Panama banks do not foresee changes in interest rates and are facing the crisis stemming from the COVID-19 pandemic with measures that guarantee their long-term sustainability and focus on easing the burden on affected customers, representatives of the banking sector said Wednesday.

Panamanian banks are well capitalized to face a situation that is unprecedented and requires a responsible response that involves all economic agents, said the president of the Board of Directors of the Panama Banking Association, Aimeé Sentmat de Grimaldo.

Sentmat assured in this context that "at this time" it is not in the sector's mind to modify interest rates, in response to the expectations generated in Panama, which lacks a central bank and whose current currency is the dollar, after the US Federal Reserve reduced benchmark interest rates between 0% to 0.25%.

"It is important to clarify that the FED is not the Central Bank of Panama and does not directly regulate the rates in the country," said Sentmat. The deciding factors are mainly at what rates the bank receives from its correspondent banks, and the rate of government bonds in the international market.

At this time, the dynamics of acquiring cheaper funds are not being seen, because liquidity is contracted in the world, therefore, a drop in interest rates is not expected, he added.

RESPONSIBLE MEASURES IN THE FACE OF THE CRISIS

Sentmat defended the responsible and prudent measures that banks are applying to support customers that are being affected by the crisis, and that guarantee the long-term sustainability of a sector that is key in Panama's service economy.

These measures are basically a 90-day moratorium on consumer loans April 1, and case-by-case payment arrangements with commercial customers.

The moratorium is applied in a consumer portfolio that registers 1.7 million credits, total value of 28 billion dollars, so the non-payment of the obligations for three months is a tangible measure that has an impact in banking, said the executive.

One of the consequences of the moratorium is the contraction of credit, but the measures are being worked on by the government to obtain funds that allow us to guarantee the credit flow that will ensure that the economy will overcome the crisis, he added.

"In Panama 50% of the gross domestic product (GDP) is consumption, and it has to be generated through credit," said Sentmat.

So far, Panama has registered 6,021 confirmed cases of SARS-CoV-2 coronavirus (the cause of COVID-19 disease), with 167 deaths.