Disappearance of FND would lead producers to seek informal options.
According to the Morena Parliamentary Group, the proposal is for the credits provided by the Financial Institution to be carried out through the Trusts Established in Relation to Agriculture.
Financiera Nacional de Desarrollo Agropecuario, Rural, Forestal y Pesquero (FND), an institution dedicated to providing loans to the primary sector and rural activities, ceased granting credits at the end of last year. As a result, on April 29, 2023, the Chamber of Senators approved a decree for its extinction.
The Secretaría de Hacienda y Crédito Público (SHCP), as the coordinating body of the sector, will be responsible for the process of extinction and liquidation of the organization. The Instituto para Devolver al Pueblo lo Robado (Institute to Return Stolen Goods to the People) will act as the sole liquidator of the federal government, with broad powers for administration and collection.
The arguments presented by the federal government to justify the dissolution of the FND include an increase in non-performing loans and a decline in credit recovery rates. However, critics argue that these arguments are weak and that the lack of loan recovery began with the current administration's insufficient personnel for supervision due to austerity policies.
The closure of the FND will leave a significant void as other financial institutions will lose a funding source for rural credit. Concerns are raised that producers who relied on FND loans may turn to informal lenders with higher interest rates. The disappearance of the FND from the market is expected to reduce competition and increase the cost of credit for the agricultural sector, which has seen growth during this administration.
The underlying reasons for the FND's disappearance are related to the country's limited fiscal margin to develop flagship projects of the current administration. The Council for Agriculture and Livestock of Nuevo León (CEA-NL) also highlights the potential impact of the rural finance institution's closure, urging the disclosure of alternative solutions to prevent producers from resorting to informal credit and to provide them with certainty for investment in their activities.
Servin, A. (2023, 24 de mayo). Desaparición de FND llevaría a productores a buscar opciones informales. El Economista. Recuperado de: https://www.eleconomista.com.mx/los-especiales/Desaparicion-de-FND-llevaria-a-productores-a-buscar-opciones-informales-20230524-0019.html