SANTO DOMINGO.- The Monetary Board approved an increase of 25 billion pesos to the new Rapid Liquidity Facility (FLR), within the framework of the monetary stimulus strategy that aims to boost economic activity in an environment of low inflationary pressures.
In a press release, the Central Bank of the Dominican Republic (BCRD) details that these resources will be disbursed gradually at an annual interest rate of 3% so that financial intermediation entities can channel new loans to productive sectors, households and MSMEs, at an interest rate no higher than 9% per year.
The amount corresponding to each entity, the financial entity explains, will be determined according to its participation in the loan portfolio of the financial system, to be disbursed after its availability of resources released from the legal reserve is exhausted.
The Central Bank of the Dominican Republic (BCRD) clarified that the entire authorized reserve requirement, amounting to approximately 34 billion pesos, remains available for issuing new loans to productive sectors, households, and micro, small, and medium-sized enterprises (MSMEs) at interest rates not exceeding 9% annually.
The disbursement of these resources will be made starting yesterday, Monday, June 19, gradually, in a weekly proportion that does not exceed 25% of the amount corresponding to each entity.
The agency also reported that as of June 16, 2023, some 60 billion pesos corresponding to the Rapid Liquidity Facility (FLR) had been placed.
These resources were disbursed by the Central Bank at an annual interest rate of 3%, guaranteed by securities issued by the regulatory entity or the Ministry of Finance.
Of this amount, some 30 billion pesos were provided at the aforementioned 3% annual rate to financial intermediation entities to grant new financing to productive sectors and households, at interest rates not exceeding 9% annually, and to micro, small and medium-sized enterprises, at competitive rates according to the costs inherent to this market segment.
Additionally, 30 billion pesos were disbursed so that these entities could have greater levels of liquidity, which would contribute to accelerating the transmission mechanism of monetary policy and the reduction of interest rates, through the gradual placement of new loans for productive activity, as the processes of evaluating debtors are exhausted.
The Central Bank reported that, of the funds allocated to productive sectors and households, 62% was channeled by financial intermediation entities to the trade and MSME sector, followed by the manufacturing sector, with a share of 16%, while 15% of said funds were allocated to the construction sector; the remaining 7% was granted to the agricultural, household and health sectors, among others.
To date, 1,194 loans have been granted at a weighted average rate of 8.7% per year, for working capital, purchase of supplies and production of finished products, among others, the Central Bank reported.
"The channeling of these resources has contributed to the reduction of interest rates at multiple banks, which would boost consumption and investment in sectors with a broad multiplier effect on economic activity and a favorable performance of the labor market," he said.
The Central Bank's forecasting models indicate that, within the framework of this monetary stimulus program, inflation would remain within the target range of 4% ± 1% for the remainder of this year, "in the absence of exogenous shocks not foreseen in the Monetary Program.".
