The loan will benefit more than 1,000 producers by providing access to co-financing for enhancing trade capacity.
A press release by Inter-American Development Bank (IDB) states:
The Inter-American Development Bank (IDB) has approved a loan of U.S. $30 million to El Salvador for the program of Development Support Production for International Integration, which will increase the ability of micro, small and medium enterprises (MSMEs) to participate in national, regional and global value chains.
The country aims to increase its exports to 530 products by 2014.
The new goal is part of an export strategy set by the Government which seeks to replace the current subsidy of 6% (Drawback) for foreign sales.
Capitales.com reports, "Authorities have also set other goals mostly related to increasing the number of export destinations from 52 to 60 and increase the number of exporters with sales greater than $500,000 from 428 in 2008 to 540 in 2014."
Exporters are concerned that the government's $175 million investment in the sector will not make up for the loss of incentives.
El Salvador's Corporation of Exporting Companies, known as COEXPORT, believes the impact on the export sector of the $175 million government investment plan will be minimal.
Francisco Bolaños, president of COEXPORT, told Laprensagrafica.com that, "according to our calculations, the employment bonus will cover around 4,000 jobs while job losses are in the region of 28,000. This is an example of where the budget falls short. Let's remember that the main aim is to create jobs and this is why much more is needed".
The government presented its "National Export Strategy" in which it plans to invest $175 million during its five year mandate.
The funds come from the national budget in addition to a $40 million loan from the Inter-American Development Bank (IDB), commented the Secretariat to the Presidency.
The presentation made no mention of how much the annual investment will be.
The export sector registered a 15% fall between January and April and continues to have difficulties in getting financing.
Medium and small sized businesses are the most affected, according to the Executive Director of the Corporation of Exporters of El Salvador (Coexport acronym in Spanish), Silvia Cuellar.
Patricia Palma writes for Elsalvador.com: “The President of the Central Reserve Bank (BCR acronym in Spanish), Carlos Acevedo, also pointed out the difficulties being experienced by those companies ‘that aren’t big enough to access credit from comercial banks, nor are they small enough to recieve the support of the Mortgage Bank.’ In order to meet thier needs, the Central Bank is working to create a system of guarantees that work ‘like a type of cosigner,’ explained Acevedo,…”