Co-Financing Guarantee Scheme to support Tourism Recovery
July 14, 2022Latest News
To support the government’s policy on tourism recovery and growth of the sector, Credit Guarantee Corporation of Cambodia (CGCC) launched the Co-Financing Guarantee Scheme for Tourism (CFGS-TR) after approval by the Ministry of Economy and Finance.
CFGS-TR is specifically designed to provide credit guarantees on co-financing loans disbursed by CGCC’s Participating Financial Institutions (PFIs) under the Tourism Recovery Co-Financing Scheme (TRCS) of the SME Bank of Cambodia.
It is a joint effort by the two state-owned enterprises to improve access to finance for SMEs in the tourism sector. While TRCS aims to lower SMEs’ cost of borrowing, CFGS-TR is a guarantee scheme that will act as collateral/security for 80 percent of the loan amount; thus, reducing the physical collateral required from the borrowers.
CFGS-TR will support new loan disbursements in the banking sector to SMEs. Meanwhile, PFIs will be able to offer higher loans and the risk exposure will be shared with CGCC up to 80 percent.
According to a press release the Co-Financing Guarantee scheme – Tourism is a sub-credit guarantee scheme under the Co-Financing Guarantee scheme offered by the CGCC to participating financial institutions on the loans lent out under the Tourism Recovery Co-Financing schemes of SME Bank of Cambodia.
Hong Vannak, an economic researcher at the Royal Academy of Cambodia, said that the provision and receipt of a loan with legal guarantees have played an important role in the growth of the economy, particularly, in a crisis caused by Covid-19.
When the financial sector is stable, there is a lot of investment and job creation. On the other hand, when small and medium enterprises have sufficient capital, it also helps to increase production processes and reduce imports and increase exports, he added.
He further said that providing credit guarantees has helped both lenders and borrowers to have confidence in each other because before daring to guarantee, the CGCC always has conditions and studies the business first.
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