Salvadoran deputies grant State sovereign guarantee to the Executive for a loan for SMEs and renewable energy projects

This Legislative Assembly release was published using machine translation.

With 76 votes in favor, the deputies of the Legislative Assembly authorized the Executive Branch the sovereign guarantee of the State for the loan of $ 40 million that the Development Bank of El Salvador (BANDESAL) will subscribe 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 or compromise its budget, but the debtor will be BANDESAL, which will pay with the recovery of the loans that it will grant to the entrepreneurs.

BANDESAL began managing credit in April last year -during the pandemic- and will use $ 20 million to support small and medium-sized companies to reactivate their economic activities under favorable conditions. The other half of the money will go to finance energy efficiency and renewable energy projects.

These funds will be delivered by the bank through direct credits so that entrepreneurs can acquire, renew or expand material assets; buy essential land for your 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 that will be used for the production of heat or electricity with biogas.

The beneficiaries of this line of credit will have 10 years to pay, with an interest of 3%.

This will be the first financial operation to be carried out by the European Investment Bank in Latin America, in 2021, and the first to be carried out, in three years, in Central America.

The deputy for New Ideas, Giovanny Zaldaña, highlighted that the EIB is one of the loan arms of the European Union and one of the largest providers of climate finance.

He added that the loans made by that bank are usually considered a quality seal that helps projects attract additional investment.

While the legislator Yanira Martínez pointed out that the renewable energy projects that will be financed with the $ 40 million loan will benefit El Salvador with the reduction of CO2; it will make energy cheaper, there will be less energy consumption and the environment will be protected.

"Applying these energies we will have a better quality of life; all this is for the benefit of the population," said the deputy.