During the virtual forum "Peruvian economy: the pending agenda after the Bicentennial," the Cabinet member raised the following question: "What is the reason for this rapid and vigorous recovery?"
"In 2019, a normal year, credit growth rate was about 6%. In 2020, the year hit by COVID-19, this growth rate is multiplied by four, reaching between 20% and 25%," he added.
"Obviously, some companies in sectors, such as hotels and restaurants, have gone bankrupt because the crisis hit them dramatically, but the bulk of companies have survived because of this credit support," he said.
Credit programs
Mendoza recalled that the Central Reserve Bank (BCR) and the
Ministry of Economy-Finance (MEF) implemented the most powerful credit policy in Peruvian history, essentially through programs such as: Reactiva Peru, FAE-Mype, FAE-Tourism, and FAE-Agro.
"The idea is that banks receive a lot of resources, at one of the lowest interest rates in history. Banks, even having plenty of resources, should not lend to troubled companies, but that is when the State guarantee comes in. If companies have problems and, for some reason they do not pay them back, they charge me; that is the secret," Mendoza explained.
"It is a credit policy with a State guarantee that has a future cost, but that explains the remarkable growth of bank credit, which is the main explanatory variable of why Peru is recovering faster than other countries in Latin America. No country like Peru has been so daring for companies to receive cheap and abundant credit en masse," he pointed out.