THE HAGUE, 16-Jan-2018 — /EuropaWire/ — Banco Comafi has received a US$20 million investment from the Dutch development bank FMO to support Argentina’s new business sector in line with pro-market reforms implemented by the country’s elected government.
The bank is the first Argentinian lender to get FMO’s backing. It is expected to use the loan to improve its balance sheet as well as assist the working capital needs of micro and small-to-medium sized enterprises (MSMEs). Its partner firms will also receive long-term financing in both US dollars and local currency. Around half of the facilities are denominated in Argentine pesos.
Pablo Pochat, the financial director for the bank, told Development Finance: “For some time, Comafi has focused on the SME segment, to which we assign an increasingly relevant role in the economic growth of Argentina, and for which our institution has developed significant comparative advantages, such as personalised attention, proximity and specific credit lines, this financing will be applied precisely to strengthen and promote this business strategy.”
After winning midterm elections in October last year, the ruling party of Argentina, led by President Mauricio Macri, aims to roll out a tax bill that could lift the financial burden on corporates and bring the tax code closer to international standards. In the third quarter of 2017, the Organisation for Economic Cooperation and Development (OECD)revised its growth forecast for the country up to 2.9 percent. The organisation cited structural reforms on tax among the reasons for its revision.
The World Bank states that as recently as 2016, domestic credit to the private sector was only 14 percent of gross domestic product in Argentina, one of the lowest proportions of any economy in Latin America. According to the GPS of Argentinian Enterprises, a digital data platform run by Argentina’s ministry of production, of more than 600,000 active companies in the country, 99 percent are micro and small-to-medium sized enterprises. These firms generate around four million jobs for people in the transport sector as well as commerce, food, hospitality and gastronomy.
Huib-Jan de Ruijter, director of financial institutions of the FMO, called Argentina “a country that requires a significant increase in private investment”, adding: “This loan will allow Banco Comafi to continue growing in the SME segment and provide much needed long-term finance for its clients, thereby supporting job creation and economic and social development.”
Pochat said: “It strengthens our financial structure and supports our strategy of accompanying the growth of our customers in the MSME segment.”
Source: development finance
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