Austria-based intergovernmental development finance institution, OPEC Fund for International Development (OFID) has signed a $30 million term loan agreement with Banco Regional of Paraguay for on-lending to small-and-medium-sized enterprises (SMEs), particularly agribusinesses.
Agribusiness is a key economic driver of Paraguay’s economy and food exports are the main source of the country’s foreign currency. The agricultural sector was severely affected by the recession as a result of the COVID-19 pandemic.
The sector is composed primarily of agro-related SMEs, generating over 80 percent of employment. According to the statement, the loan will assist Banco Regional in meeting the SME’s cash needs as a result of business interruption due to the partial COVID-19 closure.
Banco Regional is one of the leading financial institutions in Paraguay, with a strong focus on lending to agribusiness, representing around half of the bank’s portfolio.
“Building on our strong partnership with Banco Regional, we will provide access to finance for small and medium-sized businesses, particularly in agribusiness, a vital sector for Paraguay’s economy. This will help to increase Paraguay’s links to global value chains, support exporting SMEs, and protect employment in related industries. This loan is well aligned with several of the United Nations’ Sustainable Development Goals (SDGs) – SDG 1: No poverty; SDG 2: Zero hunger; SDG 3; and SDG 8: Decent work and economic growth.”
This is the third facility the OPEC Fund has extended to Banco Paraguay. The proceeds from the first loan were used to on-lend to 36 sub-borrowers in the agricultural sector. “The second facility provided 53 sub-loans to Paraguayan enterprises for international trade finance purposes, pre-export finance of cash crops and import of agricultural supplies and machinery,” as per the reports.