How Will Credit Guarantee Program Help Recovering the Economy?

Summary

The government unveiled a funding guarantee program for labor-intensive companies, as a part of the National Economic Recovery (PEN) program. The Coordinating Minister for Economic Affairs Airlangga Hartarto said that the guarantee facility was given to banks in order to increase the distribution of working capital loans to labor-intensive industries. "Banks have signed a guarantee agreement for industries that absorb many labors," he said, Wednesday (7/27).

The working capital credit guarantee runs through the Indonesian Export Financing Institution (LPEI) and PT Indonesia Infrastructure Guarantee Fund (PT PII), a special institution under the Ministry of Finance. LPEI and PII will guarantee loans with a ceiling of Rp 10 billion to Rp 1 trillion. Airlangga expects that the program can encourage the creation of working capital loans worth Rp 100 trillion until 2021.

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