SANTO DOMINGO – The Dominican Republic's Multiple Banking Association (ABA) welcomed the monetary easing program, authorized by the Monetary Board and to be implemented by the Central Bank, for a total amount of RD$175 billion that will be available to financial institutions before the end of the current year, due to its potential favorable impact on interest rates received by the public and the consequent effect on boosting the economy.
The ABA stated that "necessarily, this set of measures that the authorities will implement should accelerate the transmission mechanism of interest rates downwards, as a consequence of the 100 basis point reductions accumulated since August of this year in the monetary policy rate , which would alleviate the financial cost for families and companies that are financing themselves."
He highlighted, as part of these provisions, the redemption upon maturity of Central Bank bills and notes amounting to RD$140 billion during the last quarter of 2024, as well as the new release of resources from the legal reserve for RD$35 billion for housing financing, especially low-cost housing, which will have rates of up to 10% per year, with a term of seven years.
He also considered relevant the expansion, by the Central Bank, of the repurchase facilities to multiple banks in terms of up to 28 days, the elimination of provisions to cover interbank operations that use as collateral securities issued by the Central Bank and by the Ministry of Finance.
He also considered favorable the extension, for one year, of the termination date of some RD$68 billion of the rapid liquidity facilities (FLR), with the objective of neutralizing the contractionary effect of the return of these payments to the regulatory body.
The Banking Association highlighted that the release of resources for housing construction, especially low-cost housing, is a timely measure that will boost the construction sector, whose growth reached 4.4% of GDP in the January-September period according to Central Bank data, with the consequent multiplier effect on other productive sectors.
The banking sector estimated that the positive effects of these measures will contribute directly to maintaining the stable macroeconomic environment, characterized by inflation that has remained below the target range of 4% ± 1%.
"Likewise, we understand that this broad program will foster employment opportunities and financial inclusion, promote investment and aggregate demand, among other aspects that generate well-being among the population," the ABA concluded.
