(Bloomberg) -- Colombian president Gustavo Petro said he reached an agreement with private banks to lend to “productive” sectors in a bid to help reactivate the nation’s stagnant economy.
The 55 trillion pesos ($13.6 billion) in increased lending to the housing, industrial, manufacturing, agriculture and tourism sectors, among others, will be carried out throughout a period of 18 months, Petro said in a webcast on Tuesday. The deal replaces an initial government plan to send a bill to congress forcing banks to provide cheap financing.
The loans—which represent an approximate 25% increase for those sectors—will be disbursed under market terms, said banking association head Jonathan Malagon, who spoke alongside Petro.
The move is positive in the sense that “it leaves the decisions in the hands of banks,” said BTG Pactual Andean chief economist Munir Jalil, even if the government narrows down the sectors on the receiving end.
Petro has reiterated complaints that high interest rates, disappointing tax revenue and cuts in public spending have stalled growth. Colombia’s central bank forecasts the economy will grow 1.8% this year, up from 0.6% last year.
The government is still planning to send other bills as part of an economic reactivation package, Petro said.
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