IFC, the private sector arm of the World Bank Group, will provide a five-year local currency loan to Romania’s ProCredit Bank to expand its operations, promoting competition and improving access to finance for micro, small, and medium enterprises.

The US$15mn equivalent investment will be the second local currency loan offered by IFC in the Romanian market. As an internationally triple-A rated institution, IFC leverages its credit to provide customised local currency products to private sector clients.

Michael Kowalski, general manager of ProCredit Bank, says, “smaller businesses are critical for economic development in Romania, and they have proven to be dynamic and reliable partners. The IFC loan should trigger further growth in our loan portfolio and increase access to finance for many more very small and small entrepreneurs.”

Ana Maria Mihaescu, IFC chief of mission in Romania, adds, “IFC’s innovative initiative to provide long-term funding in local currency to Romanian banks will help them better match the maturities of their assets and liabilities. The lack of such financing has meant that borrowers, particularly smaller businesses, have had difficulty obtaining financing or received foreign currency loans at their own currency risk. Borrowing in a currency different from that of one’s revenues is ultimately a risk.

Therefore, firms are prudent to concentrate on their core businesses and not take on currency bets.”