The ruling covers Guarantee Contract No. 5083/OC-ES, signed between BANDESAL and IDB, for US$200 million, resources that will be used to finance the operation called “Primer Programa de Acceso al Crédito para la Recuperación de la MIPYME”.

The IDB, in august 2020, approved the First Operation of the CCLIP Line for an amount of US$200 million for investment projects, with the purpose of facilitating access to credit to MSMEs (Micro, Small and Medium Enterprises) to contribute to their recovery, however, the previous Assembly did not take the file to study.

In Decree No. 20, dated may 25, 2021, the New Legislative Assembly empowered the Executive Branch of the Treasury to grant, on behalf of the State and Government of the Republic of El Salvador, the sovereign guarantee of the State for the loan that the Banco de Desarrollo de la República de El Salvador subscribes with the Inter-American Development Bank (IDB), for an amount of US$200 million.

The loan program, according to BANDESAL, does not represent a debt for the State, since they assure the payment of the debt with the repayment of the loan.

This loan program will be implemented through BANDESAL's intermediary financial institutions, that is to say, BANDESAL will administer the loan contract and will be able to channel the funds to the institutions so that they reach the end users.

All MSMEs may apply through the intermediary financial institutions. The conditions are very banking: credit record, payment capacity and collateral are taken into account. These are the three elements that will be taken into consideration.

Sustainable energy

The Guarantee Agreement, signed on april 15, 2021, by BANDESAL and on April 23, 2021 by the European Investment Bank (EIB), for an amount of US$40 million to finance the operation "BANDESAL Sustainable Energy and SMEs COVID-19", was endorsed.

On june 8, 2021, the deputies of the Legislative Assembly authorized the Executive Branch the sovereign guarantee of the State for the US$40 million loan to be subscribed by Banco de Desarrollo de El Salvador (BANDESAL) with the European Investment Bank (EIB), to finance the operation "BANDESAL Energía Sostenible y PYMES COVID-19".

The credit approved by the EIB requires the sovereign guarantee of the State, which will not be a direct obligation nor will it commit the State's budget; rather, the debtor will be BANDESAL, which will pay with the recovery of the loans it will grant to the entrepreneurs, they said.

BANDESAL started to manage the credit in april last year -during the pandemic- and will use $20 million to support small and medium-sized enterprises to reactivate their economic activities under favorable conditions. The other half of the money will be used to finance energy efficiency and renewable energy projects.

These funds will be provided by the bank in the form of direct loans to enable entrepreneurs to acquire, renovate, or expand tangible assets; purchase land essential for their investments or assets other than real estate.

For energy efficiency and renewable energy projects, the credits granted by BANDESAL will be used to acquire the raw material to be used for the production of heat or electricity with biogas.