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Peruvian finance minister Alfredo Thorne called on the nation to utilize second-tier and development banks to jumpstart a credit boom for Peru's small and mid-sized businesses.
Speaking at an energy forum in Lima on Tuesday (Oct. 18), the minister warned of increasing default rates with certain areas of credit and that financing is slowing, with negative growth for auto loans.
Peru has shown 84 consecutive months of GDP growth, but while some loan portfolios appear poised for growth, institutional weakness recently led Moody's to forecast little improvement in the nation's credit metrics.
"We need to foster and optimize Agrobanco, Mivivienda, Cofide and El Banco de la Nación (BN), specifically so that credit arrives in small and medium-sized businesses," Thorne was reported as saying by daily El Peruano.
The minister discarded the idea of driving such a boom using the usual mechanisms of top-tier banks to boost credit by providing backing for private sector loans.
"We will use bank guarantees so the state can share part of the risk to the private sector," he added.
At the event, he suggested transforming housing financier Mivivienda into something like Fannie Mae in the United States, "Also like what Mexico had, which is a federal mortgage association [Sociedad Hipotecaria Federal] to ensure that loans reach sectors with the lowest revenues."
Thorne also said that implementing a general sales tax (IGV) which would cost public coffers nearly 1bn soles (US$300mn).
This in addition to other measures, such as income tax reform, could contribute a direct boost to consumption of nearly 1%, according to the official.