Rural home improvement loan program : savings and loan system of Bolivia; evaluation

Special evaluation covers the period 1979-9/82 and is based on document review and interviews at four Mutuales. The project's goal and purpose have been met. The S&L system has extended its services to low-income rural families and established itself as an efficient and responsive resource. The Mutuales have hired additional staff to promote the program, low-cost construction designs have been developed, and locally produced materials and supplies are being more extensively used. Since most of the new loans are for improvements, the system has provided substantial support for the country's informal construction industry. Against targets of 960 home improvement loans averaging $500 in small, dispersed rural communities, 1,600 home improvement loans averaging $2,000 in rural market towns, and 230 or more loans for core units averaging $4,500 in major rural population centers, provision was made, respectively, of 699 loans averaging $525, 2,709 loans averaging $1,597, and 141 loans averaging $3,766. Cost of the solutions has been remarkably lower than anticipated. The most serious problem confronted by the project was and is the fluctuation in the dollar/peso exchange rate. Since it was not feasible to adjust mortgages to recurrent devaluations, (that would require a 680% change) it was decided in 7/1/82 to: introduce a 76% adjustment applied to both the savings and the loan side of the S&L's portfolio; fix interest rates on the current portfolio through 12/31/82 and allow them to rise thereafter; set interest rates at 33-38% on lending operations; at 14-22% on ordinary savings accounts;and at 30% on fixed time deposits.