MOLDOVA SME A2F GUARANTEE FACILITY (MAIB)

Promoter – Financial Intermediary

BC MOLDOVA AGROINDBANK SA

Location

• Moldova

Description

The facility, under Global Authorisation 2020-0043 (COVID-19 SME Access to Finance Initiative), will guarantee a portfolio of loans to micro, small and medium-sized Enterprises (MSMEs) in Moldova.

Additionality and Impact

The proposed partial portfolio guarantee (PPG) to BC Moldova Agroindbank SA (MAIB) will mitigate the credit risk of final beneficiaries, thereby contributing to improving access to finance for micro, small and medium enterprises (MSMEs) in the Republic of Moldova. MSMEs are the backbone of the Moldovan economy and account by far for most of the firms in the country. However, their added value and employment capacity are constrained, among other factors, by limited access to financial resources. Based on the 2019 Enterprise Survey jointly conducted by the European Investment Bank (EIB), European Bank for Reconstruction and Development (EBRD) and World Bank (WB), the share of credit-constrained firms is around 41.5%, somewhat higher than in other Eastern Partnership countries. Of these credit constrained firms, the vast majority (over 84%) were discouraged from even applying for a loan, indicating that a large share of firms runs the risk of becoming disconnected from the banking sector. The provision of adequate financing to MSMEs is hindered by market failures, namely externalities and information asymmetries. Moreover, the segment has been severely hit by the consequences of the war in Ukraine. The operation will help address these market shortfalls by mitigating the credit risk borne by the intermediary banks, thereby enabling them to lend to MSMEs at attractive terms and conditions. The operation is consistent with EU external policy objectives (in particular the overarching priority to foster jobs and sustainable and inclusive growth), country development objectives and will contribute to a number of Sustainable Development Goals (SDGs), most notably SDG8 (Decent Work and Economic Growth) and SDG10 (Reduced Inequalities).

Objectives

The aim is to mitigate the credit risk of the intermediary and enhance the beneficiaries access to loan finance at improved terms and conditions, especially reduced collateral requirements and/or lower financing costs. Consequently, the operation contributes to economic resilience and employment generating activities.

Sector(s)

• Credit lines - Credit lines

Proposed EIB finance (Approximate amount)

EUR 5 million

Total cost (Approximate amount)

EUR 44 million

Environmental aspects

The EIB will require that implementation of the project will be done in line with the principles of EU environmental legislation and EIB Environmental and Social Standards.

Procurement

The EIB will require that implementation of the project will be done in accordance with the EIB's Guide to Procurement.

Status

Signed - 5/04/2024