Financial markets are in turmoil. Shares of banks are going down. European bonds are paying out record rates. Big corporations are announcing layoffs.
The global financial system seems to be heading towards another major crisis, and it could be worse than in 2008. At that time, the United States’ national debt was below $10 trillion, whereas now it is over 14.
The law establishes a trust fund of $1.11 billion to be used by banks to finance productive investment.
According to the Cabinet Decree which was approved March 9, the resources should be directed to finance new productive investments or those that were begun after June, 2008.
The article in prensa.com indicated: "They can also be used as working capital to cover the needs for continued or expanded operation in the short term and for short-term loans (up to two years) for foreign trade."
The Central Bank of Honduras is pressuring bankers to enlarge their credit portfolios, but banks are resisting any change to their risk policies.
In statements in La Tribuna, the well-known banker, Jorge Bueso Arias, insisted that "it is not that [the Central Bank] wants to put forth mandates, but rather... it wants that we increase our credit portfolio, and I have said publicly that our main responsibility is to our depositors,...
The initiative proposed by president Oscar Arias seeks to strengthen the sector and shield it from the global crisis.
The president said that the National Bank, the Bank of Costa Rica and the Agricultural Bank of Cartago have enough liquidity and that this is just a preventative measure.
After the XLII Assembly held in Panama, the Latin American Federation of Banks expressed its position on the financial crisis.
LATIN AMERICAN FEDERATION OF BANKS
DECLARATION OF PANAMA, November 2008
• The current international financial crisis and the resulting global economic recession did not start in Latin America.
• The Latin American banking sector is solid, liquid and credit-worthy.
The objective of the Superintendence of Financial Entities is to strengthen bank liquidity in order to prevent being affected by the global crisis.
Superintendent, Oscar Rodriguez, justified the decision to ease some risk indicators for financial entities in order to allow them to "raise" more liquidit, since they do not know how great the impact of the global financial crisis will be. He emphasized that the equity requirements will not change.
The Dow Jones industrial average opened 400 points higher and never looked back, led by big gains in financial stocks.
Last week’s stock sell-off gave way to a big rally, with the Dow Jones industrial average having its largest-ever point gain. The surge came as countries around the world took steps to ease the financial crisis, ushering in a drastic reshaping of the banking industry even as doubts lingered about its long-term effects.
Guatemalan analysts agree that the country will not receive a direct impact from the international financial crisis.
Carlos Gonzalez, an economist from the Association of Investigations and Social Studies, affirmed that he does not foresee any direct impact, however he said that this could happen if the US economy continues to slip and therefore affect Guatemalan exports, remittances and employment.
$1.2 billion in real estate investment have been suspended until project viability can be assured.
Several major hotel chains announced that their investment projects would be suspended for an indefinitely until the viability of the projects can be assured. These decision represent $1.2 billion in tourism investment in Costa Rica.
Many of these large hotel projects are financed by banks in the US such as Lehman Brothers, which had just opened offices in country in 2008. Some projects financed by American sources include the Mandarin Oriental, Hyatt, Saint Regis, Regent and Punta Cacique. The construction of these projects depend on market recuperation and bank stability.