Challenges of Public Credit Guarantee Schemes in Latin America during the Pandemic

Partial credit guarantees have been a central tool in countries’ strategies to support firmsthrough the COVID-19 pandemic. This paper presents the results of a set of surveys covering 19 partial creditguarantees in 12 countries in the Latin America region, which were repeated at different stages of the pandemiccrisis. The paper finds that most partial credit guarantees in the region are not large enough to foster change in theway the local financial sectors conduct business, how they engage with small and medium-size enterprises, and how theyassimilate climate and gender considerations. Moreover, the response to the pandemic shows that most partial creditguarantees in the region have made limited use of the toolkit of parametric changes for boosting participationamong financial institutions. Finally, the paper stresses the need for fair pricing methodologies and risk-basedcapital adequacy that may ensure the long-term sustainability of partial credit guarantee schemes.