Access to finance, particularly credit,is widely recognized as problematic for small and mediumenterprises (SMEs), hampering their growth and development.To address this challenge, many governments around the worldintervene in SME credit markets through credit guaranteeschemes (CGSs). A CGS offers risk mitigation to lenders bytaking a share of the lenders’ losses on SME loans in caseof default. CGSs can contribute to expand access to financefor SMEs. Yet they may bring limited value added and provecostly if they are not designed and implemented well. Therehave been efforts in recent years to identify good practicesfor CGSs, but the international community still lacks acommon set of principles or standards that can helpgovernments establish, operate, and evaluate CGSs for SMEs.The Principles for Public Credit Guarantees for SMEs arefilling this gap. The Principles provide a generallyaccepted set of good practices, which can serve as a globalreference for the design, execution, and evaluation ofpublic CGSs around the world. The Principles proposeappropriate governance and risk management arrangements, aswell as operational conduct rules for CGSs, which can leadto improved outreach and additionality along with financialsustainability. Developed through extensive consultationswith stakeholders, the Principles draw from both theliterature on good practices for CGSs and sound practicesimplemented by a number of successful CGSs around the world.
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