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IDB Fund approves US $ 849,650 grant for strengthening risk management in Peruvian financial system

The Multilateral Investment Fund (MIF) of the Inter-American Development Bank (IDB) today announced the approval of a US$ 849,650 grant to improve credit risk management and assessment tools and to modernize technologies used by the  financial system in Peru.

The main objective of this operation is to improve the conditions for access to credit by businesses and households.

“The project will heighten awareness and provide training to financial institutions for better risk management, and support the Superintendency of Banks, Insurance Companies and Private Pension Fund Managers and the financial system’s efforts to institute a credit reporting center (CRC),” said IDB project team leader, Luis Alberto Giorgio.

Despite the Peruvian financial system indicators have improved steadily over the past six years, access to credit has not evolved on a similar trend. According to official figures, bank lending to the private sector represents only 17 percent of gross domestic product (GDP), down from 26 percent six years ago.

“The lack of access to credit undermines productive sector competitiveness, so strengthening the financial system and making credit more readily available are top priorities for Perú’s sustainable growth strategy,” said Giorgio.

The CRC’s task is to compile information from financial institutions and make it available to the financial system for more accurate credit risk assessment. This improves credit access, especially for micro, small and medium-sized enterprises (MSMEs.

“The CRC will benefit MSMEs by helping to address the lack of information that financial institutions have on this type of businesses, which significantly limits their access to the formal financial system,” said Giorgio.

The project will not only strengthen financial institutions by facilitating the development of technologies for gauging risk in line with international standards, but it will also enhance the regulatory and oversight capacities of the Superintendency of Banks, Insurance Companies and Private Pension Fund Managers, the executing agency.

“Execution of this project will also promote partnerships between the public sector and the private sector to enhance competitiveness in the productive sector,” added Giorgio.

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