The IMF asks Spain for more “useful” measures to encourage loan to businesses and households
The International Monetary Fund ( IMF ) has asked Spain to approve “more useful measures” to reduce the restrictions on loan suffered by the country, such as reforms to ensure an effective and timely resolution of the debt of businesses and households and to reduce Banking financing costs. “More useful measures to alleviate loan constraints could include additional reforms to ensure effective and timely resolution of corporate and household debt, as well as reforms to further alleviate bank financing costs, such as additional steps It makes a full banking union, “says the IMF in the second chapter of the ‘ Global Financial Stability Report’ (GFSR).
The excessive indebtedness of companies has limited the demand for loan
The IMF warns that the excessive indebtedness of banks, companies and households is the “key factor” that limits the volume of loan in Spain. The data indicate that since 2009 Spain has faced a “substantial hardening” of the loan offer, partly due to the level of capitalization of the banks . In this line, he also points out that the financial position of the banks and the pressures on the sovereign debt have contributed to higher interest rates, and therefore to lower loan volumes, as well as the excessive indebtedness of the companies. limited the demand for loan.
In his opinion, in Spain the decline in loan is due both to a fall in the demand for loans and to a lower capacity or willingness of financial institutions to lend. The institution led by Christine Lagarde points out that in order to solve these loan limitations, the government has helped carry out a restructuring of the banking sector, which included a “significant” recapitalization program.
In addition, public agencies such as the ICO have directly lent money to companies, and the Government has taken steps to promote the issuance of debt by small and medium-sized enterprises (SMEs) and equitable financing, as well as to address the excessive indebtedness of households and companies, including changes in bankruptcy law and resolution programs for highly indebted households.
Differences between countries
The report considers that the restrictions that exist in the loan markets vary according to the country and evolve over time, which reaffirms the importance of a “careful assessment country by country and the need for more reliable data on loans new”.
It affects the importance of a country-by-country analysis
In this sense, he points out that in many cases, policies oriented to demand and supply are complementary, but he stresses their relative magnitude and sequence are important. “For example, alleviating the excess debt of companies helps only if the banking sector is properly capitalized, ” he adds. He also says that authorities should also recognize the limits of loan policies and not try to do too much.
In his opinion, since many policies will take time to take effect, the evaluation of their effectiveness and the need for additional measures should not be rushed . “When loan policies are able to support loan expansion and economic recovery, financial stability is reinforced, but authorities must be aware of the longer-term potential risks to financial stability,” the fund warns. The main risks revolve around the worsening of loan risk.