This technical cooperation (TC) aims to improve access to financial services for low-income Peruvians through two components: program for institutional strengthening of rural credit unions; and support for the privatization of municipal credit unions. The first component has two subcomponents, intended to speed up the improvement of productivity and the financial soundness of the rural credit unions (CRACs): improved management of the CRACs; and reform of their net worth structure. Subcomponent one, which seeks to mitigate the uncertainty of farm income and the risky seasonality of farming by reducing the cost of credit and encouraging the entry of private partners, will make itself felt primarily in the areas of: strategic planning; promotion of the attractiveness of deposits or development of new and redefinition of existing financial products; strengthening of internal controls and auditing of CRACs; development of the technology of lending to rural microenterprises; and development of policies on portfolio management and financial operations with assets and liabilities. Subcomponent two, which seeks to overcome the problem of a dispersed and unstable shareholder base in municipal credit unions and, consequently, a diffuse equity structure, promotes increased private-sector participation by: cleaning up CRAC portfolios; improving indicators of their profitability and productivity; and promoting mergers already taking place and offering shares to microinvestors to supplement the limited investment capacity of present CRAC shareholders. The second component funds several national and regional events for CRAC directors and managers which, in conjunction with financial information obtained from investment banks, will enable them to stay focused on their microentrepreneurial objective and frame a definitive strategy for privatization.
Project Detail
Country
Peru
Project Number
TC9905054
Approval Date
September 1, 1999
Project Status
Closed
Project Type
Technical Cooperation
Sector
PRIVATE FIRMS AND SME DEVELOPMENT
Subsector
PRIVATE FIRMS AND SME DEVELOPMENT
Lending Instrument
Multilateral Investment Fund Instrument
Lending Instrument Code
MIF
Modality
-
Facility Type
-
Environmental and Social Impact Category (ESIC)
-
Total Cost
USD 2,500,000.00
Country Counterpart Financing
USD 1,000,000.00
Original Amount Approved
USD 1,500,000.00