The good times that the Honduran banking sector is going through could encourage the development of projects by entrepreneurs and owners of micro, small and medium-sized enterprises, who need access to credit to strengthen or reopen their businesses.
Despite the somewhat unfavorable context in Honduras due to the pandemic and the aftermath of hurricanes Eta and Iota, certain economic indicators show an important path for economic reactivation.
In early January, the Economic Commission for Latin America and the Caribbean (ECLAC) presented the report “Preliminary Overview of the Economies of Latin America and the Caribbean”, in which it states that Honduras was one of the countries that grew the most in 2021 (9% of GDP).
The Central Bank of Honduras (BCH) informed that it also obtained a privileged position in the country risk ranking, ranking eighth among 17 Latin American countries, which allows access to credit with rates of low interest. Likewise, said report is based on the risk ratings of Moody’s and Standard & Poor’s, which despite the obstacles of the last 2 years maintain the country’s credit quality with a stable figure. This indicator reflects some confidence for those seeking access to credit, as despite uncertain times regionally and globally, credit stability has managed to maintain its position. Similarly, reports such as the World Economic Forum’s Global Competitiveness Index and the World Bank’s Doing Business report list the development of the financial market in Honduras among indicators of greater stability and better access to country.
Likewise, it is important to mention the report on financial inclusion in Honduras published by the National Banking and Insurance Commission in 2020. The said report mentions that for the year 2019, the service points of financial entities in Honduras have totaled 8,029 points nationally. , with a growth of 22.0% compared to the year 2018. Likewise, as a fundamental element of financial inclusion and access to credit, it is to create different mechanisms so that people who have no credit history have access to economic resources to carry out their personal, professional and investment projects. Today, financial institutions in Honduras have the following five types of credit:
- Commercial: intended for the financing of industry, tourism, commerce, exports, mining, construction, communications, etc.
- Microcredits: intended to finance small-scale activities
- Consumer loans
- Credit cards: obligations contracted to finance the purchase of consumer goods or payment for services
- Housing loans: to finance the construction, expansion, renovation, purchase of housing and land.
During the first weeks of the year, Wilfredo Cerrato, president of the Honduran Central Bank, referred to the rapid economic reactivation that the country has experienced, saying that “The rebound recovery is so good that it is higher than the value of 2019 GDP. We thought it was going to pick up in the third quarter of this year, however, economic activity has been very good. Private and public investment has been good.
Finally, it is important to say that the good times that the Honduran banking sector is going through could encourage the development of projects by entrepreneurs and owners of micro, small and medium-sized enterprises, who need access to credit to strengthen or reopen their businesses. It should be noted that due to the closure of activities generated by the pandemic, a significant number of these businesses have become informal. According to the World Bank, access to credit driven by the private sector would provide a better outlet for fragile businesses and help generate more dynamic growth in countries facing the effects of covid-19.