Belgrade - On Monday, May 13, 2019, the United States Agency for International Development (USAID) Assistant Administrator for Europe and Eurasia, Brock Bierman, and the Minister of Agriculture, Forestry and Water Management Branislav Nedimović signed an Agreement for Cooperation towards establishing a joint loan portfolio guarantee with commercial banks. By covering up to 60 percent of associated losses, the new guarantee will incentivize banks to provide up to $50 million in finance for small and medium sized enterprises in Serbia’s agricultural sector. The program will help Serbian firms access financing to grow, innovate, and create new jobs.

“USAID has used its Development Credit Authority tool throughout the world to solve lending challenges, using United States government resources to insure against potential losses,” said Mr. Bierman. “However, today is unique. The Government of Serbia, through the Ministry of Agriculture, is sharing the risks with USAID by providing $1 million of its own resources to serve as a first-loss guarantee. By doing so, Serbia is demonstrating its commitment to mobilize its own resources to solve development challenges. I applaud the government and the ministry for this.”

USAID’s Development Credit Authority is an innovative tool that uses risk-sharing agreements to mobilize local private capital to fill financing gaps. Under the agreement, the Ministry of Agriculture, Forestry and Water Management as the first-loss guarantor, will provide 60% of that claim until the $1 million they have committed to the program is exhausted. The United States Government will then provide 60% of any other claims submitted as a part of the program. The guarantee with commercial banks is expected to be signed by July 2019.

Complementing the loan guarantee, USAID’s Competitive Economy Project (CEP) will provide technical assistance to businesses and activities, helping them meet the necessary standards to access the available financing.