Govt Offers Working Capital Loan Guarantees for MSMEs

TEMPO.CO, Jakarta - The government has launched a program providing working capital credit guarantees for Micro, Small and Medium Enterprises (MSMEs), as an effort to expedite economic recovery. The Finance Ministry assigned Jamkrindo and Askrindo to act as guarantors of MSMEs' working capital loans from banks.

"MSMEs are the main priority in restoring the national economy. After MSMEs that are affected by Covid-19 were given flexibilities to restructure their debts, the government sees that providing them with working capital is highly necessary," Coordinating Minister for Economic Affairs Airlangga Hartarto said in his online speech, Tuesday, July 7.  

Airlangga said the Finance Ministry has also allocated funds for payment of compensation services, underwriting guarantees, loss limits, and other required risk-sharing support. The government has also allocated a guarantee reserve fund and a guaranteed service fee budget from the state budget.

Meanwhile, banks as the lender are implementing prudential principles against default risks. This is where credit guarantees become important, and why the government will provide it. 

"Therefore, both Jamkrindo and Askrindo are expected to actively run the program so that banks can provide the loans," AIrlangga said. 

The government allocates Rp695.20 trillion for Covid-19 relief, comprising of Rp87.55 trillion for medical efforts and Rp607.65 trillion for the national economic recovery program (PEN).        

Read: Over 300,000 MSMEs Go Digital amid COVID-19 Pandemic

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