The Minister of Finance, Ricardo Bonilla, and the president of Asobancaria, Jonathan Malagón, discussed in depth the scope that the recently announced 'Pact for Credit' will have in terms of economic reactivation. They highlight credits to industrial microenterprises and a focus on financing housing improvements, among other issues.

The scope of the so-called 'Credit Pact' between the Government and the financial sector continues to be known. This Wednesday, the Minister of Finance, Ricardo Bonilla, and the president of Asobancaria, Jonathan Malagón, delved into the scope that greater financing will have in the five sectors prioritized in the Government's economic reactivation plans: housing and infrastructure, manufacturing and energy transition, agriculture, popular economy and tourism.

Basically, the 'Credit Pact' is the mechanism that finances the reactivation plans that the Government contemplates as a response to an economy that cooled in 2023 and wants to consolidate the faster pace seen in 2024.

How? Through a boost to demand, meaning better financing conditions for micro-industrial companies, for tourist operators, for agricultural producers or for buying or improving housing, among other examples of activities that, due to their interconnections, can move the Colombian economic apparatus.

As Jonathan Malagón explained, “these are sectors that manage to convert investments into growth of the Gross Domestic Product (GDP) and, therefore, into employment.”

The real benefits of the 'Credit Pact'

The agreement announces greater disbursements of loans for the aforementioned sectors. However, the conditions under which these loans will be delivered and, therefore, the advantages for Colombians are yet to be seen. According to the president of Asobancaria, in the next three weeks there will be different conversations with unions and businessmen to define the conditions.

For now, both the Government and the banks represented in Asobancaria have reiterated that there will be better financing conditions for the popular economy, that is, promotion of those economic activities developed by small-scale units (individuals, families, micro-businesses or micro-enterprises) in the prioritized economic sectors.

"In addition, these are sectors where there is a strong commitment to the popular economy, to reach small entrepreneurs in the branches that the Government has established," said the president of Asobancaria.

For example, the Minister of Finance mentioned that there is a goal of 500,000 loans for industrial microenterprises. Ricardo Bonilla explained that, in many cases, Colombians will be able to access loans with a compensated rate.

“The compensated rate today is an instrument that is developed from the second-tier banking system, which we are going to strengthen with Bancóldex to achieve an objective that the banking sector has set for us: a goal of 500,000 loans for industrial microenterprises, which would be channeled through joint mechanisms between public and private banks. Compensated rate and guarantees from the National Guarantee Fund. These types of approaches exist,” said the minister.

Bonilla added that interested parties should approach banks and present their projects. “Banks will be quick to respond, which will allow projects and working capital needs to be financed in the coming months to finance the economy,” he added.

In this way, a debate that began in May seems to have been settled. On several occasions, including the installation of Congress, President Petro said that although bankers did not think so, he would insist on forced investments to reactivate the economy. This mechanism basically consists of banks having to use their deposits (that is, the savings of their clients) to allocate credits to a particular sector, but by obligation and without considering the criteria of profitability and risk.

Now, following the agreement reached by the parties, strategic investments will be launched in the form of loans which, although governed by market conditions, aim to improve the financing of key activities for the economy's functioning.