Individual and portfolio financial guarantees will now be provided through the Loan Guarantee Fund.
The Government approved the Regulation on the organization, functioning and use of the Loan Guarantee Fund for small and medium-sized enterprises. The document regulates the activities of the Enterprise Development Organization (ODA), which provides guarantees through the fund. The regulation provides for a new mechanism to support SMEs through loan portfolio guarantees introduced into legislation in spring of 2022. A loan portfolio guarantee is an obligation under which an institution that manages loan guarantee funds assumes the credit risk associated with a portfolio of eligible loans provided in accordance with a cooperation agreement signed with a financial sector entity. The introduction of a new guarantee mechanism will require an increase in the size of the Loan Guarantee Fund by at least 200 million lei. These funds may be allocated from the World Bank resources for one of the components of the future III-th Moldova Competitiveness Project, which is still under discussion. Its total cost will be $50 million, including $15 million to replenish the Loan Guarantee Fund. Also, individual financial guarantees will continue to be provided through the Loan Guarantee Fund for Small and Medium Enterprises. The draft document describes the organization and functioning of guarantee activities; procedures for the selection of banks and non-bank credit institutions were regulated and the criteria for their eligibility for approval as creditors were listed; describes the mechanism for providing different categories of guarantees, the procedure for the formation of the fund, the requirements for monitoring the fulfillment of obligations of all parties, etc. In 2021, ODA provided through the fund 468 financial guarantees worth 387.8 million lei, which facilitated access to loans worth 992.8 million lei and generated investments worth more than 1.13 billion lei. At the end of 2021, the volume of active guarantees amounted to 412.9 million lei, which is 270.6% more than in 2020. In total, in 2018-2021, ODA provided financial guarantees through the fund for 526.5 million lei, which facilitated access to loans worth 1 billion 399 million lei and generated investments worth more than 1 billion lei. In 2022, the portfolio of the Loan Guarantee Fund is 15 million lei. This amount is also provided for 2023-2025. As expected, the expansion of guarantee mechanisms will increase the access of 900 SMEs to financing in the amount of 2 billion lei, will provide financial guarantees for at least 1 billion lei and implement projects worth 2.5 billion lei, maintain and create jobs for 1 thousand people, increase the share of active financial guarantees for SMEs provided by the banking sector from 2.26% to 5%. The new regulation will come into force after being published in Monitorul Oficial. // 19.10.2022- InfoMarket.
