Tagatisprogramme

Tagatisprogramme refer to structured financial programs that provide guarantees to lenders on behalf of borrowers. These programs are typically offered by government agencies, development banks, or specialized financial institutions. The aim is to improve access to credit for individuals, small and medium-sized enterprises, exporters, or specific sectors by reducing perceived risk for lenders and enabling more favorable terms.

In operation, a borrower applies for a loan or credit facility. If the lender accepts the application, the tagatisprogramme provides a guarantee for part or all of the obligation. The borrower typically pays a fee or premium for the guarantee, and must meet program criteria. If the borrower defaults, the guarantor compensates the lender up to the guaranteed amount, after which the guarantor seeks recovery from the borrower according to the agreement.

Common types include full guarantees, partial guarantees, and first-loss guarantees. Guarantees may cover principal, interest, fees, or a combination, and can be contingent on conditions such as project viability, collateral, or environmental or social criteria. Eligibility criteria vary by program but often require demonstration of creditworthiness, a sound business plan, and alignment with policy goals such as job creation, export support, or energy efficiency.

Benefits include increased lending to underserved groups and improved loan terms, while risks involve potential costs to the guarantor and moral hazard. Tagatisprogramme are used worldwide to stimulate investment and economic activity, particularly during downturns or in riskier sectors. See also: loan guarantee, export credit agency, credit risk.