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USAID and the Kosovo government have agreed a development deal for the agricultural sector, which has been struggling with high-interest loans.
The United States and Kosovo on Thursday signed a groundbreaking agricultural development credit scheme worth over €20 million euro.
The program is to provide loan guarantees to six Kosovo banks to issue loans to farmers and agricultural businesses, increasing lending to a sector that is constrained by lack of access to credit.
Kosovo’s Minister of Agriculture, Blerand Stavileci, said the funds will improve the way such businesses were treated by the banks, which have imposed high interest rates on loans.
“Farmers are discouraged by such a difficult credit approach and by high interest rates, which are difficult to handle and have limited the investment potential in agriculture,” the minister said.
The percentage of agricultural credit lines, compared to the overall loans portfolio in 2011, was only 3.6 per cent, or €40 million.
According to the Ministry of Agriculture, the average yearly interest rates on loans to farmers has been as high as 22 or 25 per cent.
USAID’s Kosovo Mission Director, Maureen Shauket, said that the new loan programme was a milestone for Kosovo and for the mission.
“This marks the first time in USAID history that a host country government is funding a loan guarantee program in partnership with USAID... This demonstrates the collaborative and mutually supportive relationship that exists between our two governments,” she said.
The loan portfolio agreement will guarantee 50 per cent of the disbursed credit with a five-year grace period through Raiffeisen Bank, Procredit Bank, National Trade Bank, Kosovo’s Economy Bank, Turkish Economic Bank and Nova Ljubljanska Banka Prishtina.
To keep its reform policy credible for investors, the government must find common ground with the IMF and look for a new arrangement, experts say.