for the disbursement." Normally this type of loan is granted at low interest rates and with ample grace periods.
This is the amount that the Salvadoran Foundation for Social and Economic Development recommends getting in the contingency credit.
According to a report published yesterday by the foundation "we must urge the Central Reserve (BCR) to negotiate a contingency fund of $1 billion from the IMF, making use of the new line of credit that the Bank has opened.