Stimulus cash now available

PANAMA. Access to the $1. 1 billion Financial Stimulus Program (Programa de Estimulo Financiero, PEF) is now available to the Panamanian banking system.

The executive board of the PEF recently met with the Panamanian Banking Association (ABP) board to discuss the details of the program.

The $1.1 billion is divided into three programs, with conditions set by the financial institutions behind the loans.

The economic director of Panama’s Bank Superintendency, Gustavo Villa, explained that the maturity date of loans by the Inter-American Development Bank (IDB) is three years, while CAF (Corporacion Andina de Fomento) loans have a seven year maturity date, and the National Bank loans five-years.

Interest rates are also not uniform. Interest rates of six-month CAF loans start at 1.7 percent over LIBOR (London InterBank Offered Rate), rates for six-month IDB loans are up to 4.5 percent over LIBOR, and those for 6-month BNP loans are 3.5 percent over LIBOR.

Each bank will be able to obtain loans for up to 50 percent of the security, with a ceiling amount of $100 million. Maturity dates and exact rates will depend on the needs and projects of each specific bank.

Villa said that PEF is not designed to help local banks, but to spur economic growth in the country.

“This is not a program to save any banks or to strengthen liquidity. It is for banks to lend to the economy.”

He said the program will be focused on financing foreign trade and to provide working capital for all of the productive sectors in Panama such as industry, commerce, and construction.

Funds will not be used for car loans or mortgages.

Maria de Diego, vice-president of ABP, said that the funds are destined for short term loans meant to promote investment, job creation, and to stimulate the country’s economy.

The former head of the Bank Superintendency, Delia Cardenas, says that there is a preference towards portfolios that generate jobs, such as construction.

PEF loans are conditioned to guarantees, in the form of US or Panamanian government debt instruments for example, for local banks to obtain access to the funds.