After the earthquake in Haiti on January 12th 2010 the IDB, along with the US-Treasury Department and the IDA, have worked with the Haitian government (“GOH”) and the Banque de la République D’Haïti(Central Bank of Haiti) representatives to develop a partial credit guarantee (“PCG”) scheme to re-start the banking system. These efforts have two pillars:
The first pillar is designed to: (i) support restructured loans by issuing PCGs; (ii) have a public governance structure, (iii) have a limited life of approximately 5 years; and (iii) will transfer the remaining funds, as the amounts guaranteed expire, to the Second Pillar. It is subdivided into two sub-funds: one to attend to smaller firms, and the other directed at larger firms.
The second pillar : (i) will provide PCGs to new loans, helping to finance new investments; (ii) be sustainable; and (iii) have private governance.
Tthe first pillar of the PCGP is now operational and being managed by the FDI, which will receive restructuring sub-loan applications from eligible commercial banks in Haiti. The first Pillar of the Program has two components according to the borrower’s loan size to be restructured: (i) small credits (lower than 1 million dollars); and (ii) larger loans with an outstanding debt larger than 1 million dollars.
The IDB, the IDA and the Haiti Reconstruction Fund (HRF) provide grant resources to fund the operation of the first component of the First Pillar of the PCGP, which is designed tol support the restructuring of viable small loans affected by the earthquake.
The restructuring of loans is expected to have positive social impacts as it will contribute to the reestablishment and enhancement of the operation of micro, small and medium enterprises (SMEs). At the same time, it is expected that guarantees granted through the Program fully comply with the environmental, social, health, safety, and labor (such terms together defined as “Environment and Social”) requirements of the IDB and The World Bank Group, as well as applicable Haitian laws (including Environmental and Social Laws) and regulations.
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The second pillar of the PCGF is likely to be financed by a separate IDB operation, and is not covered by this ESMS.