CDA loans fall 74 percent • Government-controlled lending agency reports biggest drop since 1996

Average quarterly loans approved by the Commonwealth Development Authority dropped 75 percent in 2000 compared with the volume of credit applications okayed during the previous year.

A record of CDA loans compiled by the Central Statistics Division revealed the government’s prime lending agency released only a quarterly average of $428,341 amount of credits last year, from the average $1.625 per three-month period in 1999.

CDA approved only about $60,000 worth of credit applications in the third quarter of 2000; $1.062 million during the April-June period; and some $163,500 in the first three months of last year.

CDA has been consistent in its infusion of fresh money into the local economy through loans made to local businesses reaching over $26 million in a four-year period covering 1996 to 1999.

However, economic upheavals brought about by the financially devastating Asian currency crisis had taken its toll on the total volume of credit agreements approved by the development authority in 1999.

According to a report obtained from the CNMI Department of Commerce, 1999 marked the first time when total amount of loan packages okayed by CDA dropped in three years, falling by about 22 percent to $6.5 million from the year ago’s $8.3 million.

CDA officials have also projected another decline in the volume of loan agreements sealed this year, as it intensifies efforts to cut the increasing number of non-performing and problem loans due to the borrowers’ weaker re-payment ability.

In fact, CDA has not awarded a single loan in the first three months of last year, in line with its decision to slowdown on lending amid the borrowers’ crippled ability to service their outstanding credits.

Back in 1999, the development authority has consistently awarded an average of $1.625 million in each quarter which is, however, lower than the previous year’s $2.075 quarterly average or when the CNMI economy was yet to feel the pinch of the regional recession.

CDA had been approving an average of more than a million dollars in both direct and guaranteed loan in each quarter of 1996 and 1997, the Quarterly Economic Review of the commerce department disclosed.

In 1996, the economic report revealed CDA approved $4.3 million worth of direct and guaranteed loan agreements. The figure rose to $7 million the following year, then soared to $8.3 million in 1998, only to suffer a modest drop to $6.5 million last year.

CDA has tightened its existing policies on the approval of loan agreements amid increasing delinquency rate and stock-piling applications due to the turtle-paced recovery of the Northern Marianas economy.