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Portugal Exporters Taste Credit
World Economy

Portugal Exporters Taste Credit

In Portugal, getting a loan is still harder than in almost any other country in the eurozone. But if your company exports, you may be in luck.
The country has been at the sharp end of Europe’s credit crunch during the region’s debt crisis and loans have contracted non-stop since 2010, Reuters reported.
Unlike in Spain, Italy or even Greece, credit to companies is still shrinking, but thanks to money printing by the European Central Bank (ECB), it may now be stabilizing, with loans to exporters on the rise.
Companies of all kinds are getting calls from banks offering loans, but they do not always like what they hear.
Joao Costa, director of Arpial, producing metal parts mainly for the domestic market, said two banks which got in touch recently presented much higher commission and charges than when Arpial last borrowed three years ago, offsetting lower rates.
An “exaggerated number of guarantees” demanded by banks was a big obstacle, too, he said, adding that Arpial might borrow next year to expand if the market for its products improves.
“Exporting companies will have more access to larger bank loans, but they have to have good (debt) ratios and assets,” Costa said.
Antonio Mendes Ferreira, head of United Resins, which exports most of the products it makes for printing inks, said liquidity in the banking system had improved significantly in the past year but only exporters were feeling the benefit.
“The feeling in the market is that exporters in the industrial sector are the preferred target of commercial banks offering credit.”
His words are borne out by the data, which shows credit to the export sector rose 3.8 percent in the year to March, up from a 0.9 percent rise in 2014.
That should put a smile on the face of Portugal’s creditors; the European Union and IMF’s bailout program, which Lisbon exited last year, was intended precisely to boost exports and channel investment to the most competitive firms.
“I think banks are now quite willing to lend to companies with reasonable risk profiles. So we need more good-risk companies, which takes us back to exports - exporters tend to be more productive, larger and better-managed,” said Albert Jaeger, the IMF representative in Lisbon.
Export growth has been the main engine of Portugal’s recovery from three years of recession. Exports made up 40 percent of GDP in 2014, up from 28 percent five years ago.
In March, the ECB launched a plan to buy 60 billion euros a month of bonds in the eurozone to stave off deflation and get credit to companies and consumers. On Tuesday, the ECB decided to speed up the pace of money printing over the next two months.
Overall lending in the eurozone increased for the first time in three years in March when compared to a year earlier.

 

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