National pact for credit won over forced investments

There was white smoke between the National Government and the country’s banks, so there will be no more forced investment projects.

This was announced by the President of the Republic, Gustavo Petro; the Minister of Finance, Ricardo Bonilla, and the President of the Banking and Financial Institutions Association of Colombia (Asobancaria), Jonathan Malagón, who announced that The national pact for credit was agreed uponunder which strategic sectors for economic recovery will receive, in the next 18 months, $55 billion more in loans than they received in the last year and a half.

“Strategic sectors that the Government has defined as ‘the spearhead’ of economic recovery and that received 195 billion pesos in loans in the last 18 months, will now receive $250 billion, an increase of $55 billion in disbursements, that is, a growth of 28%, with inflation that is going down.”explained Jonathan Malagón.

The president of Asobancaria explained that the sectors will have more resources and more loanable funds for the development of their activity, with which they will be able to consolidate the process of Colombia’s economic recovery.

“We announce the agreement on strategic investments, the result of constructive and concerted dialogue with the Government, which will allow the disbursement of $250 billion in loans,” added Malagón.

And which activities will receive more credit? According to the information provided, these are: housing and infrastructure, manufacturing and energy transition, agriculture, the popular economy and tourism.

Colombian money

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(See: These are two works in Bogotá that were supposed to be ready this year, but they didn’t make it)

Pact for credit

Malagón also spoke about the famous forced investments, which have been much discussed in recent weeks, and assured that the savings of Colombians were never at risk.

“In the national pact for credit we will use all financial instruments, both public and private, and these resources will be granted under market logic. For investors and savers, this agreement is a message of confidence”he added.

He also said that from September 2024, and for 18 months, unprecedented mobilizations (of credits) will be generated for the strategic sectors for the reactivation, which will help to have a more prosperous society.

The executive also explained that the agreement will apply to all activities and to all Colombians in general. He added that nothing and no one will be excluded. and that although some sectors will be promoted, it will not be at the expense of the rest of the economy.

“One might think that the growth of some sectors will imply the decline of others or the rise of interest rates, but there is no such thing. We are going to have a recovering economy and the credit risk in general will be lower, we will have lower interest rates due to the position of the Bank of the Republic and that will be transmitted, immediately, to commercial banks. And these better economic conditions and more liquidity will make any Colombian who approaches a loan find more favorable conditions for its disbursement.”.

Finally, On how those $250 billion will be distributed, sector by sector, the accounts are:

– Housing and infrastructure: $46.6 billion.

– Manufacturing and energy transition: $163.4 billion.

– Agriculture: $32.1 billion.

– Popular economy: $4.1 trillion.

– Tourism: 8.4 billion.

Infrastructure

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Andi: ‘There are solutions at hand’

After learning of the agreement between the financial sector and the Government on the credit pact that prevents forced investments from increasing, the president of Andi, Bruce Mac Master, highlighted that the objectives that the Government expressed, of giving more access to credit to people who were not able to have it, I could achieve it with an instrument at handsuch as guarantee funds, including the National Guarantee Fund.

“The Government has more funds”said the union leader, emphasizing that to resolve the high cost of credit that the Executive talks about, there is another instrument, which is the interest rate subsidy.
“The interest rate subsidy has been a very successful strategy, well known and very well defined, especially in the construction sector, and that is why there was the Frech fund”said the union leader.

And he pointed out that the agreement between the Government and bankers is the result of taking these two factors into account and that Banks are also interested in expanding financial inclusion and capillarity in the allocation of credit, which can be achieved with these two instruments.

“It is the will of the banks, the will of the Government to generate better interest rates and of course the interest and entrepreneurship of Colombians”he added.

CAMILO HERNANDEZ M.
Portfolio

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