Costa Rica: Loans in Dollars Get More Expensive

Arguing an attempt to control credit growth in dollars, the Central Bank will apply a reserve limit of 15% to banks that receive lines of foreign funding in that currency.

Tuesday, May 19, 2015

The banking sector has opposed the measure, asserting that it will result in an increase in the cost of credit in dollars, affecting the business sector, especially exporters and importers who normally resort to credit lines in dollars to finance their operations abroad.

Gerardo Corrales, CEO of BAC San José, told Elfinancierocr.com "... "If the Central Bank wants to discourage lending to non-earners of foreign exchange, instead of going along that path and punishing equally exporters who do generate currency and are already hit hard by the appreciation of the exchange rate, they should go by way of cheapening colons, for example by reducing reserve requirements in that currency '. "

"... The measure aims to level the playing field between local and international funding of market intermediaries. From that point of view it would be a healthy measure said economist and former president of the Central Bank Francisco de Paula Gutierrez.However, he acknowledged that this reserve will make it more expensive to obtain external resources and that in the end this will be reflected in an increase in foreign currency lending rates, which are charged for loans. "

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Banking Costa Rica: More Reserves for Dollar Loans

August 2015

The Financial Superintendency plans to increase reserve requirements for banks that lend in dollars to companies that do not generate revenue in that currency.

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Bankers say that the cost of financing in US currency will increase because of the application of a legal reserve limit on deposits taken from abroad for periods of over one year.

Market participants expect that once the measure has been implemented, interest rates in dollars could increase by between 0.75% to 1.25%.

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