Skip to main content

Paraguay will increase credit supply for SMEs and family home building with IDB support

$50 million loan will benefit an estimated 3,000 companies and 1,000 families

The Inter-American Development Bank (IDB) approved a loan of $50 million for the Financial Development Agency (AFD) of Paraguay, whose mission is to increase competitiveness and employment in the productive sectors by providing medium- and long-term financing.

The operation will increase the supply of credit to small- and medium-sized enterprises and to low-income families for the purchase of homes. An estimated 3,000 companies and 1,000 families will benefit.

This is the third and final loan under the investment project credit line that the IDB approved in March 2008 for a total of $150 million. The credit line was extended together with a first loan for $50 million.

The operation has a single medium- and long-term component to enable the AFD, as a second-tier development financing bank, to on-lend to intermediate financial institutions that will provide credit directly to the productive sector and Paraguayan families.

Specific objectives of the program are to improve terms of loans available in the financial system for investment projects that require medium- and long-term financing.

"The program seeks to increase the amount of long-term financing in the system and continue to support productive sectors as well as housing, which is so critical for development," said José Francisco Demichelis, IDB team leader.

In the first $50 million loan provided through the credit line, 2,226 small- and medium-sized enterprises received credits for investment projects in less than four years, enabling them to carry out projects to increase production. That financing also enabled 1,239 families to buy homes.

The new $50 million IDB loan consists of $18 million from the Bank’s ordinary capital for a term of 20 years, with a 5-year grace period and a variable interest rate based on LIBOR; $25.6 million, also from Ordinary Capital, for a 30-year term, with a 5.5-year grace period and a variable interest rate based on LIBOR; and $6.4 million from the Fund for Special Operations for a 40-year term, with a 40-year grace period and an interest rate 0.25% per annum.

Jump back to top