income markets. Lelarge et al. (2010), provide evidence indicating that the obtention of a loan guarantee helps newly created French firms grow faster and pay a lower cost for their capital, though it also increases their probability of default.

Inadequate pricing of guarantees has been identified in the literature. A study covering 76 PCGs across 46 developed and developing countries finds evidence that while governments have a crucial role in funding and management of PCGs, their involvement in risk assessment and recovery is limited (Beck et al., 2008b). Risk-based pricing and limited use of risk management mechanisms have been largely absent in the design of the PCG schemes. This finding is also confirmed in this paper.

The World Bank Principles for Public Credit Guarantee Schemes for Small and Medium Enterprises offer a sound approach for assessing the soundness of the PCG schemes. Following the launch of the _World Bank Principles for Public Credit Guarantee Schemes for Small and Medium Enterprises_ , Calice (2016) reviewed its implementation across the globe. The paper found the space for reform and actions in terms of the accountability of funding sources, corporate governance and risk management, prudential regulatory recognition of guarantees, program/product calibration, and reporting and disclosure. More recently Goffe and others (2021) provide a set of good practices for policy makers in the design of PCG schemes.

# 3. Methodology

The paper is largely based on information from three surveys of PCG schemes in LAC, conducted by the World Bank in the second half of 2020. The surveys cover almost all the operating PCGs in LAC by examining 19 PCGs in 12 countries: Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, El Salvador, Honduras, Mexico, Paraguay, Peru, and Uruguay.<sup>2</sup> In that regard, the project benefited from a network that brings together PCGs in the region and programs in Spain and Portugal: _Red Iberoamericana de Garantías_ (REGAR).<sup>3</sup> The information was collected over three survey periods, in June, September and December of 2020. See Table A1 in the Appendix for a full list of the programs and the details of the periods during which they were surveyed. The surveys generated information on a set of characteristics of the schemes that will be presented in this paper, including their objectives, scope, governance and COVID-19 response programs. The design of successive surveys was enriched both by the policy discussion held with the PCGs that participated in the survey and the operational work the WB has undertaken with governments in supporting such schemes. A summary tabulation of the responses is available in Table A2 in the Appendix.

> 2 The Caribbean PCG is expected to be included in future surveys. Jamaica and the Organization of Eastern Caribbean States have recently launched PCGs, which will be surveyed as they increase their volume of operations. The Development Bank of Jamaica (DBJ) has revamped its Credit Enhancement Facility with support from the World Bank (P152307) and began operations in January 2020. The Eastern Caribbean Partial Credit Guarantee Corporation (ECPCGC) operates in Antigua & Barbuda, Dominica, Grenada, St. Kitts & Nevis, St. Lucia, and St. Vincent & the Grenadines. The project is being supported by the World Bank. It was launched in October 2020 and it began operations in January 2021.

> 3 In addition, non-affiliated PCGs were also contacted in an attempt to increase the survey coverage.

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