IFC provides $130 million to Banco Galicia to promote access to finance for SMEs and sustainable energy projects in Argentina
IFC, a member of the World Bank Group, will provide $130 million to Banco Galicia to expand the bank’s long-term lending to small and medium enterprises (SMEs) and to develop a new program to finance sustainable energy projects in Argentina. Banco Galicia is a leading source of financing for SMEs in Argentina. Currently, it supports more than 70,000 SMEs, including in the agribusiness sector.
IFC’s financing package consists of a five-year tranche to expand access to long-term finance for SMEs in Argentina, mainly in the agribusiness sector; and a seven-year tranche to support sustainable energy projects. Long-term funds are important to fund capital expenditure and capacity expansion programs for SMEs. An active SME sector is important for job creation and to ensure a dynamic supply chain production system. Similarly, fostering investments in clean energy sources, including solar, wind, biomass and geothermal sources, as well as energy efficiency and water efficiency projects promote better use of resources and reduction of greenhouse gas emissions compared to traditional sources.
While still in its early days, sustainable energy financing has significant potential in Argentina. The country is blessed with unique wind and solar resources, and a grid structure which allows to take advantage of them. In addition, the energy sector in Argentina is undergoing a process of extensive reform, with substantial investment expected over the next few years. IFC’s new financing comes at a time when Argentina is positioning to resume its path of economic growth, and expects an expansion of the financial sector through the resumption of long-term lending and ensuing investments in the real sector.
“IFC’s investment in Banco Galicia will help strengthen our leadership position in the Argentine financial system, by restarting lending to SMEs at longer tenors in Argentina, particularly in the agribusiness sector, which is an essential engine of economic growth in the country. Galicia is also excited to contribute to the development of sustainable energy sources, a strategic sector for the Argentine economy,” said Fabián Kon, CEO of Banco Galicia.
“Working with financial institutions such as Banco Galicia is essential to IFC’s strategy of promoting economic growth in Argentina. Banco Galicia, a leader in Argentina’s financial sector, has demonstrated a commitment to sustainability and innovation. IFC looks forward to strengthening its long-term partnership with Banco Galicia by helping the bank continue serving productive sectors in the Argentine economy,” said Salem Rohana, IFC Country Manager for Argentina, Chile, Paraguay and Uruguay.
In Argentina, IFC has committed over $1.6 billion in sustainable private sector projects over the past twelve months, becoming the largest international source of financing to the country’s private sector during this period. IFC’s strategy in Argentina is focused on financing projects with significant development impact for spurring economic growth, innovation and job creation. Priority sectors include agribusiness, infrastructure and renewable energy; competitive manufacturing; strengthening long-term financing for companies, including small and medium enterprises (SMEs); and helping improve investment climate for business start-ups and SME growth.