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Government would assume S / 4,875 million for delinquency in Reactiva Peru

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As a result of the COVID-19 pandemic, the Executive Branch created -since 2020- various state-guaranteed credit programs to support the most affected companies, with the aim of preventing the payment chain from being broken in the national economy.

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Thus, in total, the Government approved guarantees of up to S/76,500 million among all its implemented programs. However, to date, a guarantee of S/28,970 million is maintained, with Reactiva Peru being the most outstanding, since it concentrates 99% (S/28,742 million), according to the Multiannual Macroeconomic Framework (MMM) 2023-2026 published by the Ministry of Economy and Finance (MEF).

Likewise, according to the General Directorate of the Public Treasury and the General Directorate of Financial Markets and Private Pensions of the MEF, as of June 2022, the potential amount of honor that the national Government would have to cover for the guarantees granted would reach S / 4,931 million, equivalent to 0.6% of Peru’s gross domestic product (GDP).

Arturo García, professor of Finance at ESAN Graduate School of Business, explains that the nearly S/5,000 million would be what the State would have to assume for non-payment of credits granted.

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However, unlike the previous projections of the MEF, the amount of default has decreased by more than half, since an estimated honoring of S/11,406 million was previously expected in all guaranteed programs, according to the MMM for the period 2022- 2025.

default by program

Reactiva Peru was the most ambitious program launched by the Government to support companies with a fund of S/60,000 million with State guarantee, of which around S/58,000 million were used.

Two years after the credit program was implemented, as of June of this year, the guaranteed amount of the total credit portfolio exceeded S/28,742 million. Of the total number of beneficiary companies (433,975), 85.3% have a 98% guarantee on the loans granted, and 96.5% are micro and small companies.

In addition, the rescheduling of loans granted amounted to S/15,713 million (49.9% of the total portfolio balance); Of this amount, S/14,404 million is guaranteed by the national government, benefiting 128,181 companies.

Likewise, the MEF has estimated that, of the total default, some S/4,875 million would be due to delinquency in Reactiva Peru, which considers rescheduled and non-rescheduled credits. In addition, as of June 2022, S/2,005 million of the loans have already been honored.

“We are talking about 8.5% of Reactiva, which is less than what was initially estimated. The MEF estimated that there could be a non-payment of between 10% and 15%; it was known that it was a cost that the State was going to assume because it was a measure to avoid massive bankruptcies of companies,” said García, who pointed out that this lower forecast is also due to the facilities that have been given to companies to pay, How are the rescheduling?

In the FAE-Agro, the guaranteed amount of the total loan portfolio amounted to S/22.5 million (96% of the total of S/23.4 million). In this case, a maximum probable loss of S/6.5 million is expected.

Meanwhile, in the PAE-Mype, the guaranteed amount of the total credit portfolio amounted to S/205 million (95.5%) of the total of S/214.7 million; estimating a default amount of S/6.5 million.

Finally, in the COVID-19 Guarantee Program, a default of S/3.5 million is foreseen. In this case, the guaranteed amount of the total loan portfolio was S/29.6 million (27,986 beneficiaries).

The debt will be recovered

According to the MEF, the estimated default does not imply the final and real loss that the State will face for the program, since the debts will be recovered. In a scenario of non-compliance, the first line of action is the active recovery and collection management carried out by the financial institution.

After the entities have exhausted all possible efforts, they proceed to punish them and inform Cofide in order to honor the guarantees issued for the credit.

After the honoring of the guarantees through the Cofide, an active recovery process by the State continues, with which the real loss assumed would be lower due to the recoveries achieved.

Infographic – The Republic

Source: Larepublica

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