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El Salvador’s Construction Sector Grows for the First Time in Five Years

Article Summary:

Construction in El Salvador for the year 2011 will show a growth of 4.6%. It was pushed along by public investment projects but the housing marking remained stagnate, according to official reports. El Salvador officials hope to stimulate the housing market by establishing a new law giving preferential interest rates to home buyers.

Original Article Text From La Prensa Graphica via Google Translate :

Construction Will Grow by 4.6% in 2011

The construction industry will lay off 2011 with good news: a growth of 4.6% after five years of contraction in economic activity. The executive director of the Salvadoran Chamber of Construction Industry (CASALCO), Ismael Nolasco, said that one of the factors that favored the industry was the execution of public works.

“A very close estimate of 4.6% walketh about, it would be a positive growth in five years within the industry,” he said. “It has influenced the acceptable performance of public investment of $ 1.200 million announced, has reached a rate of about 60% to 70% of investment, which had a favorable impact on the performance of the industry,” he said.

But not all good news. Nolasco said that demand for housing has not increased, when this could be a trigger for economic takeoff. “The housing industry is not running projects as it has in normal years, and this is due to lack of demand. So we are trying to find a mechanism to facilitate home ownership, “he said. According to the union, they are not building more than 6,000 homes in the country.

On the other hand, Nolasco said that government housing program House for All has a delay of 50% on your goals and six months in building works. In fact, the Department of Housing reported that of the 3,500 social housing to be built under the program will end only 1.729.

Discuss of Interest Law
Therefore, the union celebrated the announcement of President Mauricio Funes on the discussion of a law of preferential interest rates for home purchase. The draft will be reviewed by the Technical Secretariat of the Presidency, Ministry of Finance and the private sector.

This law would seek a reduction in interest paid by families to buy a home. Nolasco said the proposal is that for a house worth $ 20,000, which fee may be around $ 140, the search for a mechanism for the payment to reach $ 70 within 10 years.

The director noted that the range of lower interest is variable and depends on the decision of the Government. According to Nolasco, the Social Housing Fund (FSV) and conducted a trial, because this year reduced interest rates for new home purchases, increasing housing demand.

Takes several years CASALCO proposing this law has worked in countries like Panama, Colombia and Brazil. The union believes that in El Salvador the standard should apply to mortgages of up to $ 75,000.

As for jobs, the industry has the challenge of recovering from 13,000 and 14,000 jobs lost during the economic crisis. Last year, the industry fell -6.3%. 2012, CASALCO expected to have good results, taking into account the $ 980 million public investment announced by the Government, the budget for investment in reconstruction of storm damage 12-E, and the preferential interest law.

The chairman of the Central Reserve Bank (BCR), Carlos Acevedo, who yesterday made a presentation to union members of CASALCO on local and international economic environment, said it was necessary to “solve the problem of credit for home builders and consumers.” Proposed models such as Singapore, compulsory savings to boost homeownership.

Link to Original Article:

From La Prensa Grafica

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