March 1, 2013
Bankers in Costa Rica are digesting what many see as unwelcome news.
In February, the central bank slapped restrictions on the growth of their credit portfolios. At the same time, SUGEF, the banking regulator, is mulling a range of new measures to curb risk-taking.
As Fernando Naranjo, general manager at the country’s largest financial institution Banco Nacional de Costa Rica, puts it: “the restrictions are the hot button topic of the moment”.
The measures are designed to help Costa Rica deal with a number of burgeoning macroeconomic distortions: large spreads between local and US interest rates has led to an explosion in foreign currency lending, which jumped 17.8% in 2012.
Costa Rican banks are confronting tighter credit controls as authorities grapple with an explosion in dollar lending. The central bank insists such moves are a necessary evil