The interest rates of the national financial system are again under analysis by the Monetary and Financial Board, the highest regulatory body in the sector.
The Board has among its functions the establishment of maximum ceilings on interest rates in the country. The delegate of the President to this body, Marcos Lopez, said yesterday (Thursday September 13, 2018) that the review will point to “the country’s savings are channeled to productive investment, which is what the country requires.”
Not only will the interest rates for the productive sector be revised, but an integral analysis of all the segments will be carried out, which includes consumption, housing, microcredit, among others. “We hope to have a technical study that allows a global review of how to set rates in the market,” he said, noting that the analysis will consider the risk levels of each segment.
The analysis will also include the provision of the Law of Productive Development -in effect since August 21st- that set rates for the agricultural and livestock sectors. Veronica Artola, manager of the Central Bank of Ecuador, explained days ago that the review is analyzed in coordination with the Ministry of Finance and acknowledged that it is a sensitive issue.
As part of the task, work tables will be set up with different sectors. International methodologies are analyzed to identify the best options for “working groups: whether by union, by institutions (…)”. Private banks look skeptically at a possible review of financing costs.
Julio José Prado, president of the Association of Private Banks of Ecuador (Asobanca), considered that it is not the best time to adjust this policy. He argued that banks have been lowering rates in the last two years.
The rates were, on average, 12% in all segments. For 2017, the cost fell to 11% and so far this year is already at 10.5%. The reduction obeys, according to Prado, to the macroeconomic conditions and, above all, to the high liquidity that there was. “When there are conditions and competition the rates can go down without the need for an agency to oblige.”
But the context for the rest of this year and for 2019 is different. Prado said that there is now less liquidity, which is due to a lesser injection of resources into the economy by the Government.
The executive said that the rates do not reflect bank risk. “Liquidity is scarce, unstable. There is a difference between the terms of the deposits and of the credits. These are issues that we have to go to talk about”
Lopez hopes that the issue can be defined until the end of the year and acknowledged that “we must look for incentives to lower rates, because the cost cannot be reduced by decree.” These statements were made within the framework of the VI Latin American Congress of Economy and Banking, which started yesterday in Quito and ends today, Friday, September 14, 2018.
The Finance Minister, Richard Martinez, announced at the event that he will send a reform in October to facilitate tax procedures. (I)