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CDB provides $300 million loan to the Bank of the Lao PDR for on-lending to small- and medium-sized enterprises
| Funder | China Development Bank (CDB) |
|---|---|
| Recipient Organization | Bank of the Lao P.D.R. |
| Country | Lao People's Democratic Republic |
| Start Date | Jul 10, 2019 |
| End Date | Feb 25, 2033 |
| Duration | 4,979 days |
| Number of Grantees | 1 |
| Roles | Recipient |
| Data Source | AidData Chinese Aid |
| Grant ID | 64201 |
Grant Description
CDB provides $300 million loan to the Bank of the Lao PDR for on-lending to small- and medium-sized enterprises On November 13, 2017, the Bank of the Lao PDR (BOL) and China Development Bank (CDB) signed a financial cooperation agreement (MOU) to support the small- and medium-sized enterprises (SMEs) in Laos.
Then, on July 10, 2019, the BOL and the CDB signed a $300 million loan agreement. The loan was scheduled for disbursement in three separate $100 million tranches.
The proceeds of the loan were to be used by the borrower to on-lend to 12 commercial banks, which will in turn on-lend to SMEs in Laos (with special emphasis on those SMEs that are engaged in agricultural production and supply regional markets).
However, according to the World Bank, several ‘unrealistic conditions’ (related to SME eligibility and SME business plans) prevented a quick release of the first tranche of the loan.
In December 2019, Governor of the BOL Sonexay Sithphaxay said that “[w]e are collecting information about the readiness of the banks involved in the initiative on SME funding before submitting a request to the CDB for the withdrawal of the first tranche of $100 million at the end of this year.’ Six months later, in June 2020, the World Bank reported that the BOL was seeking to renegotiate its loan agreement with CDB.
Staff Comments
- The borrowing terms of the CDB loan are unknown. This issue merits further investigation.
- This $300 million CDB loan is not included in the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020.
Sources & References
- 国开行与老挝合作方签署相关协议
- BOL and CDB sign MOU on Financial Cooperation to promote the development of SMEs in Lao PDR
- Chinese 300 million USD loan support the development of small and medium-sized enterprises in Laos
- Lao gov’t set to inject US$300 million to help SMEs
- China boosts SME promotion with US$300 million in finance
- SMEs to access finance via Laos-China cooperation scheme
- 国开行与老挝合作方签署相关协议
- Laos’ central bank set to use $300M Chinese loans for SME financing
- Laos’ central bank set to use $300M Chinese loans for SME financing
- Lao-PDR-Economic-Monitor-Lao-PDR-in-the-Time-of-COVID-19-Thematic-Section-Building-a-Resilient-Health-System
- Lao_PDR_National_Report_2021
- Ten Lao banks to seek loan for promotion of SMEs Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.
All Grantees
Bank of the Lao P.D.R.
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