Between May and June of this year, the average lending rate of commercial banks has fallen from 11.52% to 10.28%, a drop that is explained by the high level of liquidity of the banks and the low placement of credits.
The pandemic that caused the outbreak of covid-19 has hit the financial system, since due to the current market conditions, the active rates have come down between the months of May and July.
Following the entry into force of the Usury Law, the Central Bank published the maximum annual interest rates, which for credit operations in colons amount to 37.69% and 30.36% in dollars.
The law that was published on June 20, 2020 establishes the methodology to be used to set the maximum interest rate, and stipulates that the Central Bank of Costa Rica must publish on its website and on The Gazette, the maximum usury rates in the first week of January and July each year.
In order to help cooperatives, cope with the emergency caused by the spread of covid-19, the National Institute for Cooperative Development agreed to reduce the interest rate on loans.
This decision was taken to support the cooperative sector, especially the agricultural sector, which has been suffering from a variety of effects. The authorities also hope to make a significant contribution to the country, in the context of the current epidemiological situation, reported the National Institute for Cooperative Development (INFOCOOP).
In Costa Rica, a law initiative under discussion seeks to set caps on interest rates on loans, a measure that could lead to a reduction in the offer of credit for debtors classified as higher risk.
As part of a bill being discussed in the Legislative Assembly, the heads of the Central Bank of Costa Rica (BCCR) and the General Superintendence of Financial Entities (Sugef) were asked to give their views on the content of the proposal.
The Cortizo administration approved a proposal that establishes that the government will assume 2% of the bank interest for the purchase of homes valued between $120,000 and $150,000, and in the case of real estate between $150,000 and $180,000, the exoneration will be 1.5%.
The Cabinet Council approved on September 3 the bill No. 044-19, which still has to be endorsed by the Assembly and seeks to increase coverage for the purchase of homes worth $180,000, informed the presidency of Panama.
Because savers in Costa Rica have moved their resources to longer terms, to avoid an increase in income tax, the Basic Passive Rate rose to 6.65%, a level not recorded since August 2015.
According to data published by the Central Bank of Costa Rica on Wednesday afternoon, July 3, the Basic Passive Rate (BPR) reports levels not reached since August 26, 2015, and will remain at 6.65% until next July 10.
The Costa Rican banking sector opposes such a measure, arguing that imposing an upper cap on interest rates on bank loans would cause informality in the credit market.
The 20.861 reform of the competition promotion and effective consumer defense, which aims to cap credit interest rates, is discussed with the country's Tax Affairs Commission.
Regarding the establishment of a rate cap, Ronulfo Jiménez, legal advisor to the Costa Rican Banking Association, said during the hearing that "... these initiatives are not retroactive, leaving the population with over-indebtedness in that condition, therefore, denies that this will benefit the consumer."
Because of the adjustments made by the Central Bank to interest rates in recent days, financial institutions in Costa Rica will be forced to raise interest rates on savings in local currency.
Arguing that forecasts suggest that inflation in 2019 could be above the upper limit of the target range, on November 1st the Central Bank of Costa Rica (BCCR) decided to raise the monetary policy rate from 5% to 5.25%.
The Passive Base Rate fell from 6% to 5.9%, while the Effective Rate in Dollars also fell, from 2.29% to 2.11%.
The Central Bank of Costa Rica published on the afternoon of Wednesday, April 4, after not having registered any movement the previous week, news that the Passive Base Rate fell by 0.10%, and will remain at 5.90% until next Wednesday, April 11.[GRAFICA caption = "Click to interact with graph"]
The passive base rate rose from 4.50% to 4.60%, while the effective rate in dollars rose from 1.93% to 2.11%.
BancoCentral deCosta Ricareleased news on Wednesday afternoon on November 23 that the passive base rate rose by 0.10%, meaning that the rate will remain at 4.60% until Wednesday November 30.
The passive base rate in colones fell from 4.80% to a record low of 4.70%, while the effective tax rate in dollars dropped from 1.98% to 1.91%.
The Central Bank of Costa Rica (BCCR) released late on Wednesday September 21, news that the passive base rate will stand at 4.70%, until Wednesday September 28. This is its lowest value so far this year.
The Central Bank of Costa Rica has started publishing the effective rate in dollars, which is a weighted average of the gross interest rates given for term deposits.
Calculation of the Effective Rate in Dollars
Week of 05/05/2016 to 11/05/2016
Public banks: Relative Weight: 0.4338 - Average Rate: 1.6084
Private Banks: Relative Weight: 0,5662- Average rate: 2.1677
Between December 2014 and September 2015 the average lending rate in private banks fell by 2.5%.
Data from the Central Bank of Honduras and the Honduran Association of Banking Institutions (Ahiba) indicates that up to October 2, 2015 the lending rate on loans in the national currency was 13.46%, 15.30% lower than last July, reports Elheraldo.hn.
A bill intends to extend the system of preferential interest rates on bank loans for productive activities in the agricultural sector.
From a statement issued by the Assembly of Panama:
The Agricultural Affairs Committee has been exchanging views with officials in the primary and banking sectors on a bill that establishes discounts in the interest rate of loans to local producers in the order of $500,000.
The Solis administration is relaunching a bill which aims to set the maximum allowable interest rate for any type of loan.
Although the so called usury rate is part of Costa Rican law, it is not specified how much the rate should be. Because of this, "... the Costa Rican financial market offers various loans with very high rates that could be punishable, but the gap in the law does not allow the courts to determine what is a high or low rate."