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The Legislative Assembly ratified, with 56 votes, a sovereign guarantee from the State that will allow the Banco de Desarrollo de la República de El Salvador (BANDESAL) to secure a US$100 million loan from the Banco Internacional de Reconstrucción y Fomento (BIRF). These funds will be used to expand access to financing for micro, small, and medium-sized enterprises (MSMEs).
The approval of the sovereign guarantee is an essential step in finalizing the financing, as it represents the Salvadoran State’s backing for the loan to be granted by the international organization. With this guarantee, BANDESAL will be able to implement the project called «Intermediación Financiera Mejorada para la Creación de Empleo», aimed at strengthening the development of the business sector and promoting the creation of new jobs.
According to statements made during the 118th plenary session, the program seeks to facilitate MSMEs’ access to credit on better terms, enabling them to strengthen their operations, make investments, and expand their productive capacity. The project comprises two main components.
The first is the Línea de Crédito Multidestinos,, through which BANDESAL will channel resources via intermediary financial institutions, including banks, cooperatives, and savings and loan associations, so that they can provide financing to businesses.
The second component consists of the creation of a Fondo de Garantía Parcial de Crédito, a mechanism designed to reduce the risk of credit operations. This fund will allow for lower traditional guaranteed requirements, facilitate private capital participation, and expand access to financing for MSMEs.
With the ratification of this sovereign guarantee, BANDESAL will be able to move forward with securing the loan from the IBRD and promote a program that seeks to strengthen access to credit for one of the sectors that contributes most to economic activity and job creation in El Salvador.
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