ACCESS TO CREDIT

One of the limitations on the performance of Andean SMEs is their difficulty in acceding to timely, inexpensive credit, due basically to the weakness of their guarantees and their high risk status.    

To confront this situation, it has been decided to create an Andean System of SME Guarantees, a Community mechanism to coordinate and reinforce the efforts of Andean countries with regard to guarantees. 

Support was given at the Fourth Meeting of the Subregional Committee on Small and Medium-sized Industry on October 18, 2004, to the proposal of the Andean Community General Secretariat to create an Andean Guarantee System. 

That System will help establish an Andean reguarantee mechanism to free national capital resources for leveraging the provision of new guarantees, with benefits for the region’s SMEs.   

The objectives for setting up this System are:

a) Support, promote and advise on SME development, facilitating access to financing by providing guarantees to enterprises that meet Andean Community criteria for classification as SMEs. 

b) Promote fuller SME participation in the integration process. 

c) Support the creation of National Guarantee Systems in Bolivia and Ecuador.   .

d) Reinforce the national guarantee systems of Andean Community countries by creating a sustainable and efficient Andean Reguarantee Mechanism with very low operating costs. 

e) Diversify national institution risk through the Andean Reguarantee Mechanism, making more and better use of the financing resources of the guarantee institutions within the framework of the Community integration process.   

f) Encourage Member Country financial control institutions to make the provisioning level required for SME loans backed by national guarantee institutions more flexible. 

g) Free national guarantee institutions from the obligation to specifically provision the ceded portion of the risk, as well as from technical equity requirements, when risks are ceded through reguarantee or reinsurance mechanisms.   

h) Foster technical cooperation and the exchange of information among National Guarantee Systems. 

i) Coordinate the exchange of experiences among guarantee institutions belonging to the National Guarantee Systems of Colombia, Peru, and Venezuela and those systems or entities to be created in Bolivia y Ecuador.