Credit guarantee schemes – a response from the National Guarantee System of Ecuador

Abstract

In an earlier article 'Credit guarantee funds and mutual guarantee systems', in Volume 4 Number 2 of SED, Jacob Levitsky commented that for credit guarantee schemes in Latin America, '… in no way does the guarantee organization contribute to an improvement in the attitude or ability of the debtor as regards to the repayment of loans and the use of the finance being borrowed'.The author of the following article responds in this way:'The observations [by Jake Levitsky] were limited:○ to guarantee schemes financed by governments;○ to guarantee organizations which do not undertake any real independent credit appraisal analysis; and○ to centralized guarantee mechanisms.There are, in fact, a number of well-functioning guarantee schemes, among them the National Guarantee System of Ecuador (SNGC).' In the following article an attempt has been made to give a more complete picture of the success of guarantee schemes, by describing the functioning of the SNGC, its focus, source of funding, structures and procedures. The article compares SNGC with the criteria for success described by Levitsky; it points to the problems still facing SNGC and makes some suggestions about how they may be overcome.