Colombians’ debt with banks increases

Last year, according to a study made by the firm Kantar Millward Brown that later was spread by the newspaper El País, Colombians not only perceived that the economy was improving, but they also were optimistic about their economic situation in 2017. However, almost half of the respondents also said their debts were increasing and needed a higher salary. Now, a couple of months after the study, the optimism has decreased and the debts are at the highest point in the last five years. Currently, the balance of delinquency stands at more than US$2 billion.

The Financial Superintendence reported that not only credits have increased but also their payment deadlines. While in 2008 credits had an average of two years of deadline, the time limit has increased to an average of five years.

In the eyes of general public, this increase is beneficial. However, analysts argue that the increase will induce to fewer payments and, with them, more debts. Aside from this, the main argument is that the increase of payment deadlines will leave people exposed to volatile economic changes. And, clearly, the figures shown by the Financial Superintendence confirm this reasoning.

The recent VAT (Value Added Tax) increase and the tax reform are part of this economic situation that people are more and more vulnerable. The VAT increase, some analysts say, has forced some people to use their credit cards more and, therefore, incur in unwanted debts. Regarding the tax reform, economists argue that, as the same time as it has impacted negatively on the Colombian economy, it has, consequently, affected the income and purchasing capacity of people.

While some argue that the economy is adjusting to the VAT change and the tax reform, it’s still difficult to predict how will the second semester go. As Colombians keep resorting to credit and, even, asking for longer payment deadlines, there’s no certainty on whether the economy will be able to sustain the current situation. There is something clear: the people will be the most harmed by the lack of financial regulation.

The colombia Post | Juan Sebastián Torres

We use cookies to improve our website. By continuing to use this website, you are giving consent to cookies being used. More details…