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).
Between May and September 2018, an increase was reported in the proportion of loans with payment arrears greater than 90 days, but between October and December the trend was downwards.
Data from the General Superintendence of Financial Entities (Sugef) indicate that between September and December 2018, the proportion of loans with payment arrears greater than 90 days, or in judicial collection, decreased from 2.58% to 2.14%.
CABEI granted a loan to Banco de Costa Rica, which will be used to finance operations by SMEs and business clients in the industrial, agricultural, and cooperative sectors.
The financing was made under the modality of disbursement of global line of credit, intended for working capital and boosting Costa Rican productive sectors, informed a source of the executive.
Limiting the fees charged in Costa Rica and establishing a law that defines market limits in Guatemala are part of the attempts being made in the region to regulate the use of credit cards.
A law proposal presented last January before the Legislative Assembly of Costa Rica, aims to regulate the percentage of the commission paid by businesses for credit or debit cards.
Up to February 2018, the growth rate of bank loans for trade, services, consumption and housing activities decreased considerably compared to the same period last year.
According to figures from the Central Bank of Costa Rica, between February 2017 and the same month of this year, the annual growth rate of credit granted by the financial system to the private sector fell from 13% to 7%.
Figures up to October 2017 show a 3% YoY growth, well below the 12% increase registered in the same month in 2016.
The slowdown seen in economic activity during the last eleven months is one of the reasons that explain the lower demand for bank loans by companies in the country.
Elfinancierocr.com reports that "...In addition, the rise in interest rates in colones and dollars, the volatility presented by the dollar in the middle of last year, as well as the growing fiscal deficit, prevented companies from finding any stimulus to support the idea that it was a good time to borrow."
The drop from 20% to 6% in the annual growth rate of bank lending to companies as of June, illustrates the direct link between confidence in the future and demand for business loans.
Cathay Bank estimates that slower growth in bank loans for business activities is due to the uncertainty regarding the near future of the economy. The possibility of a tax reform, coupled with the lack of action by the government to reduce spending and increase public investment are factors that are raising questions and forcing companies to delay projects.
In the last three years there has been a decline in the amount of credit granted to private companies for purchasing property, land and construction of buildings.
In September 2014, on average, 834 transactions were formalized between banks and other financial companies, representing a decrease of 28% compared to the same month in 2013. The downward trend in granting of loans for these purposes has been observed since early 2012.
The instrument which had been viewed as a way to circumvent the current credit squeeze, is now officially considered as another form of credit facility.
Bankers' acceptances had been relaunched by the National Stock Exchange (BNV) as a way to provide short-term funds to companies who require them, without having to apply for a formal loan, believing that banks would not have to count them as part of their portfolio credit growth which is currently limited by resolution of the Central Bank of Costa Rica (BCCR).
A bill has been presented to the Legislature which will regulate the use of inventories, intangible assets and other movable assets as security for financing.
A statement from the MEIC reads:
San Jose, February 7, 2013. In order to increase access to credit, particularly for SMEs, the financial sector, the private sector and the Government, with the help of international consultants, over the last few months have been working on the basis for a proposed Law on Secured Transactions.
Principal and interests will be guaranteed through a contigency loan granted by the Central American Bank for Economic Integration to the issuing company.
“Partial Credit Guarantees” is the name of the project that CABEI is preparing to assist companies in accessing regulated capital markets in the Bank's member states.
David Castillo's article at Capitales.com, points that "the plan is similar to a Stand By Credit Letter or Safe Credit Letter.
Costa Rican banks are reporting an increase in loans, specially for industry, services, commerce and home building.
Event though stats for the first half of 2009 do not report an increase in the credit balance of the banking system, "bankers forecast higher loan growth than predicted by the Central Bank in its macroeconomic program revision. The Bank estimated credit growth at 4.3% in Colones and 3% in U.S. dollars."
Bank credit tightening makes it necessary to look for alternate private capital financing sources.
In the Elfinancierocr.com blog article "En numerous," Edgar Delgado Montoya outlined five options as a source of financing for both start ups and business expansion projects: Emerge Fund, Link Investment Caseif II, E + Co LAC, and E3 Corp.
Delgado Montoya said: "In addition to delving into very different sectors, investment banking operations are quite flexible as to how the manner in which resources can be administered to the receiving enterprise."
It is indispensable for the economy to continue using credit to finance production and commercial operations.
The analysis by Raul Moreira published in the La Estrella in Panama emphasizes that "the demand for internal credit by the private sector was at $31.6 billion in October and continued to grow at 20.38%, while deposits had an increase of 24.69%, which shows that the main source of financing for the expansion of credit comes from domestic savings by individuals. Prudence and caution is recommended for credit policies and it is important to maintain the rhythm of capturing funding."
Fitch Ratings discusses the corporate credit environment throughout Latin America.
As can be seen in the charts on the following two pages, Latin American corporates have made tremendous improvements in their liquidity positions since the end of 2003 due to vibrant local capital markets, strong cash flow generation and significant deleveraging. The improvements have been broad-based, occurring within each market and across each issuer default rating (IDR) category. The charts also reveal a sharp downturn in the funds from operations (FFO) growth rate during the last twelve months (LTM) ended June 30, 2008, and a reduction in cash as a percentage of short-term debt.