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Debate on the National Government Proposal Expanding the mandatory investment scheme to other sectors of the economy It’s hot, but whoever proposed it can’t clearly explain their goals, and opponents don’t seem to understand how the system works.
They risk making assumptions that undermine confidence in the financial system, with some politicians even taking to the streets to ask people whether they agree to put their savings in the hands of the financial system. President Petronothing technical, but they create greater uncertainty.
Mandatory investment by banks The Right to Development in Agriculture (TDA) They are a financial instrument created by the state since 1973 to direct resources to the agricultural sector.
These investments oblige the bank to allocate a certain percentage of its liquidity to the purchase of Agricultural Development Rights (TDA), which are issued by the Bank of the Republic and managed by Finagro, providing a degree of security. This reduces the risk of these investments. Since its inception more than 50 years ago, the program has been a vital pillar of rural irrigation resources, providing financing for productive projects that would otherwise not have access to credit.
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However, of the total investment Only 20% of agricultural projects are allocated to small and medium-sized producers The remaining 80% is registered with Finagro through rediscount, as an alternative portfolio of projects that have little or no relation to the agricultural sector, which is a great drawback of this type of portfolio created by the Bank of the Republic.
For more than three decades, Finagro has managed to direct resources towards the agricultural sector, despite the above shortcomings.
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However, any changes to the system must be carefully evaluated to avoid introducing unnecessary risks to the financial sector and depositors.
The main risk of expanding this program to other sectors is that it would force too much diversification of investments, compromising the focus and effectiveness of support to the agriculture sector (agriculture sector). The only support tool left for farmers.
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A higher share of mandatory investments in the financial system affects the profitability of depositors, but does not imply a greater risk of non-payment, as long as it is managed according to the model currently used. If you switch to another less stringent model, such as transferring these investments to government funds that are not backed by debt securities, and abandon the approach currently used by the Bank of the Republic and Finaglo The risk is potential because it opens the door for these resources to be diverted to other purposes. This brings great uncertainty to their recovery.
The main question the government must answer is Why more mandatory investment is needed Even if not in the agricultural sector, it has managed to direct them towards a high percentage of resources.
Last year, about 20 billion pesos, or 80% of the mandatory investments, were registered as alternative portfolio investments, that is, they did not enter Finagro as TDAs, but the bank put them directly into loans for activities that had little or no relationship with agricultural activities.
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What is involved here is an inefficient plan to get enough resource flows that cannot be efficiently delivered to small and medium agricultural producers. It is like having a rocket and traveling by horse and carriage.
Following this order of thought, The first thing to do is to build a financial model and a plan to channel those resources into the general economy and sectors it considers a priority, and then see whether it is necessary to have additional resources to justify an increase in the proportion of mandatory investment and assess the greater risks this would imply for the banks. Little progress Its goal is to provide more than one million credits to the mass economy, due to the lack of an operating model to synchronize the different financial entities dedicated to this purpose, starting with the Bicentenario Group.
One alternative proposed by the national government is the current national agricultural credit system, SNCAmodifying the allocation percentages, leaving at least 50% for the sector (operated by Finagro) by 2023, about $12 billion, and the remaining 50%, or another $12 billion, allocated to financing other sectors, creating a new title for this purpose in Banco de la República, which is composed of Bank Index; In this way, there is no need to create a new compulsory investment system or increase the proportion of banks, in addition to the complexity and time required for implementation.
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In conclusion, the government must identify the specific objectives of the proposal, the sectors it wishes to promote, and the mechanism and modalities for accessing irrigation resources.
Without an effective and proven model to overcome the barriers and delays that agricultural banks currently face in obtaining credit or transferring these resources to costly microfinance institutions, small business owners will not have an inexhaustible source of project financing that is far more creditworthy than commercial banks.
Jesus Antonio Vargas Orozco
Business consultant.
jesusvargas.orozco@gmail.com
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