Borrowers in dollars with income in colones face greater difficulties in paying their loans

Borrowers in dollars who receive income in colones face greater difficulties in paying their loans because they have suffered two blows: an increase in the price of the dollar and a drop in income due to the pandemic.

This was explained this Thursday by the financial authorities when presenting the Semiannual Financial Stability Report 2022 at a press conference.

in bliss conferencethe General Superintendent of Financial Entities, Rocío Aguilar, indicated that in the case of debtors who have loans in a currency other than the one in which they receive their income (the authorities call them “non-generators”), delinquency (loans with arrears greater than 90 days or in judicial collection with respect to total loans) in March 2022 it was 3.40% and in the case of generators (who have their debts in the same currency in which they receive their income) it was 2.21 %.

“Indeed, it is being felt in non-generators, who are those people who do not have their income in that currency, that higher delinquency and fundamentally here there is an element that has to do with the increase in the exchange rate,” Aguilar commented.

“That, of course, also aggravated by the pandemic, then it is a combination of loss of ability to pay in many of these households, it is above all non-generators, which in some cases lost their sources of income, partially or even totally and that is also aggravated, as Doña Rocío said, by the increase in the exchange rate has generated a lot of pressure on their ability to pay”, added the president of the Central Bank, Rodrigo Cubero.

As of March 31 of this year, for example, the price of the dollar had risen 8.9% compared to the same day of the previous year.

Loans to non-generators are lowered

The amount of credit in dollars granted to non-generators has decreased over the years in relation to the total portfolio. It went from representing 31.6% in December 2015 to 22.3% in March 2022.

As Cubero commented at the conference, between February 2020 and February 2022, the total credit balance in dollars to non-generators was reduced by $1,000 million, from $9,421 million to $8,420 million.

[ Crédito en dólares pierde atractivo para quienes ganan en colones ]

However, as indicated in the semi-annual report, presented at the conference, the credit in dollars granted to non-generators still represents a significant percentage of the credit portfolio.

“Although credit in dollars to debtors who do not generate foreign currency has shown negative growth rates in the last five years, the balance of loans to these debtors still represents a significant percentage of the total credit portfolio of regulated financial intermediaries in the country. ”, indicates the text.

into the future

Prospectively (refers to the future by projecting data from the present), according to Juan Carlos García, an official of the Central Bank’s financial stability department, the increase in external interest rates could affect non-generating households more.

“One has to see this risk prospectively in the sense that the world economic environment also reflects that there could eventually be an increase in interest rates abroad that, if transferred to the local market, would make credit more expensive for those debtors, for example, when they have interest rates that are adjusted periodically, then it is an issue that also enters into that language that we say is increasing the risk for them and also the recent trends that have occurred in the foreign exchange market, which if they continue could aggravate the ability of payment of those debtors”, Garcia explained.

[ Reserva Federal decreta la mayor alza de su tasa en 22 años y en Costa Rica se sentirán los efectos ]

In addition, García said, as has been pointed out in previous reports, the level of indebtedness of Costa Rican debtors is relatively high and therefore that makes their margin of action, when those exchange rate and interest rate variables increase, much more. reduced and this is particularly important in the case of households and individuals.

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