Various changes in interest rates will apply from January 3, 2022

From this January 3, public and private banks will apply changes in interest rates. In practice, since Monday, the new interest rates decided by the Financial Policy and Regulation Board, a resolution that was published last week by the Central Bank of Ecuador.

Additionally, the IESS Bank announced almost at the end of the year that from January 2022 a reduced rate will be applied for unsecured loans.

And the President of the Republic, Guillermo Lasso, announced that this year rates of 1% will be applied for a 30-year term in public banks, for microcredit. However, this still depends on a resolution from the Board itself and on a report from the Ministry of Economy and Finance.

Interest rates for the financial system will be applied to eight of the thirteen existing segments.

• Productive business credit: previous: 10.21%. Effective January 1: 9.89%.
• Productive previous SMEs: 11.83%. Effective January 1: 11.26%.
• Previous consumption: 17.30%. Effective January 1: 16.77%.
• Previous retail microcredit: 28.50%. Effective January 1: 28.23%.
• Previous simple accumulation microcredits: 25.50%. Effective January 1: 24.89%.
• Previous extended accumulation microcredits: 23.50%. Effective January 1: 22.05%.
• Previous corporate productivity: 9.33%. Effective January 1: 8.86%.
• Previous real estate: 11.33%. Effective January 1: 10.40%.

For Marcos López, former delegate of the president in the Monetary and Financial Policy Board, and an expert in financial matters, the new formula applied for rates leaves some doubts for example, what is the value of operating costs and how is the distribution of these costs.

Another issue that would be pending is build a base rate (a sort of Prime rate) that becomes a marker rate for those with lower risk. For López, at the moment, the rate policy would not support financial inclusion for the population that has not had access to credit due to risk. It is delivered at the same rate, with which the bank only bets on giving credit to those who have less risk.

Regarding the Biess, Francisco Cepeda, chairman of the board and its manager, Iván Tobar, announced the reduction of the rate for unsecured persons with a term of 2 years from 14% to 11%. For López, this issue can heat up the economy, but in an economy like ours in which the injection of liquidity can go to many products that are not produced in the country, it is necessary to be moderate. It should also be analyzed what the impact will be for the IESS funds, since they will yield lower interest rates.

Meanwhile, Lasso He has talked about lowering the interest rate of BanEcuador. The Government has admitted that there should be a subsidy. This increases fiscal spending, which would be going against the fiscal adjustment policy, López explained.