The Inter-American Development Bank (IDB) has approved a $58 million loan to support production recovery in Argentina’s San Juan Province following the impact of COVID-19. The loan will provide productive financing for the recovery and sustainability of micro, small, and medium-sized enterprises (MSMEs) that generate employment in the province.
Photo: IFAD/Carla Francescutti
The project will benefit MSMEs in sectors targeted by the San Juan 2030 Strategic Plan, including agriculture, industry, commerce, research/development/innovation (R+D+I), construction, tourism, renewable energies, knowledge economy, services, and logistics.
The loan will be channeled through eligible intermediary financial institutions by means of a competitive auction mechanism. This will ensure that at least 25 percent of the portfolio will be earmarked for women-led or women-owned companies, and at least 15 percent will be used for green investments contributing to climate change mitigation or adaptation.
The IDB will also provide non-financial support to boost the ability of the province’s MSMEs to access productive financing, including technical assistance to the Agencia San Juan de Desarrollo de Inversiones (San Juan Investment Development Agency), as well as nonreimbursable contributions to beneficiary MSMEs.
Technical assistance will include diagnostic assessments and projects with priority supply chains to help identify actions in support of beneficiary MSMEs; action plans to close the gaps in financing and digitalization of businesses that have been identified in diagnostic assessments (especially those related to the gender gap); and implementing a monitoring system to track the use of loans issued for green investments.
Nonreimbursable contributions will target beneficiary MSMEs or associated groups to execute projects identified in implemented studies, including actions to bridge the gender gap, promote green investments, and foster the digitalization of businesses.
This operation is in line with the priorities of the IDB’s Vision 2025 , an agenda to promote economic recovery and inclusive growth of Latin America and the Caribbean in the areas of MSMEs digitalization, climate change, gender and inclusion, and regional integration.
The IDB’s $58 million loan is for a 25-year term with a 5.5-year grace period and an interest rate based on LIBOR. The government of Argentina will provide an additional $10 million in local counterpart funding.
This article was originally published by the IDB.