Hoy newspaper recounts the demise of dozens of small businesses due to the elevated costs of operation and high interest rates on loans. Reporter Rafael Baldayac from Santiago tells of retail business complaining of 30-percent increases on the prices of food and electricity, and 50-percent increases in interest rates on bank loans. He mentions that over 40 smaller businesses have closed in Santiago and others are clearly being bankrupted.
The president of the Association of Retailers of Santiago said that in the last few weeks the prices of food products have risen between 20 and 25 percent. Claudio Marmolejos explained that this obliges the retailer to look for larger amounts of capital in order to replace inventories, at a time when loans cost 52 percent more than last year.
?Not many retailers can hold out under these conditions for very long,? said Marmolejos.
According to the head of the retailers, the pastas, tomato products, cooking oils, powdered milk and staples like sugar, rice, salt, garlic, onions and potatoes have increased in price dramatically.
Interest rates zoomed to about 36 percent as a reaction to government monetary restrictions to contain the run on the dollar while maintaining the present high levels of government spending.