“The aforementioned interest rates will remain unchanged for renewals of credit lines maintained by the BCRD after the start of the gradual and orderly return of liquidity granted through the different facilities.”.
SANTO DOMINGO - The fear generated by the increase in the Monetary Policy Rate (MPR), announced last week by the Central Bank of the Dominican Republic (BCRD), that it would translate into an increase in bank loan rates, was dispelled yesterday with the clarification made by the body responsible for regulating the country's banking and monetary system.
“The decision to increase the Monetary Policy Rate (MPR) from 3.00% to 3.50% does not apply to the liquidity facilities granted by said institution for an amount of up to RD$215,814.3 million so that financial intermediation entities could channel loans to productive sectors, households and micro, small and medium-sized enterprises (MSMEs),” the agency clarified in a press release.
He said that the resources granted by the BCRD to financial intermediation entities through the Rapid Liquidity Facility (FLR) are maintained at an invariable interest rate until their maturity of 3.0% per year, guaranteed with securities issued by the Ministry of Finance, the Central Bank, private companies and by low-risk credit portfolio.
It adds that the facilities granted through the Repurchase Agreement Financing Window remain at 3.5% annually, guaranteed with securities issued by the Ministry of Finance and the Central Bank, which is why the rates of loans channeled by these entities to the productive sectors must remain up to 8% annually, unchanged until their maturity; and for households and MSMEs at the competitive rates originally agreed between the entities and the debtors, according to the costs inherent to these market segments.
Similarly, it specifies, the interest rates on loans granted to the aforementioned sectors using funds released from legal reserve requirements must remain fixed until maturity. In other words, the terms and conditions of loans channeled through financial intermediaries using funds obtained from the Central Bank's various liquidity windows cannot be modified.
It indicates that, likewise, the aforementioned interest rates will remain unchanged for the renewals of credit lines maintained by the BCRD after the start of the gradual and orderly return of liquidity granted through the different facilities, so that the productive sectors, households and MSMEs can count on these resources at low cost, as working capital necessary to continue their productive activities normally.
“The Central Bank of the Dominican Republic reaffirms its commitment to macroeconomic stability and the proper functioning of the financial and payment systems, remaining vigilant to adopt in a timely manner the measures necessary for such purposes,” the statement concludes.
