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The economy could see its growth capacity reduced due to a second withdrawal of 10% from pension funds, according to the Central Bank’s Financial Stability Report.
The president of the issuing institute, Mario Marcel, warned that, if the reduction in private savings associated with the reform is not replaced, the losses will translate into a fall in investment.
With a long-term view of the effects of the pandemic on the economy, the Central Bank released this morning the Financial Stability Report for the second semester.
A central warning was in the decrease in the savings capacity of households, beyond the indebtedness that is what usually worries. According to the analysis of the issuing institute, household debt has remained stable, however, from the equity point of view, savings have been reduced considerably.
There is talk of a stressed financial position that is mainly explained by the fall in income, where access to direct transfers has been fundamental, but savings have also been used, which also include pension funds.
According to the Central Bank’s analysis, the first withdrawal had a positive effect that allowed the 2020 GDP to increase by 1.2% and alleviate the financial situation of households, which also used at least 15% of those resources to pay debts .
Another indeterminate number saved those funds, but there is the big warning that the issuer makes. Short-term measures to deal with the emergency may have unintended consequences, such as a drop in local investment. This was explained by the president of the Central Bank, Mario Marcel, detailing the impact this may have on the structural parameters of the economy.
“A part of household savings is being consumed, which finances investment. And investment determines the growth capacity of the economy ”, he explains.
As Marcel warns, one way to maintain investment would be for the State to contain the fall in private savings, but it is something complex in the fragile fiscal scenario that is already taking place. However, there are those who believe that this has to be the way, such as the president of the Union Association of Social Security Advisors, Anne Katherine Clarke.
More in line with the analysis of the report, the director of the Business School of the Universidad Mayor, Francisco Castañeda, said, warning that the fact of a second 10% comes to put even more pressure on the Treasury’s spending to cover the most vulnerable sectors .
There is analysis in this regard, because this project of the second withdrawal includes a formula to replace the resources that are withdrawn, but of a voluntary nature, with an overpricing of 5%.
A study by the consulting firm Ciedess indicates that, for an average contributor, replenishing the funds they withdraw would take at least four years, according to the general manager of the institution, Rodrigo Gutiérrez, despite the fact that there are several aspects to consider.
The Central Bank report also detailed that the private sector debt reaches 134% of GDP, which charts the flow of credit during the pandemic, especially due to the Fogape effect.
In this sense, one of the messages that the issuing institute reinforced was to carefully evaluate bills that could impact the liquidity of the financial system. In addition to the second 10%, initiatives such as the suspension of the collection of credit installments, the suspension of liens and increases or the withdrawal of funds from annuities.
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