In August 2024, in a strategic move to enhance economic growth and stability in the Dominican Republic, the U.S. International Development Finance Corporation (DFC), in collaboration with USAID, has announced a $42 million portfolio guaranty for Banreservas, the largest bank in the country. This initiative aims to increase small business lending, particularly targeting women-owned MSMEs and green loans.
Portfolio Guaranty: Targeting Critical Needs
The guaranty is designed to address urgent lending needs in the Dominican Republic, focusing on women micro-entrepreneurs in the Southwest corridor and environmentally sustainable projects. By covering up to 70% of Banreservas’ losses for these high-risk loans, DFC aims to reduce the perceived risk and encourage more robust lending practices.
“The partnership with Banreservas signifies our commitment to fostering inclusive economic growth and addressing financial disparities,” said DFC CEO Scott Nathan. “This guaranty will empower small businesses and support sustainable development in the Dominican Republic.”
Portfolio Guaranty: Empowering Women and Promoting Sustainability
With nearly a quarter of the Dominican population living below the poverty line, and women owning fewer than 5% of MSMEs, this initiative is crucial. The guaranty is expected to support loans to approximately 3,500 MSMEs, with an average loan size of under $5,000, significantly impacting women entrepreneurs and promoting green initiatives.
Banreservas’ President, Samuel Pereyra, emphasized the importance of this support: “The DFC guaranty enhances our ability to extend credit to underserved sectors, particularly women-owned businesses and environmentally sustainable projects.”
Portfolio Guaranty: Advancing Regional Integration and Economic Prosperity
The portfolio guaranty aligns with the goals of the Americas Partnership for Economic Prosperity (APEP), announced by President Biden in 2022, to tackle economic inequality and foster regional economic integration. This initiative, part of several measures unveiled during the inaugural APEP Leaders’ Summit, highlights the collaborative efforts between DFC, USAID, and regional stakeholders to mobilize quality investments and boost regional competitiveness.
Portfolio Guaranty: Long-term Impact and Global Partnerships
The guaranty is expected to catalyze significant economic growth by enabling Banreservas to expand its microfinance portfolio and support MSMEs, driving innovation, job creation, and sustainable practices. Additionally, the initiative underscores the importance of international cooperation in addressing local economic challenges.
This partnership sets a precedent for future collaborations between international financial institutions and local banks, demonstrating the potential of leveraging global partnerships to achieve sustainable economic development.
Conclusion
The $42 million portfolio guaranty by DFC for Banreservas marks a significant step towards economic resilience and inclusive growth in the Dominican Republic. By empowering small businesses and promoting sustainable development, this initiative not only addresses immediate financial challenges but also paves the way for long-term economic stability and prosperity.
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For more information, visit DFC’s investment story.
