Interest rates in colones will remain stable during the third quarter of 2016. This was announced by the Economic Research Institute from The University of Costa Rica (UCR).
Economist Rudolf Lücke declared that interest rates could be from 4.75% to 5.25% regarding the methodological adjustment made by the Central Bank of Costa Rica in September 2015.
Last year, the financial indicator showed an important decrease from 7.2% at the beginning of the year to 5.95% by the end of 2015.
During the first six months of 2016 the rate continued to drop, reaching 5.25% in June. Even during the second week of July, the basic passive rate decreased to 5.05%.
According to economist Luis Diego Herrera, there are some factors that could be influencing this situation:
1) International stability in interest rates.
2) Fiscal deficit’s financing is not a threat.
3) There is little demand for credit in colones.
Lücke expressed that he is worried due to the difference between government’s revenues and expenses that leads to a systematic increase in the national debt. By the end of 2015 it reached 8.1 billion colones, which means an increase of 1.2 billion in one year and in the first six months of 2016 it rose to 8.7 billion colones.
The economist maintains that the situation will remain stable but if the government continues financing its own deficit, it seems inevitable that at some point the tax pressures affect interest rates.