A new crisis within the government coalition may be on the horizon with the recent refusal of the whites to support the lobbying project that aims at a restructuring of the small debt of families and individuals in the country; which was put as one of the conditions of the sector of Guido Manini Rios to stay in the Multicolor Coalition after the scandal carried out by the ex-minister of Housing and Territorial Planning (MVOT), Irene Moreira.
“We are not willing, as the National Party, to accompany this latest project presented. But we do want a solution,” said the white senator. Grace Bianchi in Parliament, stating bad news for Cabildo Abierto: they are left alone in their proposal to try to advance a legislative solution on this issue.
According to Bianchi, and in relation to the regulation of interest rates included in the proposal, the “usury issue” should be resolved with a different bill because it is “very specific.” Even the senator was one of those who was willing to vote when the previous text of the lobbyists that reached the plenary session of the Senate but was stopped by the then senator Gustavo Penades, at the request of the government.
The nationalist position was confirmed in the face of the proposals made by the delegation of the Association of Bank Employees of Uruguay (AEBU) Front of Constitution and Legislation Commission. And with this decision, the sector of the president Luis Lacalle Pou adds to Broad Front (FA) that, although it was a possible ally of CA in this project, it also rejected the initiative proposed by the lobbyists for not having “the logic of the original project, which was to attend to the core of the most deprived population.”
Is a new crisis looming in the coalition?
In mid-May, those led by Guido Manini Ríos had given themselves until the end of that month to find a legislative solution. Otherwise, they said at that time, they would go out to collect signatures to go for a plebiscite.
“Cabildo Abierto has given itself a deadline until the end of this month to seek an urgent legislative solution for irrecoverable debtors and people included in the Clearing”, says the statement read this Monday and adds that if a parliamentary agreement is not reached they will go through the collection of signatures because “people cannot wait any longer.”
However, almost a month after the deadline, there is still no indication that the project will be dealt with soon. And with the new nationalist declarations, everything seems to indicate that the initiative will remain in a parliamentary drawer like its previous version.
The question is what will happen now at the coalition level, while the debt restructuring project had been put on the table by CA as the only reason that kept Manini Ríos’s party as part of the government after the crisis caused by the resignation from Moreira. In turn, the senator and party leader had accused Lacalle Pou of passing him accounts for this initiative. So it will remain to be seen how the different sectors will make this decision while the draft of Accountabilitycloser and closer to a new election year.
AEBU’s Warnings
During his appearance before the Constitution and Legislation Commission, the AEBU delegation made some “Unwanted Effects” Warnings that the Cabildo Abierto project could have, such as pushing people to seek credit in the informal market.
“Moving or rigidifying any of the parameters linked to indebtedness opens the door to the expulsion of increasingly important formal collective systems. To the extent that one restricts access to credit and makes companies in the financial system shut down due to the risk rate or the mechanisms that it implies, a kind of transfer to the informal sector begins to be generated, an element that we also propose as a scenario of concern,” said the secretary of Union International Relations, Pablo Andrade.
According to the numbers handled by the AEBU adviser Hannibal Peluffo In the commission, close to 70% of the adults are related, have some credit or some operation with the formal financial system, and of that population a little more than half is well categorized. However, more than a third of the debtors are in categories 4 and 5, which are “the most problematic”. “Among debtors, 40% of those under 35 have problematic debt,” he explained.
The economist warned that the interest rate has been growing among those credits that the salary quota is not withheld. “It would give the impression that the interest rate problem would be located there, in those segments,” he said.
Likewise, Peluffo pointed out that the forced judicial agreement between creditor and debtor ends up being “costly” mainly for creditors. “When the judicial process can carry fees for the calculations and for all this administrative process, which is the responsibility of the creditors, it represents additional costs that, without a doubt, companies will take into account when deciding whether or not to grant a loan“, considered.
This situation, added to a reduction in the price of credit (due to interest rate regulation), could generate an increase in exclusion that makes people —who continue to need access to credit— end up resorting to mechanisms informal.
Source: Ambito
