The Inter-American Development Bank (IDB) has approved an $80 million loan to strengthen the sustainability of micro, small and medium-sized enterprises (MSMEs) impacted by the COVID-19 crisis, which are a key pillar of employment in Uruguay.
The operation is part of a $1.7 billion-plus support plan announced by the IDB to help the country cope with the sanitary emergency and its impact on health, social, economic and fiscal issues. The loan was approved under new, simplified procedures adopted by the Bank to speed up assistance so countries in the region can tackle emergencies more efficiently.
MSMEs are a key component of Uruguay’s production and employment capabilities, accounting for more than 99 percent of the private sector companies and more than 67 percent of the jobs. Their activities are mostly concentrated on services and commerce – two sectors badly affected by the coronavirus crisis.
The Global Credit Program for Safeguarding the Productive Fabric and Employment will uphold the short-term financial sustainability of Uruguay’s MSMEs and foster their economic recovery through access to productive financing.
In this sense, it will contribute to the capitalization efforts of the National System of Guarantees (SIGA) to underwrite credits extended by Intermediate Financial Institutions to MSMEs affected by the crisis. The goal is to help them overcome temporary liquidity problems, meet their commercial and financial commitments, and ensure the continuity of their operations through financing aimed at normalizing their commercial cycle.
In addition, the program will promote Uruguay’s MSMEs economic recovery by providing sustained access to financing so they can reestablish their production capabilities, cover their productive conversion needs, or meet any eventual increase in demand as a consequence of the pandemic.
It has been estimated that the program’s resources will benefit some 15,000 formally constituted MSMEs that have been affected by the crisis, helping them gain access to credit and producing a positive impact on their sustainability as well as on their employment and sales levels.
The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.
José Francisco Demichelis
IDB Project Team Leader