The coronavirus has left an economic impact in several countries. For this reason, some governments are developing exceptional measures to mitigate its effects. For example, the suspension of tax and mortgage payments to lessen the economic pressure on small businesses and households.
In the United States, interest rates were reduced to almost zero and a US$700 billion stimulus program was launched in a bid to protect its economy, says Mario Miranda, director of finance at MonederoSMART.
A bill prepared by the Central Bank would require all financial entities to request authorization from the institution before obtaining dollar loans from abroad.
With this measure and others such as modifying the legal reserve requirement in foreign currency, which currently stands at 15%, the Central Bank of Costa Rica aims to stop the growth that has been seen in loan portfolios in US currency.
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.
Bank entities estimate that in 2015 they granted, on average, between 15% and 25% more loans than in 2014.
Although a lower level of uncertainty is expected, the economic and fiscal situation is an element which concerns bankers who predict, nevertheless, growth portfolios similar to those of 2014.
Elfinancierocr.com reports that "...Bancrédito, Banco Lafise and BCT are the entities which estimated higher growth in their portfolios for 2015, but other banks expected a rise of around 15%. "
Loans for the purchase of vehicles grew at twice the rate of consumer loans, which grew by 17% year on year to July 2013.
"There were good results in the placement of credit for cars, very much hand in hand with our Autoshow" said Carlos Brina, assistant manager of Scotiabank.
These type of loans increased the most in the category of consumer credit, which totaled $4.408 million (2.2 billion colones).
The Bank of Costa Rica and the Foreign Trade Promotion Office are to launch a credit program for exports.
"Funding is one of the main barriers to the development of the national export sector, preventing our companies from realising their true potential. This program will directly benefit over 2,000 exporting companies from all over the country," said Mario Rivera, general manager of the BCR.
The BCIE has granted an additional $3 million to Desyfin's global credit line, meaning that the total amount it now has reaches $10 million.
With this money Desyfin will finance "programs to support micro, small and medium enterprises, financial intermediation programs for social housing, the housing and urban improvement program, and factoring products for suppliers," explains Nacion.com.
During the VIII Petrocaribe Summit it was reported that the rate of interest on oil bills will be changed, increasing from between 2% to 4%.
The Guatemalan Vice President Roxana Baldetti, explained that Venezuela has modified the interest payment according to oil and oil supplies for more than a dozen Latin American countries. Guatemala's concern is so great that it no longer considers the agreement attractive and could move away from it.
A month after setting limits on the credit expansion of financial institutions, the government pushes for a law to encourage home loans.
"... The Executive has announced a bill that would allow financing for long term housing loans for middle class families. The presidency included as one of its priorities for its extraordinary session the draft plan for law 7558, an initiative that would waive mandatory reserves for bonds used to raise funds and provide loans", noted an article in Crhoy.com.
The Costa Rican Chamber of the Construction Industry has said that mortgage lending is an investment, not an expense, and therefore access should not be limited.
A statement from the Costa Rican Chamber of the Construction Industry (CCC) reads:
CCC MEETS WITH MINISTER AFTER MEASURES ANNOUNCED BY THE CENTRAL BANK
The Board of the Costa Rican Chamber of the Construction Industry (CCC by its initials in Spanish) met yesterday with the Minister of Finance, Edgar Ayales to make him aware of the sector’s concerns about the measures announced by the Central Bank of Costa Rica (BCCR) to place a limit on credit portfolios in colones and dollars.
The ceiling on the growth of the loan portfolios imposed on Costa Rican banks has forced financial institutions to adjust their lending strategies.
Elfinancierocr.com reports that "The Central Bank of Costa Rica (BCCR by its initials in Spanish) established a ceiling of 9% on the growth that credit loans might have between February and October this year. In 12 months, the figure will rise to 12%. "
Over the next nine months the Central Bank of Costa Rica will slow credit growth to the private sector, keeping it at below 9%.
Posted under a publication of the Macroeconomic Program for 2013-2014 the measure is temporary and intends to prevent the formation of a credit bubble caused by excess liquidity. During 2012 private sector credit grew by 14.2%.
The Inter-American Development Bank will provide $153 million to a new capital investment platform for Latin America and the Caribbean, in partnership with the Export-Import Bank of China.
A statement from the Inter-American Development Bank (IDB) reads:
IDB approves $153 million in loans to establish an IDB and China Eximbank capital investment platform
With the exception of El Salvador, bank lending is growing in Central American countries, strengthening in the years following the crisis and reaching double-digit growth in real terms.
From a report by Fitch Ratings:
Accelerating Growth: Central American bank lending has strengthened these countries in the years following the crisis, reaching double digit growth, even in real terms, with the exception of the Salvadoran banking system.
In Costa Rica there are 45 credit programs for SMEs, which in the first six months of 2012 placed $582 million, 66% of which were for the services and trade sectors.
A statement from the Ministry of Economy, Industry and Commerce (MEIC) reads:
Financial institutions placed 242,757,000 colones ($582 million) in loans to SMEs during the first half of 2012