Academic literature on the topic 'Current debt relief system'

This paper proposes a novel system-wide multi-state framework to model state occupations and the transitions among current, delinquency, default, prepayment, repurchase, short sale and foreclosure on mortgage loans. The approach allows for the modelling of the progression of borrowers from one state to another to fully understand the risks of a cohort of borrowers over time. We use a multi-state Markov model to model the transitions to and from various states. The key factors affecting the transition into various loan outcomes are the ability to pay as measured by debt-to-income ratio, equity as marked by loan-to-value ratio, interest rates and the property type. Our findings have broader policy implications for better decision-making on granting loans and the design of debt relief and mortgage modification policies.

The scientific and methodological approach to the evaluation and analysis of the efficiency of system management by innovation factors for sustainable development of national economy from the point of view satisfaction vital interest’s population is developed. This is the calculation of the modernized index human development based on the adjective model based on 26 indicators (social, economic and environmental subsystems), as well as using the methods of the main components and the slip matrix. The resultant value is the modernized Human Development Index (MHDІ) of Ukraine. The architectonics MHDІ of Ukraine in 2007–2017 from the position of sub-indices of the ecological, social and economic subsystems is analyzed. Consequently, the scientific and methodological approach based on the MHDI change allows us to draw conclusions regarding the effectiveness of the work and public administration bodies in the context of making managerial decisions regarding the satisfaction of the vital interest’s population. MHDI considers the main regulated parameter of the system management in the innovation factors of sustainable development in socially oriented economy. The tendency of steady decline MHDI of Ukraine in 2007–2017 on 53.45 % was confirmed, which confirms inefficient state regulation of crisis situations in Ukraine. In order to increase the efficiency management of innovative factors by sustainable development of the national economy, from the standpoint of satisfaction vital interest’s population, it is proposed to intensify the use of public debt and savings bonds, market and non-market methods of relief and debt load. This is due to the fact that at the current stage of development in the national economy, public external debt is one of the most significant indicators of the state economy. It is at the same time a criterion for the effectiveness of public financial policy, as well as a threat and opportunity for the Ukrainian economy. In order to optimize its size, various methods, approaches, tools are used. Based on the analysis of world experience, it has been established that the securities market, in particular debt securities, plays a strategic role in regulating this issue. Therefore, it makes sense to recommend government debt bonds and government savings bonds to optimize the amount of external public debt.

Based on the fact that the parent company has actual control over the subsidiary company, this paper analyzes the possibility of the parent company using the subsidiary company to seek benefits and damage the interests of creditors. Moreover, under the intangible protection of the current limited liability system and the independent personality of the company, it can “retreat”. This is undoubtedly against the original intention of the establishment of enterprise groups and has great potential harm to creditors. In addition, on the basis of the relief measures for the rights and interests of the parent company caused by the bad behavior of the subsidiary, the legal defects that should be carefully considered are determined. Considering whether there are other remedies that may have the same effect as disclosure, some are more moderate than disclosure. With Britain’s strong caution about lifting the veil, a more moderate direction could be considered.

During financial crises, liquidity tends to become scarce, a problem that disproportionately affects small companies. This paper shows that obligation-clearing is a very effective liquidity-saving method for providing relief in the trade credit market and, therefore, on the supply-side or productive part of the economy. The paper also demonstrates that when used in conjunction with a complementary currency system such as mutual credit as a liquidity source the effectiveness of obligation-clearing can be doubled. Real data from the Sardex mutual credit system show a reduction of net internal debt of the obligation network of approximately 25% when obligation-clearing is used by itself and of 50% when it is used together with mutual credit. These instruments are also relevant from the point of view of risk mitigation for lenders, based in part on the information on individual companies that the mutual credit circuit manager can provide to banks (upon the circuit member’s request) and in part on the relief that liquidity-saving provides especially to NPL companies. The paper concludes by outlining recommendations for how even greater savings could be achieved by including the tax authority as another node in the obligation network.

The article discusses the effects of fiscal instruments used to stimulate the development of small business in Ukraine and the hypothesis that the inconsistencies inherent in these instruments prevent them from achieving the desired outcomes. To test this hypothesis, the authors estimated the percentage of small businesses covered by the simplified tax scheme and analyzed such fiscal instruments as the simplified tax scheme, various types of debt financing and taxation of debt financing. The authors used the data on the amount and dynamics of repayable financial assistance to estimate the scale of the phenomenon of corporate split-ups. The latter might be caused by the interest of large and medium-sized companies in accessing small business tax preferences. To calculate the amount of repayable financial assistance the authors propose to adjust the indicator of other current liabilities for the following indicators: other current accounts payable; interest incomes of resident banks; interest incomes of non-resident banks from their lending transactions in Ukraine; commission incomes of resident banks; and the total amount of corporate bonds. The analysis relies on the data of the State Statistics Service of Ukraine on activity of companies and the data of the National Bank of Ukraine on the country’s banking system in 2012–2017. The results of the analysis have confirmed the initial hypothesis about the contradictory effects of fiscal instruments: 1) In the given period, from 22% to 38% of small businesses did not have access to the benefits of the simplified tax system due to the inadequacy of the criteria for defining the size of business. 2) The taxation norms discriminated against small businesses seeking to use specific instruments of debt financing: instead of stimulating the development of start-ups, these fiscal instruments encouraged large and medium-sized companies to split into smaller units. 3) What distinguishes Ukraine from other countries is the wide use of repayable financial assistance by small businesses to attract funds. Calculations have shown that the share of repayable financial assistance among other available instruments of debt financing in the given period exceeded 28%. Thus, the findings indicate that further improvements of small business taxation are necessary.

Debt relief initiatives have been part of the international development sphere since the early 1990s. With the launch of the Heavily Indebted Poor Country (HIPC) Initiative in 1996 and the Multilateral Debt Relief Initiative (MDRI) in 2005 many countries have been able to successfully qualify for debt relief. Tanzania has been one of the primary beneficiaries of debt relief over the years. While empirical evidence demonstrates that the country’s economic growth has been positively impacted by debt relief initiatives, other aspects of human development need to be analyzed to ensure a comprehensive assessment of the HIPC Initiative and the MDRI. This study compiles Tanzania’s health data into a composite indicator to perform a graphical analysis to compare the trends between health outcomes and external debt. The graphical analysis is contextualized through a qualitative analysis of political, economic and health financing literature from the Bank of Tanzania, UNICEF and USAID. The results indicate that there health outcomes improved throughout the whole study’s time period particularly after the HIPC Initiative. The health financing literature also points to increased development expenditure during this period. Nonetheless, the effects of debt relief seem to diminish in the long-term due to fluctuations in external donors and logistical barriers to budget execution. Tanzania also continues to face socio-economic and geographic disparities in health outcomes and funding. Some of the literature also states that the country’s weak system of checks and balances and the lack of robust institutions could cause opportunistic policy preferences that might not necessarily improve Tanzania’s health outcomes. KEYWORDS: Child Mortality Rate; Debt Relief; External Debt; Heavily Indebted Poor Country Initiative; International Monetary Fund; Life Expectancy; Maternal Mortality Rate; Multilateral Debt Relief Initiative; Official Development Aid; Prevalence of Undernourishment

A large fraction of South African consumers are highly leveraged, inadequately insured, and/or own little to no assets of value, which increases their exposure not only to idiosyncratic risk but also to severe indebtedness and/or default. This scenario can present negative ramifications that lead well beyond the confines of individual households. Thankfully, it can also be remedied by well-tailored legal debt relief mechanisms. This article reflects on the uncertainties surrounding the consumer debt relief framework of the National Credit Act in an attempt to show why it is not up to the challenge of providing meaningful relief to debt-distressed consumers. Ultimately, a comprehensive review of the current framework in favor of a discharge mechanism on simple, stated terms is proposed.

Purpose The purpose of this paper is to examine the behavior of governments in terms of trade policy design when they experience a lack of foreign resources from international trade after ensuring the sustainability of their external debt. To do so, the paper defines two concepts of trade space: “De Facto Trade Space” and “De Jure trade space.” Design/methodology/approach To conduct this study, the author relies on a panel data set comprising 109 countries over the period 1998–2014. To perform the empirical analysis, the author has mainly used the system generalized methods of moments approach. Findings The empirical analysis suggests evidence that trade space matters significantly for trade policy. Indeed, “De Facto Trade Space” is consistently associated with greater trade policy liberalization, with this positive effect being higher, the higher the development level – proxied by the real per capita income – of the concerned country. “De Jure Trade Space” tends to lead to greater trade policy liberalization in less advanced developing countries, but is associated with the adoption of trade restrictive measures in more advanced countries. Additionally, results suggest different impacts on trade policy of “Positive De Jure Trade Space” and “Negative De Jure Trade Space.” Research limitations/implications These findings suggest that the trade space, as defined in this study, plays a key role in trade policy design by policymakers. Practical implications The current study shows that trade space could significantly matter for trade policy design by policymakers. Originality/value To the best of the author’s knowledge, this is the study dealing directly with the “trade space” concept as well as its impact on trade policy.

It is now apparent that the governments of many developing countries will not repay their debts as initially contracted. Creditors and creditor governments must now adjust to the realization that full repayment is either infeasible or that enforcing full payment is undesirable from the point of view of creditor countries as a whole. The question now is what to do with these debts. The Baker and Brady plans have increased U.S. government involvement in the debt crisis and have allocated public money toward its resolution. The Kenen plan, discussed in this issue, proposes still more public involvement and, in all likelihood, more public money. Each of these plans is an ad hoc response to the impasse that has arisen between some highly indebted countries and their private creditors, and aspects of each plan may help resolve this impasse. But none of these plans confronts the features of international capital markets that led to the crisis in the first place. My argument here is that the debt crisis that began in 1983 arose from defects in how international capital markets operated the previous decade. A goal of any redesign of the institutions involved in these markets should be not only to resolve the current crisis, but to keep it from happening again.

Dissertação (mestrado) - Departamento de Economia, Pontifícia Universidade Católica do Rio de Janeiro, Rio de Janeiro, 1989. Bibliografia: p. 137-140.
This dissertation analyses the implicit give away of public funds that resulted from the partial indexation of BNDE'S loans to private domestic enterprises, during the second half of the seventies. The analysis of 13.350 long term financing contracts allowed the estimation of the values that were transfered and its distribution amongest beneficiaries.
A tese analisa a doação implícita de recursos públicos, que resultou da concessão de financiamentos pelo Sistema BNDES ao setor privado nacional, com cláusula de correção monetária parcial, na segunda metade da década de setenta. A partir da análise de cerca de 13.350 contratos de empréstimos de longo prazo, estima-se o valor das transferências patrimoniais envolvidas e, examina-se sua distribuição entre os beneficiários.

The Tanzanian private sector is growing, partly due to the state’s efforts to conform to the global economy. As the economy expands and the National Microfinance Policy of 2001 is realised, more and more credit has been made available to consumers. As a direct consequence of the increase of credit, the number of over- indebted consumers in Tanzania is on the rise. The current debt relief system is regulated by the Tanzanian Bankruptcy Act no. 9 of 1930, a piece of colonial legislation. Unfortunately this law is ineffective, costly and outdated. Some of the problems identified in this study with this debt relief regime include the lack of a cost- effective alternative to bankruptcy and its total reliance on the judiciary, an institution that is itself overburdened and requires reform. The purpose of this study is to make recommendations for the reform of the current debt relief system and propose a debt relief dispensation for consumer debtors in Tanzania that will efficiently cure over- indebtedness. A wide comparative investigation was undertaken in this study of selected common law, civil and mixed legal systems that have substantial experience with the boom in over-indebted consumers now facing Tanzania. A number of solutions were borrowed from these systems that may potentially solve Tanzania’s debt relief problem. One of the main findings of this thesis is that, over time, developed jurisdictions that rely on credit in the private sector appear to be converging on the same type of procedures and moderate philosophies for consumer debt relief. These include less judicial supervision for debt relief procedures, less freedom of choice for over-indebted consumers when it comes to the type of procedures available, and mandatory surplus income repayments for debtors who can afford it. In order to address the problems of the Tanzanian debt relief system, this thesis proposes a complete overhaul of the administration of debt relief procedures in Tanzania and the introduction of a combined alternative to bankruptcy that consists of three joint procedures. A number of amendments are also proposed for the Bankruptcy Act no.9 of 1930. This thesis states the status of legal developments as they were in the selected jurisdictions on 31 December 2012.
Thesis (LLD)--University of Pretoria, 2013.
gm2013
Mercantile Law
unrestricted

The textbook reveals the theoretical and practical foundations of the organization of state and municipal finance. It examines the economic role and functions of the state, the current state of the state and municipal sectors of the economy, public finance management, the essence of the budget and state extra-budgetary funds, the organization of the budget process. Priorities and main directions of development of the budget structure and budget system of the Russian Federation, tendencies of development of sovereign funds of the state as a monetary resource are analyzed. Special attention is paid to the formation and implementation of the budget policy of the Russian Federation, the formation of inter-budgetary relations, trends in the development of public credit and public debt, the peculiarities of the provision of state (municipal) services and procurement. The content of the textbook meets the requirements of the Federal state educational institution IN the areas of bachelor's and master's degrees of the enlarged group of specialties 380000 "Economics and management". The textbook is intended for students, postgraduates and teachers of economic and managerial areas of training, students of courses and faculties of qualification improvement, employees of financial authorities and persons independently studying state and municipal Finance.

AbstractIn this book we identify two key challenges: we need a more balanced and controlled growth of money and debt as well as a better balance between public and private interests. This chapter focuses on the policy steps that can be taken to bring this about. We discuss measures taken since the crisis as well as measures that have been proposed but were not implemented.

AbstractThis chapter assesses the financial monetary system on the basis of four characteristics: (1) its economic contribution; (2) its stability; (3) its fairness in the distribution of benefits, costs and risks; and (4) its legitimacy. Based on this analysis, we highlight key problems in the current system. Our analysis points to two underlying problems: the unbalanced and uncontrolled growth of money and debt; and a distorted balance between public and private interests.

AbstractIn this final chapter we discuss the book’s key findings. We first recap the operations of our current system and the problems it presents. We then discuss how the alternative of sovereign money would work and whether switching systems would be desirable. Finally, we consider what steps can be taken to address the major problems posed by the current system. We recommend restoring the balanced growth of credit and debt, and striking a better balance between public and private interests. This entails fostering greater diversity in the financial sector, curbing the excessive growth of debt, being prepared for the next crisis, and anchoring the public dimension of the banking system.

AbstractExtrapolating from List (Das nationale System der politischen Ökonomie. Cotta, Stuttgart, 1841), we explain the paradox of China: A poor country can experience tumultuous growth precisely by exporting more capital on balance than it imports. More growth can be created in developing countries by their running current account surpluses vis-à-vis the OECD plus China region. Public debt in the OECD plus China region would have then to be managed in such a way that full employment is preserved despite the current account deficit. Such a strategy would be beneficial for both groups of countries. For the time being, this is a utopian proposal. Realizing it would mean yet another restructuring, in addition to that associated with digitalization. The opposition of those who could lose their jobs as a result will ensure that this sort of reorientation of global trade policy will remain politically unfeasible for a long time still.

AbstractThis book is the result of the first 3 years of the comparative and multidisciplinary Jean Monnet Network, “Crisis-Equity-Democracy for Europe and Latin America”, of senior academics and policy advisors from four European and three Latin American countries, including experts on the European Union and Latin American regionalism. The rationale of the project and the common link is that both Europe and Latin America can learn from their respective experiences on “crisis”, its management and the distributive and democratic implications at national and regional level. The main purposes of the joint research can be summarised as to (1) locate in the current global financial system as one of the very major causes of the financial and debt crises in the EU and Latin America; (2) demonstrate the impact of the paradigm change on global and EU economic governance; (3) analyse key systemic aspects of the global crisis, i.e. climate change, macro-financial instability and the weakening of democracy and their inter-connections; (4) map and evaluate how both regions and individual countries within both regions have tried to manage these crises; (5) discuss the economic, political and social effects of these crises on both regions and individual countries; (6) finally, to make policy suggestions on how to transition from finance capitalism to a more sustainable real capitalism, on how both regions can better manage/govern/respond to such systemic pressures and on how they can increase their cooperation.

Chapter 13 is concerned with owner occupation and discusses both the long history of tax reliefs for this sector and the scope for enabling increases in ownership among younger cohorts in future years. Support has always been closely related to political as much as economic objectives – as well as to the limitations of rental tenures. Consequently, some policies – particularly those concerned with taxation – have been off limits. Nevertheless, many economists are highly critical of the current tax system and have proposed reforms. Falling home ownership rates among the young and indeed the early middle aged are an international phenomenon, but the decline (while currently being slowly reversed) has been greater in the UK than in most other developed economies. The chapter also argues the need for home ownership to be sustainable. This raises the question of the benefits from additions to the standard debt financing model, including greater use of equity finance.

Societal coalition shape governments’ borrowing decisions across the developing world. The analyses use a compositional data model to estimate the effect of societal coalitions on the share of loans obtained from four types of creditors. The results indicate that borrowing portfolios differ significantly across coalitions: Corporatist Coalitions rely primarily on BRIC loans, Capital Coalitions on private creditors, Consumer Coalitions on bilateral loans from Western governments. These differences remain significant after controlling for economic factors (recipient GDP, current account, existing debt levels, trade, and natural resources) and political considerations (democracies versus autocracies, type of electoral system, or government ideology). Furthermore, the results are robust to analyzing China separately from Brazil, India, and Russia, as well as when combining Western bilateral with multilateral loans. The evidence strongly supports the argument that developing countries make choices among competing loan offers.

Humanitarian Supply Chain is central to the capacity building in the eco-communities which are located in the disaster prone regions. In this study, an attempt has been made to develop a system dynamics model of humanitarian supply chain in order to capture causal dynamics and inter linkages within the system under investigation and suggest some critical intervention strategies for enhancing overall performance. An economic sub-sector base model for the Indian tribal communities has been calibrated and used for simulation analysis as a reference case-study. Conclusion & Results: It has been established through the simulation results that the success of short-term relief work lies in the long-term capacity building and, is critical to the performance of both current and future humanitarian operations and programs. The scenarios studied in this paper are with respect to those crucial decision environments and their underlying complexities which create an inherent endogenous dynamics perpetuated by various stakeholders giving functional response towards the humanitarian supply chain.

With the rapid growth of internet finance and the booming of financial lending, the intelligent calling for debt collection in FinTech companies has driven increasing attention. Nowadays, the widely used intelligent calling system is based on dialogue flow, namely configuring the interaction flow with the finite-state machine. In our scenario of debt collection, the completed dialogue flow contains more than one thousand interactive paths. All the dialogue procedures are artificially specified, with extremely high maintenance costs and error-prone. To solve this problem, we propose the behavior-cloning-based collection robot framework without any dialogue flow configuration, called two-stage behavior cloning (TSBC). In the first stage, we use multi-label classification model to obtain policies that may be able to cope with the current situation according to the dialogue state; in the second stage, we score several scripts under each obtained policy to select the script with the highest score as the reply for the current state. This framework makes full use of the massive manual collection records without labeling and fully absorbs artificial wisdom and experience. We have conducted extensive experiments in both single-round and multi-round scenarios and showed the effectiveness of the proposed system. The accuracy of a single round of dialogue can be improved by 5%, and the accuracy of multiple rounds of dialogue can be increased by 3.1%.

A generic guideline for thermal-hydraulic (T-H) simulation of multiple bank safety relief valves (SRVs) was developed. To test the guideline, the Full Integral Simulation Test (FIST) 6PMC2 was simulated with the consolidated T-H code of USNRC, TRACE. The FIST 6PMC2 experiment simulates the response of a generic BWR/6 plant to a Main Steam-line Isolation Valve (MSIV) closure without reactor scram. During the test, the HPCS is unavailable and not used. The only inventory make-up system available is the Reactor Core Isolation Cooling (RCIC). This experiment can also be considered proto-typical of a BWR ATWS-like scenario. The simulation is largely dominated by the transient behavior of the SRVs. In this study, the experimental data was analyzed and used to check the modeling guideline for SRVs. The guideline relies on only the data available prior to an experiment or any other analysis, e.g. valve flow coefficients, inlet hydraulic diameters, etc. The study also revealed deficiencies in the “then” current valve model of the TRACE code which were subsequently corrected. The study demonstrates that the T-H models can simulate the operational behavior of SRVs very accurately while rather simple mistakes can be very damaging at the same time.

As a safety concern, pressure relief valves play important roles in protecting a pressure vessel or pressurized system. The conditions of the pressure relief valves deteriorate day after day which depend on the operating conditions of process train such as variation of pressure and temperature, containment and frequency of relieving during operation. If the deteriorative relief valves failure to operate normally as required, a catastrophic event may occur while no other protective means provided. So, to prepare a plan of inspection and maintenance with suitable intervals based on the knowledge of the relations between the conditions of pressure relief valves and plant operation parameters, is a safety strategy to plant owner. With practical inspection and maintenance works of pressure relief valves performed in a process train, this paper collects the as-received pressure relief valves test results from current inspection intervals and presents the relationships between as-received test data and operation parameters based on analysis of variation (ANOVA) and analysis of correlation. With these analyses, one can get the relationships between the decay conditions of the pressure relieve valves and their operating parameters. A site survey of as-received test results will be used as a case study and the weighting factors corresponding to the operation parameters are also presented.

The pressure required for treatment of food ranges from 300 to 600 MPa, depending on the food being processed and the desired results, higher pressure giving better and more economical results. However, there are currently no predictable, reliable, and repeatable safety devices available for very high pressures like 600 MPa. Rupture disks have a short life at these pressures, and pressure relief valves for very high pressure are not repeatable. Thus the possibility of using a system design is an attractive alternative that will make the overpressure protection more reliable and controllable. In current applications, high-pressure vessels normally operate from a few MPa to 200 MPa, for example when extracting substances, compacting powder materials, or healing defects in materials. The pressure medium is typically a pure gas or a liquid. Here existing devises serve their purpose. The request for mild treatment of food to enhance safety and quality has created a niche for very high pressure. With this new technique the food is treated at low temperature and high pressure for a short time. The treatment inactivates micro organisms but maintains the nutritional and organoleptic values of the food, achieving a food with high quality and increased safety throughout its commercial shelf life.

As chemical plants and petroleum refineries plan for future expansion, the capability of existing pressure relief systems to safely dispose of higher capacities is often a significant constraint. Current codes and standards now allow for the use of High Integrity Pressure Protection Systems (HIPPS) in lieu of increasing the capacity of emergency relief systems. There is a significant body of knowledge on how to design a HIPPS system once the requirement for one has been established. However, there is gap in knowledge of what situations allow for HIPPS and what practical steps can be taken to determine when a HIPPS is justified. This paper describes the analytical techniques that can be used by engineers to justify a design using instrumented protection in lieu of upgrading the relief system. A review of applicable requirements from codes and standards is included along with risk-based methods to ensure a HIPPS design is as safe as — or safer than — conventional relief design.

Self Standing Hybrid Riser (SSHR) system is an attractive option for deepwater application. The system is composed by a vertical riser pipe coming from the sea bottom to a subsurface buoy which is placed in around one hundred meter water depth from the sea surface. It is connected to a floating production facility at the sea surface by a flexible jumper. It almost eliminates all the undesired dynamic effects from ocean waves, in addition to relief the total riser system weight from the floating platform. Recent discoveries of petroleum in ultra-deep water Pre-salt Offshore Brazil stimulated development of innovative and nontraditional riser system configurations. The present work deals with the dynamic behavior of a SSHR system excited by sea current, waves and displacements induced by sea surface platform motions. In plane and out of plane displacements for the SSHR system is analyzed and subsurface buoy maximum motions amplitude have been observed. Effects from current drag and vortex induced forces are investigated by numerical simulations of the dynamic behavior of the SSHR system. Analysis procedure is presented with details, and fundamentals of the semi-empirical approach for hydrodynamic drag and vortex induced forces in the riser length and subsurface buoy are described. Numerical simulation results are presented, and evaluations are conducted for deepwater condition. Maximum amplitude of vibration is observed near from to lock-in conditions, and effects of the subsurface buoy vortex induced motion (VIM) are discussed. Hydrodynamic forces previously obtained from reduced model tests are used for the numerical approach.

One of the biggest economic crises since the industrial revolution centuries ago is underway, and its intensity is still invisible. The current crisis is caused by the corona virus (COVID-19) pandemic. In March, when the corona began to take off all over the world, including in Serbia, leading epidemiologists claimed that it would be better from May, some even from June, guided by the thesis that warmer weather could stop the virus and bring life back. on the "old". It is now almost impossible to give any precise forecast, both from the health and economic aspect. The only thing that is certain is uncertainty, both for workers and managers and owners, and uncertainty often brings with it fear. The economic crisis of 2020 differs from the crisis of 2008 because the current one was caused by the states with their measures, and the last one was caused by the financial sector by uncontrolled risky behavior. The consequences will be similar, because again, the banks will warn the states that they have borrowed too much, as if the debt did not arise first in order for the banks to be saved. Unlike the world economic crisis that was current ten years ago, this crisis does not have a clear focus in the financial system that can be identified and acted upon with adequate measures. The economic consequences of the pandemic are greater the more economically underdeveloped the country is, and Serbia entered this crisis as a country burdened with numerous problems, a high share of public debt in GDP and developmentally dependent on foreign capital. The suspension of economic activity for a certain period and its restart in an environment of uncertainty and fear of the now certain second wave, are trends that some companies will survive with certain reductions in production and work capacity.

This paper details the design of a shipping container concept with a purpose of being not only highly efficient in transport but also after arrival. In order to reduce mass while also increasing the ability to carry heavier loads, Lightweight structures and materials are employed instead of simple steels or cast iron used in current designs. The second goal of the design was to create a weld free structure that can be easily assembled and disassembled without the need for special labor and skills saving time, space and resources when shipping empty container or storing containers that are not in use. Shipping containers often clutter construction sites and temporary establishments like concerts and flea markets. By being able to break down and efficiently store containers businesses in charge of these temporary establishments can save valuable real estate and run much more efficiently. Another design feature is creating an entirely modular system. Each container is made from completely interchangeable parts that can be swapped in and out for ones that have different function like container variations that provides insulation or active temperature or humidity control for temperature sensitive products or high security configurations for hazardous materials or expensive goods. In order to provide such interchangeability, the frame is designed to be strong and rigid enough to be able to handle the required loads without relying on wall plates. The combination of these design points leads to a transportation system that can not only be deployed using existing intermodal infrastructure but can serve a secondary purpose once it arrives at its destination. Because the containers are modular and highly versatile, they can be assembled into large floor space, multistory structures. Containers and trailers normally used as office space at construction sites are cramped, uncomfortable and very unsightly. Using this system, large two story office space of several thousand square feet can be erected using no more than a dozen containers. The modular walls can be used to swap in ceiling or wall panels that let in natural light, harness solar power or allow plumbing systems, electrical wiring, thermal insulation or ventilation. Because of the weld-free design and ultra-lightweight components, structure assembly and disassembly is simple with unskilled labor and common tools. This is especially important because the most impactful application of this system could be in disaster relief. Single containers can be used as substitutes for single family homes and large container assemblies can be used to create anything kind of community use structure from shower clusters to temporary schools to dining halls to administrative buildings creating a sustainable temporary community.

The main objective of this paper is to present the recent developments for monitoring and controlling the annulus conditions of flexible risers. Petrobras has been monitoring the pressure of permeated gas in the annulus region of some risers in order to infer the eventual occurrence of non-conformities as damage on the riser external sheath, for example. Such occurrence would affect the permeated gas flow pattern, the gas pressurization period and the relief valve opening frequencies. Furthermore, the mentioned occurrence would increase the susceptibility of the steel armors to experience the potential failure mechanism of corrosion. In Petrobras, the current monitoring method is characterized by visual and periodic manometer readings from a manometer set installed near each riser end-fitting. The data is recorded in a daily report and analyzed by personnel onshore, who are in charge of comparing data and requesting relief valve’s actuation, whenever necessary. The paper illustrates Marlim-Sul Asset experience on monitoring and data processing to control the annulus conditions of flexible risers during operation. It presents the in-house developed methodology to data management and processing. This methodology is based on a daily analysis of the permeated gas data worksheet. Some examples are given to illustrate it. The paper also summarizes current developments, in progress, in order to improve riser integrity management. The first development is being done to implement, in the future, automatic data acquisition and control systems. The purpose of automating this process is to improve methods and techniques for data acquisition, transmission and processing. The second development focuses on applications in which riser top end-fittings are submerged. In this particular scenario, a special system — with a quick connection subsea device — is under development to allow the connection, by divers, after the riser pull-in, of the riser annulus to the platform gas collecting facilities. The idea is prevent seawater ingress into the riser annulus during installation, maintenance and operational phases. Therefore, the permeated gas pressure can be monitored and the annulus behavior can be controlled from the surface. The final expectation is to improve riser integrity management, providing another source of information at low cost, helping technicians to decide whenever it is time to inspect, repair or replace a riser, preventing hydrocarbon leakage to the environment.

Emergency Relief (ER) is a Department of Social Services (DSS) funded program, delivered by 197 community organisations (ER Providers) across Australia, to assist people facing a financial crisis with financial/material aid and referrals to other support programs. ER has been playing this important role in Australian communities since 1979. Without ER, more people living in Australia who experience a financial crisis might face further harm such as crippling debt or homelessness. The Emergency Relief National Coordination Group (NCG) was established in April 2020 at the start of the COVID-19 pandemic to advise the Minister for Families and Social Services on the implementation of ER. To inform its advice to the Minister, the NCG partnered with the Institute for Governance at the University of Canberra to conduct research to understand the issues and challenges faced by ER Providers and Service Users in local contexts across Australia. The research involved a desktop review of the existing literature on ER service provision, a large survey which all Commonwealth ER Providers were invited to participate in (and 122 responses were received), interviews with a purposive sample of 18 ER Providers, and the development of a program logic and theory of change for the Commonwealth ER program to assess progress. The surveys and interviews focussed on ER Provider perceptions of the strengths, weaknesses, future challenges, and areas of improvement for current ER provision. The trend of increasing case complexity, the effectiveness of ER service delivery models in achieving outcomes for Service Users, and the significance of volunteering in the sector were investigated. Separately, an evaluation of the performance of the NCG was conducted and a summary of the evaluation is provided as an appendix to this report. Several themes emerged from the review of the existing literature such as service delivery shortcomings in dealing with case complexity, the effectiveness of case management, and repeat requests for service. Interviews with ER workers and Service Users found that an uplift in workforce capability was required to deal with increasing case complexity, leading to recommendations for more training and service standards. Several service evaluations found that ER delivered with case management led to high Service User satisfaction, played an integral role in transforming the lives of people with complex needs, and lowered repeat requests for service. A large longitudinal quantitative study revealed that more time spent with participants substantially decreased the number of repeat requests for service; and, given that repeat requests for service can be an indicator of entrenched poverty, not accessing further services is likely to suggest improvement. The interviews identified the main strengths of ER to be the rapid response and flexible use of funds to stabilise crisis situations and connect people to other supports through strong local networks. Service Users trusted the system because of these strengths, and ER was often an access point to holistic support. There were three main weaknesses identified. First, funding contracts were too short and did not cover the full costs of the program—in particular, case management for complex cases. Second, many Service Users were dependent on ER which was inconsistent with the definition and intent of the program. Third, there was inconsistency in the level of service received by Service Users in different geographic locations. These weaknesses can be improved upon with a joined-up approach featuring co-design and collaborative governance, leading to the successful commissioning of social services. The survey confirmed that volunteers were significant for ER, making up 92% of all workers and 51% of all hours worked in respondent ER programs. Of the 122 respondents, volunteers amounted to 554 full-time equivalents, a contribution valued at $39.4 million. In total there were 8,316 volunteers working in the 122 respondent ER programs. The sector can support and upskill these volunteers (and employees in addition) by developing scalable training solutions such as online training modules, updating ER service standards, and engaging in collaborative learning arrangements where large and small ER Providers share resources. More engagement with peak bodies such as Volunteering Australia might also assist the sector to improve the focus on volunteer engagement. Integrated services achieve better outcomes for complex ER cases—97% of survey respondents either agreed or strongly agreed this was the case. The research identified the dimensions of service integration most relevant to ER Providers to be case management, referrals, the breadth of services offered internally, co-location with interrelated service providers, an established network of support, workforce capability, and Service User engagement. Providers can individually focus on increasing the level of service integration for their ER program to improve their ability to deal with complex cases, which are clearly on the rise. At the system level, a more joined-up approach can also improve service integration across Australia. The key dimensions of this finding are discussed next in more detail. Case management is key for achieving Service User outcomes for complex cases—89% of survey respondents either agreed or strongly agreed this was the case. Interviewees most frequently said they would provide more case management if they could change their service model. Case management allows for more time spent with the Service User, follow up with referral partners, and a higher level of expertise in service delivery to support complex cases. Of course, it is a costly model and not currently funded for all Service Users through ER. Where case management is not available as part of ER, it might be available through a related service that is part of a network of support. Where possible, ER Providers should facilitate access to case management for Service Users who would benefit. At a system level, ER models with a greater component of case management could be implemented as test cases. Referral systems are also key for achieving Service User outcomes, which is reflected in the ER Program Logic presented on page 31. The survey and interview data show that referrals within an integrated service (internal) or in a service hub (co-located) are most effective. Where this is not possible, warm referrals within a trusted network of support are more effective than cold referrals leading to higher take-up and beneficial Service User outcomes. However, cold referrals are most common, pointing to a weakness in ER referral systems. This is because ER Providers do not operate or co-locate with interrelated services in many cases, nor do they have the case management capacity to provide warm referrals in many other cases. For mental illness support, which interviewees identified as one of the most difficult issues to deal with, ER Providers offer an integrated service only 23% of the time, warm referrals 34% of the time, and cold referrals 43% of the time. A focus on referral systems at the individual ER Provider level, and system level through a joined-up approach, might lead to better outcomes for Service Users. The program logic and theory of change for ER have been documented with input from the research findings and included in Section 4.3 on page 31. These show that ER helps people facing a financial crisis to meet their immediate needs, avoid further harm, and access a path to recovery. The research demonstrates that ER is fundamental to supporting vulnerable people in Australia and should therefore continue to be funded by government.

1.1 Macroeconomic summary Economic recovery has consistently outperformed the technical staff’s expectations following a steep decline in activity in the second quarter of 2020. At the same time, total and core inflation rates have fallen and remain at low levels, suggesting that a significant element of the reactivation of Colombia’s economy has been related to recovery in potential GDP. This would support the technical staff’s diagnosis of weak aggregate demand and ample excess capacity. The most recently available data on 2020 growth suggests a contraction in economic activity of 6.8%, lower than estimates from January’s Monetary Policy Report (-7.2%). High-frequency indicators suggest that economic performance was significantly more dynamic than expected in January, despite mobility restrictions and quarantine measures. This has also come amid declines in total and core inflation, the latter of which was below January projections if controlling for certain relative price changes. This suggests that the unexpected strength of recent growth contains elements of demand, and that excess capacity, while significant, could be lower than previously estimated. Nevertheless, uncertainty over the measurement of excess capacity continues to be unusually high and marked both by variations in the way different economic sectors and spending components have been affected by the pandemic, and by uneven price behavior. The size of excess capacity, and in particular the evolution of the pandemic in forthcoming quarters, constitute substantial risks to the macroeconomic forecast presented in this report. Despite the unexpected strength of the recovery, the technical staff continues to project ample excess capacity that is expected to remain on the forecast horizon, alongside core inflation that will likely remain below the target. Domestic demand remains below 2019 levels amid unusually significant uncertainty over the size of excess capacity in the economy. High national unemployment (14.6% for February 2021) reflects a loose labor market, while observed total and core inflation continue to be below 2%. Inflationary pressures from the exchange rate are expected to continue to be low, with relatively little pass-through on inflation. This would be compatible with a negative output gap. Excess productive capacity and the expectation of core inflation below the 3% target on the forecast horizon provide a basis for an expansive monetary policy posture. The technical staff’s assessment of certain shocks and their expected effects on the economy, as well as the presence of several sources of uncertainty and related assumptions about their potential macroeconomic impacts, remain a feature of this report. The coronavirus pandemic, in particular, continues to affect the public health environment, and the reopening of Colombia’s economy remains incomplete. The technical staff’s assessment is that the COVID-19 shock has affected both aggregate demand and supply, but that the impact on demand has been deeper and more persistent. Given this persistence, the central forecast accounts for a gradual tightening of the output gap in the absence of new waves of contagion, and as vaccination campaigns progress. The central forecast continues to include an expected increase of total and core inflation rates in the second quarter of 2021, alongside the lapse of the temporary price relief measures put in place in 2020. Additional COVID-19 outbreaks (of uncertain duration and intensity) represent a significant risk factor that could affect these projections. Additionally, the forecast continues to include an upward trend in sovereign risk premiums, reflected by higher levels of public debt that in the wake of the pandemic are likely to persist on the forecast horizon, even in the context of a fiscal adjustment. At the same time, the projection accounts for the shortterm effects on private domestic demand from a fiscal adjustment along the lines of the one currently being proposed by the national government. This would be compatible with a gradual recovery of private domestic demand in 2022. The size and characteristics of the fiscal adjustment that is ultimately implemented, as well as the corresponding market response, represent another source of forecast uncertainty. Newly available information offers evidence of the potential for significant changes to the macroeconomic scenario, though without altering the general diagnosis described above. The most recent data on inflation, growth, fiscal policy, and international financial conditions suggests a more dynamic economy than previously expected. However, a third wave of the pandemic has delayed the re-opening of Colombia’s economy and brought with it a deceleration in economic activity. Detailed descriptions of these considerations and subsequent changes to the macroeconomic forecast are presented below. The expected annual decline in GDP (-0.3%) in the first quarter of 2021 appears to have been less pronounced than projected in January (-4.8%). Partial closures in January to address a second wave of COVID-19 appear to have had a less significant negative impact on the economy than previously estimated. This is reflected in figures related to mobility, energy demand, industry and retail sales, foreign trade, commercial transactions from selected banks, and the national statistics agency’s (DANE) economic tracking indicator (ISE). Output is now expected to have declined annually in the first quarter by 0.3%. Private consumption likely continued to recover, registering levels somewhat above those from the previous year, while public consumption likely increased significantly. While a recovery in investment in both housing and in other buildings and structures is expected, overall investment levels in this case likely continued to be low, and gross fixed capital formation is expected to continue to show significant annual declines. Imports likely recovered to again outpace exports, though both are expected to register significant annual declines. Economic activity that outpaced projections, an increase in oil prices and other export products, and an expected increase in public spending this year account for the upward revision to the 2021 growth forecast (from 4.6% with a range between 2% and 6% in January, to 6.0% with a range between 3% and 7% in April). As a result, the output gap is expected to be smaller and to tighten more rapidly than projected in the previous report, though it is still expected to remain in negative territory on the forecast horizon. Wide forecast intervals reflect the fact that the future evolution of the COVID-19 pandemic remains a significant source of uncertainty on these projections. The delay in the recovery of economic activity as a result of the resurgence of COVID-19 in the first quarter appears to have been less significant than projected in the January report. The central forecast scenario expects this improved performance to continue in 2021 alongside increased consumer and business confidence. Low real interest rates and an active credit supply would also support this dynamic, and the overall conditions would be expected to spur a recovery in consumption and investment. Increased growth in public spending and public works based on the national government’s spending plan (Plan Financiero del Gobierno) are other factors to consider. Additionally, an expected recovery in global demand and higher projected prices for oil and coffee would further contribute to improved external revenues and would favor investment, in particular in the oil sector. Given the above, the technical staff’s 2021 growth forecast has been revised upward from 4.6% in January (range from 2% to 6%) to 6.0% in April (range from 3% to 7%). These projections account for the potential for the third wave of COVID-19 to have a larger and more persistent effect on the economy than the previous wave, while also supposing that there will not be any additional significant waves of the pandemic and that mobility restrictions will be relaxed as a result. Economic growth in 2022 is expected to be 3%, with a range between 1% and 5%. This figure would be lower than projected in the January report (3.6% with a range between 2% and 6%), due to a higher base of comparison given the upward revision to expected GDP in 2021. This forecast also takes into account the likely effects on private demand of a fiscal adjustment of the size currently being proposed by the national government, and which would come into effect in 2022. Excess in productive capacity is now expected to be lower than estimated in January but continues to be significant and affected by high levels of uncertainty, as reflected in the wide forecast intervals. The possibility of new waves of the virus (of uncertain intensity and duration) represents a significant downward risk to projected GDP growth, and is signaled by the lower limits of the ranges provided in this report. Inflation (1.51%) and inflation excluding food and regulated items (0.94%) declined in March compared to December, continuing below the 3% target. The decline in inflation in this period was below projections, explained in large part by unanticipated increases in the costs of certain foods (3.92%) and regulated items (1.52%). An increase in international food and shipping prices, increased foreign demand for beef, and specific upward pressures on perishable food supplies appear to explain a lower-than-expected deceleration in the consumer price index (CPI) for foods. An unexpected increase in regulated items prices came amid unanticipated increases in international fuel prices, on some utilities rates, and for regulated education prices. The decline in annual inflation excluding food and regulated items between December and March was in line with projections from January, though this included downward pressure from a significant reduction in telecommunications rates due to the imminent entry of a new operator. When controlling for the effects of this relative price change, inflation excluding food and regulated items exceeds levels forecast in the previous report. Within this indicator of core inflation, the CPI for goods (1.05%) accelerated due to a reversion of the effects of the VAT-free day in November, which was largely accounted for in February, and possibly by the transmission of a recent depreciation of the peso on domestic prices for certain items (electric and household appliances). For their part, services prices decelerated and showed the lowest rate of annual growth (0.89%) among the large consumer baskets in the CPI. Within the services basket, the annual change in rental prices continued to decline, while those services that continue to experience the most significant restrictions on returning to normal operations (tourism, cinemas, nightlife, etc.) continued to register significant price declines. As previously mentioned, telephone rates also fell significantly due to increased competition in the market. Total inflation is expected to continue to be affected by ample excesses in productive capacity for the remainder of 2021 and 2022, though less so than projected in January. As a result, convergence to the inflation target is now expected to be somewhat faster than estimated in the previous report, assuming the absence of significant additional outbreaks of COVID-19. The technical staff’s year-end inflation projections for 2021 and 2022 have increased, suggesting figures around 3% due largely to variation in food and regulated items prices. The projection for inflation excluding food and regulated items also increased, but remains below 3%. Price relief measures on indirect taxes implemented in 2020 are expected to lapse in the second quarter of 2021, generating a one-off effect on prices and temporarily affecting inflation excluding food and regulated items. However, indexation to low levels of past inflation, weak demand, and ample excess productive capacity are expected to keep core inflation below the target, near 2.3% at the end of 2021 (previously 2.1%). The reversion in 2021 of the effects of some price relief measures on utility rates from 2020 should lead to an increase in the CPI for regulated items in the second half of this year. Annual price changes are now expected to be higher than estimated in the January report due to an increased expected path for fuel prices and unanticipated increases in regulated education prices. The projection for the CPI for foods has increased compared to the previous report, taking into account certain factors that were not anticipated in January (a less favorable agricultural cycle, increased pressure from international prices, and transport costs). Given the above, year-end annual inflation for 2021 and 2022 is now expected to be 3% and 2.8%, respectively, which would be above projections from January (2.3% and 2,7%). For its part, expected inflation based on analyst surveys suggests year-end inflation in 2021 and 2022 of 2.8% and 3.1%, respectively. There remains significant uncertainty surrounding the inflation forecasts included in this report due to several factors: 1) the evolution of the pandemic; 2) the difficulty in evaluating the size and persistence of excess productive capacity; 3) the timing and manner in which price relief measures will lapse; and 4) the future behavior of food prices. Projected 2021 growth in foreign demand (4.4% to 5.2%) and the supposed average oil price (USD 53 to USD 61 per Brent benchmark barrel) were both revised upward. An increase in long-term international interest rates has been reflected in a depreciation of the peso and could result in relatively tighter external financial conditions for emerging market economies, including Colombia. Average growth among Colombia’s trade partners was greater than expected in the fourth quarter of 2020. This, together with a sizable fiscal stimulus approved in the United States and the onset of a massive global vaccination campaign, largely explains the projected increase in foreign demand growth in 2021. The resilience of the goods market in the face of global crisis and an expected normalization in international trade are additional factors. These considerations and the expected continuation of a gradual reduction of mobility restrictions abroad suggest that Colombia’s trade partners could grow on average by 5.2% in 2021 and around 3.4% in 2022. The improved prospects for global economic growth have led to an increase in current and expected oil prices. Production interruptions due to a heavy winter, reduced inventories, and increased supply restrictions instituted by producing countries have also contributed to the increase. Meanwhile, market forecasts and recent Federal Reserve pronouncements suggest that the benchmark interest rate in the U.S. will remain stable for the next two years. Nevertheless, a significant increase in public spending in the country has fostered expectations for greater growth and inflation, as well as increased uncertainty over the moment in which a normalization of monetary policy might begin. This has been reflected in an increase in long-term interest rates. In this context, emerging market economies in the region, including Colombia, have registered increases in sovereign risk premiums and long-term domestic interest rates, and a depreciation of local currencies against the dollar. Recent outbreaks of COVID-19 in several of these economies; limits on vaccine supply and the slow pace of immunization campaigns in some countries; a significant increase in public debt; and tensions between the United States and China, among other factors, all add to a high level of uncertainty surrounding interest rate spreads, external financing conditions, and the future performance of risk premiums. The impact that this environment could have on the exchange rate and on domestic financing conditions represent risks to the macroeconomic and monetary policy forecasts. Domestic financial conditions continue to favor recovery in economic activity. The transmission of reductions to the policy interest rate on credit rates has been significant. The banking portfolio continues to recover amid circumstances that have affected both the supply and demand for loans, and in which some credit risks have materialized. Preferential and ordinary commercial interest rates have fallen to a similar degree as the benchmark interest rate. As is generally the case, this transmission has come at a slower pace for consumer credit rates, and has been further delayed in the case of mortgage rates. Commercial credit levels stabilized above pre-pandemic levels in March, following an increase resulting from significant liquidity requirements for businesses in the second quarter of 2020. The consumer credit portfolio continued to recover and has now surpassed February 2020 levels, though overall growth in the portfolio remains low. At the same time, portfolio projections and default indicators have increased, and credit establishment earnings have come down. Despite this, credit disbursements continue to recover and solvency indicators remain well above regulatory minimums. 1.2 Monetary policy decision In its meetings in March and April the BDBR left the benchmark interest rate unchanged at 1.75%.

From this edition, the Financial Stability Report will have fewer pages with some changes in its structure. The purpose of this change is to present the most relevant facts of the financial system and their implications on the financial stability. This allows displaying the analysis more concisely and clearly, as it will focus on describing the evolution of the variables that have the greatest impact on the performance of the financial system, for estimating then the effect of a possible materialization of these risks on the financial health of the institutions. The changing dynamics of the risks faced by the financial system implies that the content of the Report adopts this new structure; therefore, some analyses and series that were regularly included will not necessarily be in each issue. However, the statistical annex that accompanies the publication of the Report will continue to present the series that were traditionally included, regardless of whether or not they are part of the content of the Report. In this way we expect to contribute in a more comprehensive way to the study and analysis of the stability of the Colombian financial system. Executive Summary During the first half of 2015, the main advanced economies showed a slow recovery on their growth, while emerging economies continued with their slowdown trend. Domestic demand in the United States allowed for stabilization on its average growth for the first half of the year, while other developed economies such as the United Kingdom, the euro zone, and Japan showed a more gradual recovery. On the other hand, the Chinese economy exhibited the lowest growth rate in five years, which has resulted in lower global dynamism. This has led to a fall in prices of the main export goods of some Latin American economies, especially oil, whose price has also responded to a larger global supply. The decrease in the terms of trade of the Latin American economies has had an impact on national income, domestic demand, and growth. This scenario has been reflected in increases in sovereign risk spreads, devaluations of stock indices, and depreciation of the exchange rates of most countries in the region. For Colombia, the fall in oil prices has also led to a decline in the terms of trade, resulting in pressure on the dynamics of national income. Additionally, the lower demand for exports helped to widen the current account deficit. This affected the prospects and economic growth of the country during the first half of 2015. This economic context could have an impact on the payment capacity of debtors and on the valuation of investments, affecting the soundness of the financial system. However, the results of the analysis featured in this edition of the Report show that, facing an adverse scenario, the vulnerability of the financial system in terms of solvency and liquidity is low. The analysis of the current situation of credit institutions (CI) shows that growth of the gross loan portfolio remained relatively stable, as well as the loan portfolio quality indicators, except for microcredit, which showed a decrease in these indicators. Regarding liabilities, traditional sources of funding have lost market share versus non-traditional ones (bonds, money market operations and in the interbank market), but still represent more than 70%. Moreover, the solvency indicator remained relatively stable. As for non-banking financial institutions (NBFI), the slowdown observed during the first six months of 2015 in the real annual growth of the assets total, both in the proprietary and third party position, stands out. The analysis of the main debtors of the financial system shows that indebtedness of the private corporate sector has increased in the last year, mostly driven by an increase in the debt balance with domestic and foreign financial institutions. However, the increase in this latter source of funding has been influenced by the depreciation of the Colombian peso vis-à-vis the US dollar since mid-2014. The financial indicators reflected a favorable behavior with respect to the historical average, except for the profitability indicators; although they were below the average, they have shown improvement in the last year. By economic sector, it is noted that the firms focused on farming, mining and transportation activities recorded the highest levels of risk perception by credit institutions, and the largest increases in default levels with respect to those observed in December 2014. Meanwhile, households have shown an increase in the financial burden, mainly due to growth in the consumer loan portfolio, in which the modalities of credit card, payroll deductible loan, revolving and vehicle loan are those that have reported greater increases in risk indicators. On the side of investments that could be affected by the devaluation in the portfolio of credit institutions and non-banking financial institutions (NBFI), the largest share of public debt securities, variable-yield securities and domestic private debt securities is highlighted. The value of these portfolios fell between February and August 2015, driven by the devaluation in the market of these investments throughout the year. Furthermore, the analysis of the liquidity risk indicator (LRI) shows that all intermediaries showed adequate levels and exhibit a stable behavior. Likewise, the fragility analysis of the financial system associated with the increase in the use of non-traditional funding sources does not evidence a greater exposure to liquidity risk. Stress tests assess the impact of the possible joint materialization of credit and market risks, and reveal that neither the aggregate solvency indicator, nor the liquidity risk indicator (LRI) of the system would be below the established legal limits. The entities that result more individually affected have a low share in the total assets of the credit institutions; therefore, a risk to the financial system as a whole is not observed. José Darío Uribe Governor

The Colombian financial system has not suffered major structural disruptions during these months of deep economic contraction and has continued to carry out its basic functions as usual, thus facilitating the economy's response to extreme conditions. This is the result of the soundness of financial institutions at the beginning of the crisis, which was reflected in high liquidity and capital adequacy indicators as well as in the timely response of various authorities. Banco de la República lowered its policy interest rates 250 points to 1.75%, the lowest level since the creation of the new independent bank in 1991, and provided ample temporary and permanent liquidity in both pesos and foreign currency. The Office of the Financial Superintendent of Colombia, in turn, adopted prudential measures to facilitate changes in the conditions for loans in effect and temporary rules for rating and loan-loss provisions. Finally, the national government expanded the transfers as well as the guaranteed credit programs for the economy. The supply of real credit (i.e. discounting inflation) in the economy is 4% higher today than it was 12 months ago with especially marked growth in the housing (5.6%) and commercial (4.7%) loan portfolios (2.3% in consumer and -0.1% in microloans), but there have been significant changes over time. During the first few months of the quarantine, firms increased their demands for liquidity sharply while consumers reduced theirs. Since then, the growth of credit to firms has tended to slow down, while consumer and housing credit has grown. The financial system has responded satisfactorily to the changes in the respective demands of each group or sector and loans may grow at high rates in 2021 if GDP grows at rates close to 4.6% as the technical staff at the Bank expects; but the forecasts are highly uncertain. After the strict quarantine implemented by authorities in Colombia, the turmoil seen in March and early April, which was evident in the sudden reddening of macroeconomic variables on the risk heatmap in Graph A,[1] and the drop in crude oil and coal prices (note the high volatility registered in market risk for the region on Graph A) the local financial markets stabilized relatively quickly. Banco de la República’s credible and sustained policy response played a decisive role in this stabilization in terms of liquidity provision through a sharp expansion of repo operations (and changes in amounts, terms, counterparties, and eligible instruments), the purchases of public and private debt, and the reduction in bank reserve requirements. In this respect, there is now abundant aggregate liquidity and significant improvements in the liquidity position of investment funds. In this context, the main vulnerability factor for financial stability in the short term is still the high degree of uncertainty surrounding loan quality. First, the future trajectory of the number of people infected and deceased by the virus and the possible need for additional health measures is uncertain. For that reason, there is also uncertainty about the path for economic recovery in the short and medium term. Second, the degree to which the current shock will be reflected in loan quality once the risk materializes in banks’ financial statements is uncertain. For the time being, the credit risk heatmap (Graph B) indicates that non-performing and risky loans have not shown major deterioration, but past experience indicates that periods of sharp economic slowdown eventually tend to coincide with rises in non-performing loans: the calculations included in this report suggest that the impact of the recession on credit quality could be significant in the short term. This is particularly worrying since the profitability of credit establishments has been declining in recent months, and this could affect their ability to provide credit to the real sector of the economy. In order to adopt a forward-looking approach to this vulnerability, this Report presents several stress tests that evaluate the resilience of the liquidity and capital adequacy of credit institutions and investment funds in the event of a hypothetical scenario that seeks to simulate an extreme version of current macroeconomic conditions. The results suggest that even though there could be strong impacts on the credit institutions’ volume of credit and profitability under such scenarios, aggregate indicators of total and core capital adequacy will probably remain at levels that are above the regulatory limits over the horizon of a year. At the same time, the exercises highlight the high capacity of the system's liquidity to face adverse scenarios. In compliance with its constitutional objectives and in coordination with the financial system's security network, Banco de la República will continue to closely monitor the outlook for financial stability at this juncture and will make the decisions that are necessary to ensure the proper functioning of the economy, facilitate the flow of sufficient credit and liquidity resources, and further the smooth operation of the payment systems. Juan José Echavarría Governor