Appendix D. Debtors Support Programs
1. Loan Portfolio Restructuring (UDIs Program).
Through the UDIs restructuring programs, the borrower benefits from the extension of the maturity of his/her credit, as well as from a lower real interest rate. As of today, almost 161 billion pesos of the loan portfolio have been restructured to UDIs. Approximately 350,000 debtors have been benefited by this program.
The fiscal cost of the UDIs programs is estimated to be 21.6 billion pesos in present value, which represents around 0.9% of 1997 GDP.
2. Temporary Debtor Support Program (ADE Program).
In September, 1995 the CNBV announced a temporary debtor support program designed to alleviate, in the short run, the heavy payments and cash flow burdens resulting from the high nominal interest rates of the debt service of households and small and medium size enterprises. Close to 1,900,000 debtors have been benefited by this program.
As of September, 1996 the government has paid 3.3 billion pesos, out of the 4.3 billion pesos which is the total fiscal cost of the program in present value, representing 0.2% of 1996 GDP.
3. FOBAPROA.
The Federal Government has allocated an important amount of resources to those institutions with low capitalization indexes resulting from mismanagement. In addition, these institutions are now under direct control of FOBAPROA.
The fiscal cost of the direct support given to banks and brokerage houses is estimated to be 70.5 billion pesos in present value, which represents 2.8% of the 1996 GDP.
4. Capitalization Schemes.
In order to strengthen the financial institutions through their capitalization, the Federal Government, through FOBAPROA, started in 1995 a loan purchase mechanism. Within this program, FOBAPROA purchases two pesos of the bank’s loan portfolios for each peso of Tier I new capital pledged to the institutions.
The fiscal cost of the loan purchase program is estimated to be 39.0 billion pesos in present value, that is 1.6% of 1996 GDP.
As of today, twelve banks have sold loans to FOBAPROA for a total amount of 109.4 billion pesos, thus generating new capital injections for 58.4 billion pesos. This amount represents 146% of the total capital of the banking system as of December, 1994.
5. Toll road program.
Through the toll road financial restructuring program, the Federal Government bears a portion of the liabilities which a specific project is unable to meet with its net revenues. The estimated fiscal cost of this program is 26.1 billion pesos, that is, 1.0% of GDP.
6. Mortgage program.
The mortgage program, which was announced in May, 1996, increased by 43 billion UDIs the amount of funding available for mortgage restructuring, and gives mortgage holders who are current on their mortgage payments a discount which decreases gradually from 30% in 1996 during a period of 10 years.
This program will provide relief to 900,000 debtors and will have an estimated fiscal cost of 27.2 billion pesos in NPV terms (1.1% of 1996 GDP). This cost will be generated during a 30-year period.
7. Rural and fishing sector program (FINAPE).
In July 1996, a program to provide relief to debtors in the rural and fishing sector was implemented through which a payment discount is granted. The maximum discount is 40% during a 10-year period. In addition, additional UDI funding was made available as well as new loans for sector-related activities.
The program will give support to more than 500,000 debtors and is expected to have a fiscal cost of 14.2 billion pesos (0.6% of 1996 GDP) which will be generated during the next 15 years.
8. Small and medium-size enterprise program (FOPYME).
In August, 1996, a small and medium-size enterprise program was created in order to provide support for firms with debt problems of less than 6 million pesos. A maximum discount of 30% is granted during a 10-year period. In addition, additional UDO funding was made available as well as new loans small and medium-size enterprises.
The program will give support to more than 400,000 firms and is expected to have a fiscal cost of 7.4 billion pesos (0.3% of 1996 GDP) which will be generated during the next 15 years.