PARAGUAYAN PRODUCTIVE CREDIT GUARANTY PROGRAM : OPERATIONS REVIEW

This Special Evaluation, which is attached to a PES (PD-AAH-215-A1), covers the period 10/1/78-12/31/79 and was based on interviews, site visits, and a review of files. The growth of the Productive Credit Guaranty Project (PCGP) has surpassed expectations. In a portfolio of $9.9 million, 534 loans were executed. The PCGP has generated credit to SE"s and the partial guaranty and related incentives have attracted lenders. The Central Bank of Paraguay (CBP), the in-country administrator, has initiated program operations and start-up activities, but has not fulfilled its obligations which include preparing accurate data relative to the borrower eligibility, drafting project feasibility studies, and technical assistance follow-up for borrowers. The remaining three PCGP groups, i.e., A.I.D., lenders, and borrowers, are performing well. While evidence to date is not conclusive, the 75% guarantee level has reduced risk and stimulated lending, while also maintaining lender interest in loan quality. Program implementation should be completed as designed. Specifically, program monitoring and CBP control of lenders and technicians should be strengthened, particularly CB recertification and evaluation of technicians. Also, CBP should prepare short- and long-term plans and conduct regular program assessments. Recordkeeping, reporting, and communication between participants should be improved. A.I.D. should consider adopting a 3- or 4-component model if the technician and in-country administrator roles are not improved to support the monitoring and control functions. If, however, Paraguayian participants cannot fulfill their responsibilities, A.I.D. should consider replacing the 5-component model with a 3- or 4-component model. Other recommedations include focusing borrower eligibilty requirements on the target borrower groups and increasing the pace of delegation.