The business sector considers it positive that a new methodology for calculating interest rates has been established manufacturing sector – which includes the corporate and business sub-segments – and which will be effective from July 1, 2023, but at the same time it makes some observations.

The Ecuadorian Business Committee (CEE) explained that the update of the methodology for determining these interest rates made by the Committee for Financial Policy and Regulation “is an issue that the business sector has supported since the beginning of the year. We were determined to confirm that interest rate ceilings exclude Ecuadorians from of the financial system and they are pushing them towards chulco”, points out its executive director Gabriela Uquillas.

From July 1, higher interest rates for loans to companies and the economy will be in effect, which is intended to encourage banks to deliver them.

He believes that this is a step in the right direction, although he believes that there is still a long way to go. “On this occasion, the methodology of interest rates was updated only for two credit segments. From SIE, we believe that the Committee for Financial Regulation should listen to the private sector and update the methodology for all segments. No Ecuadorian should be left out of the financial sector”.

The president of the Chamber of Commerce of Guayaquil, Miguel Ángel González, points out that the change refers to the maximum rate at which banks could grant corporate loans, therefore, given this increase in the ceiling, more companies can access loans that they could not before, allowing greater inclusion.

However, he believes it’s important to keep in mind that raising the cap rate alone may not be enough to address the slowdown in business lending. “If this slowing trend continues, companies may face difficulties in obtaining the necessary financing. This scenario could have a knock-on effect that would spill over into the wider economy.”

According to González, a decrease in investment and business growth could cause a decrease in demand for goods and services, which would affect other economic sectors and could have consequences for job creation.

For the president of the Quito Chamber of Commerce, Mónica Heller, any methodological form that the technical process takes is good, because it stops being random and becomes absolutely technical; However, he points out that the increase in credit rates is complicated for the manufacturing sector, since the burden of corporate lending is already high, so “the thought of an increase in interest rates is terrifying.”

“Companies must be able to pay, not just access to credit. Of course, everyone wants more credit, the question is, can we afford the higher costs of that credit? I think not, I think the cost of credit in Ecuador is important, it is high considering that Ecuador is a dollarized country”, he answers.

He believes that instead of more lending, he will produce less, although there is a desire to do the opposite. “If what we are really looking for is the generation of more debt with the aim of having more investments, working capital and economic growth, what is needed is the opposite, better rates and better guarantees for that debt”, he affirms.

Interest rates for corporate and business loans have increased from 1 January 2023. Here are all the current rates

Those in the corporate segment are those companies that sell more than 5 million dollars a year, and those in the business segment are those that sell between 1 and 5 million dollars, according to the Executive President of the Association of Private Banks of Ecuador (Assobanca), Marco Rodríguez, who explains that it is not about an increase, but that the Administration has determined the methodology for calculating the interest rate.

“What she determined is that there will be an interest calculation methodology. This methodology will allow these two segments, corporate and business, to gather the state of the domestic and international market with regard to the various components of the interest rate and thus prevent what has been happening for the last six months. credit limit or credit limit,” Rodríguez points out.

He explains that this methodology will allow the proper allocation of interest to companies according to the risk of each company and believes that “there will be people (companies) who may even have lower interest rates than they had before when this started. “this financial hedging”.

He is aware that the interest rate methodology now approved by the Board is not an “optimal solution” because “it will not have the expected effects in the short term of a strong increase in credit dynamics”; but believes that it will help companies to start reactivating credit lines and financing their activities.

He believes that this is important because companies that previously had loans did not get them or had difficulties, and this affects production, employment and all commercial dynamics. “So we see that even though it’s not the best solution in something, it helps solve this problem.”