SANTO DOMINGO. – The Monetary Board authorized the relocation of RD$21,424.4 million to the construction sector, whose activity has a high impact on the national economy and has been affected by a turbulent international environment and its effects on market interest rates, registering a real growth of only 0.6% year-on-year in the period January-November of 2022.
This was reported by the Central Bank of the Dominican Republic (BCRD), which stated that the objective of the measure is to keep economic agents and the general public properly informed.
(It reports on the measure adopted by the Monetary Board (JM) on January 12, 2022, regarding the use of legal reserve resources for the channeling of loans for the construction and acquisition of low-cost housing (which currently amounts to up to RD$4.5 million), the BC stated in a press release.
It is important to note that at the end of 2022, approximately RD$21 billion was returned to the Central Bank, corresponding to a legal reserve release process carried out in 2017, for the financing of productive activities.
Taking these elements into account, the resolution approved by the Monetary Board establishes that the released resources will be allocated 80.0% to the acquisition of low-cost housing and 20.0% to interim loans for its construction.
Financial institutions must channel these loans at an interest rate not exceeding 9.0% per year, with terms of up to five years for the acquisition of homes and two years for construction (interim).
With this operational decision, the Central Bank's effective legal reserve requirement rate would remain at the levels prevailing before the expiration of the measure adopted in 2017.
This measure does not change the current restrictive monetary policy, as it leaves the reserve requirement ratio unchanged for the various financial intermediation entities, the Central Bank said.
"This restrictive stance is reflected in the behavior of monetary aggregates, which have moderated their growth to rates well below the expansion of nominal gross domestic product, consistent with the guidelines of the Central Bank's Monetary Program. For example, at the end of the year, the growth of the money supply (M1) slowed to close the year at 10.2%, while the broad money supply (M2) expanded by only 6.8% and the money supply in the broad sense (M3) by 5.4% year-on-year.".
