AG CREDIT

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The Agricultural Sector Credit Project for Colombia will help the government adjust the provision of agricultural credit to a market-based framework. Specifically, it will support the government's actions to: (a) implement the agreed program of financial and trade reforms; (b) promote, encourage and facilitate voluntary lending by commercial banks to the agricultural sector without incurring a significant decline in lending resources; (c) monitor and analyze agricultural credit demand and supply, and recommend measures to ensure a smooth transition to market-based credit system, including the phasing out of forced investments; and (d) transform Caja Agraria, the largest bank serving the rural sector, into an efficient rural financial institution. The project will provide US$250 million of loan funds to the Fund for Financing the Agricultural Sector to be used to rediscount medium- and long-term loans to finance on-farm investments, agroindustry and related working capital. The project will also help ensure the implementation of Caja Agraria's Corporate Plan aimed at restructuring, rationalizing and recapitalizing the institution.