close
Breaking news

The chloroquine adopted against malaria and some autoimmune diseases, has beco...read more Written by Florencio de los Santos One of the brightest chapters, but at the sam...read more FLORENCIO DE LOS SANTOS   MOVIE    NEWS  Written by Florencio de los Santo...read more San Francisco, June 4 (EFE) .- Hackers attacked the electoral campaigns of the p...read more WASHINGTON (AP) – The openly gay first secretary of the U.S. Army said Wed...read more The University of California pledged Thursday to continue supporting immigrant s...read more The world continues to be on alert after the appearance of a never-before-seen v...read more He had to overcome obstacles such as a limited campaign for the pandemic and c...read more The Queen of United Kingdom, Elizabeth, is infuriated by the new Duchess of Suss...read more US President Donald Trump announced Thursday the cancellation of the Republican ...read more

Fitch estimates that the Dominican economy will fall 5% and anticipates credit deterioration

The rating firm believes that the easing measures for banks postpone the increase in delinquencies…..

Risk rating agency Fitch Ratings estimates that the Dominican economy will decline 5% this year due to the effect of the COVID-19 pandemic, while forecasting a deterioration in bank credit.

In a virtual meeting, the international firm pointed out that the factors that most affect the forecast are a possible increase in the spread of the new coronavirus, as well as dependence on the tourism sector and on family remittances “which are a channel that transmits the shock economic growth in the region, “said Carlos Morales, director of Sovereign Ratings at Fitch Ratings.

He added that the change of government, which will take place on August 16, will be taken for the purposes of improvements or deterioration of the economic outlook according to the fiscal result observed after the crisis, or if there is a fiscal impulse that may deteriorate even plus the government’s position, but not because of the political change itself.For her part,  Larisa Arteaga, head of the Fitch Ratings Division for the Dominican Republic, Ecuador and Bolivia, said that the Dominican banks came to the pandemic with “a very solid financial profile, supported by a very strong economy that has mitigated the impact of the crisis. ”

Additionally, he said, authorities and regulators have applied measures to facilitate banking liquidity, which contributed to the expansion of private credit in the first half. However, in contrast, credit through credit cards has contracted by 10% in that period, which reveals the impact of the crisis by COVID-19 on the families’ pocket.

This, Arteaga considered, will end up hitting the quality of the bank’s loan portfolio. “The first signs of deterioration are evident,” he said, although he acknowledged that regulatory measures are applied that allow debt restructuring without consequences.

He added that the deterioration of the loan portfolios “has been moderate, but will worsen at the end of the year or at the beginning of 2021.”

The head of Fitch said that the measures applied as regards flexibilities for banks give relief, but only delay the increase in delinquencies.

He recalled that 30% of the portfolio is supported by consumer credit, which is being impacted given the lower level of income of Dominican households.

“As there is more poverty and unemployment, clearly people have less ability to pay off their debts. This is going to increase delinquencies and we are already seeing it,” he said.

No Comments

Leave a reply

Post your comment
Enter your name
Your e-mail address

Story Page