Credits: Flexible Terms during 2021

In order to face the crisis generated by the covid-19 outbreak, Costa Rica extended until December 31, 2021 the measure that allows clients of financial institutions to benefit from extensions, refinancing and readjustments without the need to carry out debtor stress analysis.

Wednesday, February 3, 2021

According to Conassif, additionally, banks were asked to reapply their internal policies for measuring the payment capacity of each client as of April 1, 2021.

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From Conassif's press release:

February 2, 2021. The National Council of Supervision of the Financial System (Conassif) extended the following measures until December 31, 2021, in order to help Costa Rican households and companies that have been affected by the COVID-19 pandemic:

  • The possibility of making extensions, refinancings and readjustments without the need for debtor stress analysis.
  • The temporary suspension of the concept of "special operation", with the objective of allowing institutions to continue focusing their efforts on modifying the contractual conditions of the loans required by their borrowers.
  • The temporary relaxation of the capital requirements associated with the term of operations and the measurement of market risks.

Additionally, banks were asked to reapply their internal policies for measuring the payment capacity of each client as of April 1, 2021.

Since the declaration of the national emergency and as the measures of restriction and social distancing began to impact the local economy, the financial authorities adopted measures focused on improving access to credit; contributing to the expeditious granting of extensions, restructurings or refinancing to debtors; mitigating the economic effect and the impact on unemployment; and ensuring the stability and soundness of the financial system.

The time passed since the declaration of the national emergency has allowed financial institutions to have a better assessment of the impact of the crisis on the situation of debtors and on their loan portfolio in general; however, although there is an important economic recovery, it is not enough to reach the pre-crisis production level, as pointed out by the Central Bank of Costa Rica in its Macroeconomic Program 2021-2022.

According to Alberto Dent, President of Conassif, "it is for this reason that it is essential to extend the measures already adopted in the regulations that govern the National Financial System, with the purpose that the entities can continue supporting debtors, while reflecting the accumulated risks and having space to support their impact; all for the benefit of the stability of the financial system and contributing to the recovery of the debtors affected by COVID-19".

The impact and effectiveness of all measures will continue to be permanently monitored by the Superintendencia General de Entidades Financieras and Conassif, in order to propose new courses of action as the crisis evolves.

More on this topic

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Managers of Costa Rica's financial institutions predict that due to the health crisis the country is going through, the demand for credit from companies and families will continue to fall in the coming months.

Figures from the Central Bank of Costa Rica state that between March 2019 and the same month in 2020, the balance of money lent by public and private banks to companies and families decreased by 2.3%, from $28,559 million to $27,908 million. See full data (in Spanish).

Loans in Panama: 90-day Moratorium

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Central America: Negative Outlook for the Banking Sector

March 2020

Fitch Ratings agreed to change the perspective of the region's banks from stable to negative, arguing that the current health crisis will affect financial institutions in all countries.

Considering the measures that countries have adopted in the last 15 days in economic matters, following the spread of covid-19, Fitch expects that there will be a decrease in the issuance of loans.

Impact of the Crisis on the Banking Sector

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Increased demand for credit and more requests for loan restructuring is part of what the covid-19 crisis has brought to Guatemala's banking sector.

According to representatives of the Guatemalan Banking Association (ABG), the spread of covid-19 and the restrictive measures that have been decreed in the country are affecting the liquidity of companies, many of which have no income and must use credit to pay their bills.

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