To cover senior unsecured loan. Project ID: 14996 (MIGA-14996)

  • Paraguay
Geographic location where the impacts of the investment may be experienced.
Specific Location
not applicable
Whenever identified, the area within countries where the impacts of the investment may be experienced. Exact locations of projects may not be identified fully or at all in project documents. Please review updated project documents and community-led assessments.
Financial Institutions
  • Multilateral Investment Guarantee Agency (MIGA)
International, regional and national development finance institutions. Many of these banks have a public interest mission, such as poverty reduction.
Project Status
Stage of the project cycle. Stages vary by development bank and can include: pending, approval, implementation, and closed or completed.
Bank Risk Rating
Environmental and social categorization assessed by the development bank as a measure of the planned project’s environmental and social impacts. A higher risk rating may require more due diligence to limit or avoid harm to people and the environment. For example, "A" or "B" are risk categories where "A" represents the highest amount of risk. Results will include projects that specifically recorded a rating, all other projects are marked ‘U’ for "Undisclosed."
Voting Date
Jun 16, 2022
Date when project documentation and funding is reviewed by the Board for consideration and approval. Some development banks will state a "board date" or "decision date." When funding approval is obtained, the legal documents are accepted and signed, the implementation phase begins.
Agencia Financiera de Desarrollo
A public entity (government or state-owned) provided with funds or financial support to manage and/or implement a project.
  • Finance
The service or industry focus of the investment. A project can have several sectors.
Investment Type(s)
Guarantee, Loan
The categories of the bank investment: loan, grant, guarantee, technical assistance, advisory services, equity and fund.
Investment Amount (USD)
$ 143.00 million
Value listed on project documents at time of disclosure. If necessary, this amount is converted to USD ($) on the date of disclosure. Please review updated project documents for more information.
Project Cost (USD)
$ 143.00 million
Value listed on project documents at time of disclosure. If necessary, this amount is converted to USD ($) on the date of disclosure. Please review updated project documents for more information.
Primary Source

Original disclosure @ MIGA website

Updated in EWS Jun 23, 2022

Disclosed by Bank May 13, 2022

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Project Description
If provided by the financial institution, the Early Warning System Team writes a short summary describing the purported development objective of the project and project components. Review the complete project documentation for a detailed description.


This summary covers an application by Agencia Financiera de Desarrollo (AFD) to cover senior unsecured loan(s) to be provided to AFD byCitibank N.A. or any of its affiliates and other lenders yet-to-be identified.

MIGA's coverage has been sought in relation to a Non-Honoring of Sovereign Financial Obligations by a State-Owned Enterprise guarantee for a US dollar debt financing structure of up to US$ 143 million with a tenor of up to 7 years.

AFD is agovernment-controlled financial institution that operates as Paraguay's only second-floor bank, providing long-term financing tointermediary financial institutions (IFIs), including banks, cooperatives and finance institutions, for on-lending to the Paraguayan economy.

In the face of the COVID-19 economic recovery, AFD played a vital countercyclical role to support critical sectors of the Paraguayan economy.The MIGA guaranteed loan(s) will be used by AFDto fund sixteen product lines aimed at supporting key sectorssuch as the Micro, Small, and Medium Enterprises (MSMEs), housing, manufacturing, agricultural or construction sectors, thereby contributing to the overall economic growth and development in Paraguay.


AFD provides financing to support retail loans, MSMEs loans as well as corporate lending in Paraguay, through IFIs. For this project, the MIGA guarantee will target lending across sixteen AFD programs covering retail and MSME loans. The E&S risks and impacts associated with retail loans are considered minimal and the risks and impacts associated with MSME loans are typically limited. The project portfolio is thus considered medium risk and the project has been categorized as FI-2 under MIGA's Policy on Environmental and Social (E&S) Sustainability (2013).

The main E&S risks of this project relate to AFD's ability to identify, assess, and manage the E&S risks and impacts associated with its lending activities (through IFIs) and the management of labor matters. MIGA analyzed AFD's portfolio for types of transactions, tenor, size, industry sectors, and exposure to MIGA's Exclusion List. MIGA also analyzed AFD's E&S risk management procedures in line with the requirements of Performance Standard 1: Assessment and Management of Environmental and Social Risks and Impacts (PS1), and AFD's labor practices in line with the requirements of Performance Standard 2: Labor and Working Conditions (PS2). The applicable E&S requirements for this project will be: (i) MIGA Exclusion List and (ii) applicable E&S laws and regulations in Paraguay.

As of December 2021, loans to individuals (mortgages and education loans) represented 36.5% of AFD's portfolio, with loans to SMEs and corporates representing approximately 38.2%. Other kinds of loans include micro loans (0.5%), bonds (5.4%), and credit lines to IFIs (19.4%). The sectors supported include agriculture, industrial production, construction, commerce, and services. AFD has no exposures to activities on the MIGA Exclusion List.

AFD has an E&S management system (ESMS) and an E&S team responsible for the implementation of the E&S risk management procedures. AFD's ESMS sets out AFD's E&S requirements (including AFD's exclusion list which incorporates MIGA's Exclusion List) for its product lines and a detailed procedure for identifying and assessing the E&S risks and impacts associated with its lending activities through IFIs. The procedure includes a screening process for IFIs, including compliance with local labor laws as assessed by the Superintendency of Banks of the Central Bank of Paraguay, and an assessment of each IFI's ability to assess E&S risks and impacts in line with AFD's E&S requirements. AFD also has a monitoring process to assess the IFIs' compliance with its requirements. IFIs are required develop and implement E&S management systems suitable to requirements of the AFD products they cover. To meet the requirements of the MIGA project, AFD will be required to incorporate MIGA's E&S requirements - MIGA Exclusion List and applicable host country E&S laws - as applicable to the specific programs under this project, into its E&S process.

AFD's emergency response procedures are in line with the requirements of PS1. In response to the COVID-19 pandemic, AFD implemented physical-distancing and hygiene measures to minimize the risk of exposure for employees and clients.

AFD's labor policies and procedures are compliant with the requirements of PS2. Amongst other aspects, AFD's has labor policies and procedures that address terms of employment, recruitment, renumeration, and benefits, grievance management, training, and occupational health and safety.

AFD will be required to report periodically to MIGA on the implementation of the ESMS.


The Project aims to support the resurgence of economic activity and growth in Paraguay, through increased access to finance across sixteen financing programs targeting main sectors like housing, agriculture, industrial, services and construction. As a second-floor bank, AFD is expected to provide liquidity at attractive rates to promote inclusive access to financial services to the Paraguayan population.Access to finance remains limited in Paraguay with only 31% of adults having an active account in a financial institution and only 7% of adults having an outstanding housing or business loan. Women and bottom of the pyramid populations have even more restricted access to finance. Only 23% of adults in the bottom 40% (B40) and 29% of adult women have an account in a financial institution, while merely 4% of them have an outstanding housing or business loan. With some of AFD's product lines targeting low-income households and informal microentrepreneurs, the Project will promote an inclusive business model for underserved groups.

Given this is AFD's first commercial long-term financing without a government guarantee, the successful implementation of the Project could serve as a track record to continue attracting new sources of financing, supporting the diversification of its funding base and promoting more competitive pricing.

The Project is consistent with the WBG FY19-23 Country Partnership Framework for Paraguay under its focus area of "Promoting Accountable Institutions and Improving the Business Climate", since it will support the on-lending activities of commercial banks to increase access to finance for MSMEs and corporates, as well as to support the provision of housing for the low and middle-income population across Paraguay. The proposed Project is aligned with MIGA's FY21-23 Strategic Business Outlook under its strategic directions of responding to the COVID-19 crisis by supporting the economic recovery and investments across the private sector aimed at building long-term resilience.

Investment Description
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