Council of Ministers approves credit guarantee system
On the 30th of May the Council of Ministers adopted a Decree-Law approving the Credit Guarantee Scheme for Small and Medium-Sized Timorese Enterprises (SMEs). The scheme was proposed by the Prime Minister and the Minister of State Coordinator of Economic Affairs.
Developed as a public programme to support Timorese SMEs, the initiative involves the sharing of credit risk with commercial banks. The State, will be able to grant a guarantee which covers up to 70% of loans, in order to meet legal requirements. This credit guarantee scheme will be regulated and enforced by the Central Bank of Timor-Leste, which participated actively in the development of the scheme. Applications for the granting of a guarantee will be carefully assessed by the Central Bank to minimize risk to the State.
By establishing the scheme the Government is responding to the challenges that SMEs face when presenting guarantees to banks and seeking to facilitate their access commercial loans under favourable market conditions. The scheme will help to make Timorese businesses more competitive, promote private sector development and support job creation.
