The Credit Situation in El Salvador

An analysis of the changes in the dynamics of granting credit, in an interview with the Superintendent of the Salvadorian Financial System.

Wednesday, February 18, 2009

Luis Armando Montenegro, Superintendent of the Financial System, in an interview published in La Prensa Gráfica, responds to questions about the liquidity of the Salvadorian financial system, the contraction of external credit to the local banking system, changes in the granting of loans, and interest rates, among other issues.

More on this topic

Credit for Private Sector Drops to 8.3% in Guatemala

April 2009

Up to and including April 9, the total growth (including loans in local and foreign currency) was 8.3%, the lowest in the last two years.

Despite measures taken by monetary authorities to keep the money market liquid in order to stimulate credit, financing to companies has not reactivated. Directors of the Industrial Bank and G&T Continental state that they are receiving up to 20% fewer loan requests.

Costa Rica has $320 Million for Development Frozen

March 2009

The money is intended for loans to small and medium sized businesses at preferential rates, but Bancrédito, the state bank which manages it, alleges legal flaws that prevent it from granting them.

For Bancrédito, the problems are that these funds require separate supervision and that the interest rates at which the loans need to be made as provided by law would cause the bank losses.

Salvadoran Banks ask for lower credit rate from the IDB

December 2008

ABANSA believes that the cost of accessing the $500 million made available with IDB funds is too high.

Armando Arias, president of the group said that the rate of the funds corresponds to the LIBOR plus 400 base points more in commissions and is practically the same as the rates offered by other international lenders.

$500 million for Salvadoran financial sector

November 2008

In an unprecedented move since the dollarization of the country's economy, the BCR will inject ready money into the local financial sector.

The IDB approved an operation for the Central Reserve Bank to buy a credit portfolio totalling $500 million from banks giving them more liquidity to support the production sector.

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