The Governor of the Central Bank and members of the Monetary Board.
–
SANTO DOMINGO, Dominican Republic.- The Central Bank of the Dominican Republic (BCRD) announced on Thursday additional measures aimed at combating the negative effects on the economy caused by the COVID-19 pandemic.
In a press document, the financial entity says that it increased from RD $ 30 billion to RD $ 50 billion the amount of liquidity facilities to financial intermediation entities and also raised to RD $ 30,133.4 million the amount of the reserve funds released legal to channel new loans to different productive sectors and households.
In addition, it reduced the legal reserve ratio in national currency to savings and credit banks by 0.5% and, with regard to the exchange market, authorized the Central Bank to offer liquidity in dollars for US $ 622.4 million.
These new measures are added to the decrease in the monetary policy interest rate (MPR) from 4.50% to 3.50% annually and the interest rate on overnight deposits and others announced the day before.
The text of the document:
“The Central Bank of the Dominican Republic (BCRD) informs economic agents and society in general that additional measures have been taken to combat the negative effects on the economy caused by the COVID-19 pandemic in the Dominican Republic.
The approved measures are specified as follows:
–
1) Increase the amount of liquidity facilities from RD $ 30 billion to RD $ 50 billion to financial intermediation entities, through Repos up to 90 days and an interest rate of up to 5% per year, using as collateral securities issued by the Central Bank and by the Ministry of Finance. These facilities may be renewed at maturity.
These additional RD $ 20 billion seek to guarantee that all financial intermediation entities have sufficient resources for the proper management of their treasuries and contribute to the channeling of resources towards the productive sectors.
It is important to point out that, as of March 26, 2020, financial intermediation entities have requested liquidity through Repos for an amount of about RD $ 33,000.0 million, an amount of about RD $ 28,000.0 million having been channeled to date, while they are in process of disbursement about RD $ 5,000.0 million.
2) Increase up to RD $ 30,133.4 million the amount of the legal reserve released resources to channel new loans to the different productive sectors and households. For these purposes and in order to streamline the use of these resources, it was decided to eliminate the condition of demanding securities from the Central Bank and the Ministry of Finance, replacing them with loan contracts. This easing is also applicable to the resources released from legal reserve in foreign currency in the amount of US $ 222.4 million.
3) Increase liquidity facilities in foreign currency to financial intermediation entities from US $ 300.0 million to US $ 400.0 million, through Repos up to 90 days and interest rate of 1.80% per year, renewable at maturity, in addition to the US $ 222.4 million released from legal reserve, in order to channel foreign currency to the productive sectors and contribute to the proper functioning of the exchange market.
4) Reduce the legal reserve ratio in national currency to savings and credit banks by 0.5% and to credit corporations, which represents a release of legal reserve resources for these entities for a total amount of up to RD $ 136.4 million, so their required legal reserve ratio is equal to that of savings and loan associations.
With these measures, the release of legal reserve resources amounts to RD $ 30,267.1 million, which added to the RD $ 50,000.0 million of Repos, would be providing liquidity to financial intermediation entities for RD $ 80,267.1 million.
5) Regarding the exchange market, The Central Bank was authorized to offer liquidity in dollars for US $ 622.4 million, of which US $ 400.0 million will be granted through Repos for up to 90 days and the remaining US $ 222.4 million for the release of legal reserve resources in foreign currency, for the channeling of new loans to the productive sectors, especially tourism and exports.
6) These new measures are added to the decrease in the interest rate monetary policy (TPM) from 4.50% to 3.50% per year and the interest rate on overnight deposits from 3.0% to 2.50% per year, that of 1-day Repos from 6.0% to 4.50% per year and that of Repos up to 90 days is set at 5.0% annually.
7) Likewise, special regulatory treatment had been authorized to the financial system to avoid the deterioration of the credit portfolio and contribute to improve the cash flow of companies and households. Specifically:
to. Loan classifications and provisions are frozen at the level they were at the time of the approval of the Resolution;
b. The possibility of restructuring credits is established without downgrading the debtor’s ratings;
c. Loans disbursed will be considered as not due against lines of credit with arrears of up to 60 days; Y
d. Extends for 90 days the period granted for updating the appraisals of the admissible guarantees.
The Central Bank of the Dominican Republic He will continue to monitor the impact of the coronavirus and its effects on the Dominican economy, being prepared to continue reacting in a timely manner to factors that may generate a deterioration in the employment and well-being of Dominicans. This institution and the Monetary Board reaffirm their commitment to macroeconomic stability and the proper functioning of the financial and payment systems ”,.
of-am
–
