_Sustainability._ It is difficult to compare arrears and default rates for the programs studied because few provide complete information on the aging of bad debts. Furthermore, programs write off bad debts sporadically or not at all so annual arrears figures include bad debts incurred over a lengthy previous period. Also, the programs report arrears information in different formats that are often not comparable. Finally, arrears data for some programs contained obvious errors. Given these shortcomings, arrears information is useful primarily as an indication of likely trends. This section provides information on the percent of outstanding loan volume in arrears for BKK, LKP, and BKD, and the percent of groups with outstanding loans that are experiencing arrears for PHBK and P4K.<sup>4</sup> BKK experienced a serious arrears problem in 1993. However, the volume of loans in arrears in 1994 and 1995 were the lowest for the five programs reviewed - 6 percent. The LKP program had about 20 percent of its portfolio volume in arrears in 1995. It experienced an increasing arrears problem from 1992 to 1995. PHBK experienced early problems with arrears. However, groups with arrears declined from a high of 29 percent of groups with outstanding loans in fiscal 1992/93 to about 13 percent in fiscal 1995/96. P4K experienced very low arrears through 1993, but the program's arrears have grown in recent years. By 1995, groups with arrears accounted for 19 percent of groups with outstanding loans. Preliminary data for 1996 indicate that in that year arrears were likely higher. The volume of BKD loans in arrears was 23 percent in 1992, and declined to 16 - 18 percent over the next three years (Table 6).

# The Committee of

Donor Agencies for Small Enterprise Development set as an acceptable standard for microenterprise lending that 10 percent or less of total loans should have late payments of 30 days or more. The programs do not separate out loans in arrears by 30 days or more. However, the above data, which measure the volume orr number of loans in

**Table 6**

**Percent of Outstanding Loan Volume in Arrears or Percent of Groups with Outstanding Loans in Arrearsa**

||1991<br>|**1992**<br>|**1993**<br>|**1994**<br>|**1995**<br>|
|---|---|---|---|---|---|
|**BKK**<br>|NA<br>|NA<br>|27<br>|6<br>|6<br>|
|**LKP**|NA|_15_|17|NA|20|
|**(Dompu**<br>District)||||||
|**PHBK**|21|29|20|11|13|
|**P4K**|_5_|_5_|6|1 1|19|
|<br>**BKD**|<br>NA|<br>23|<br>18|<br>16|18|

a/ For BKK, LKP. and BKD, these figures represen **t** he percent of loan volume in arrears net of previous years' defaults. For PHBK and P4K these figures represent the percent of groups with outstanding loans that are experiencing arrears. v arrears by one day or more, indicates that BKK arrears are below this international standard, and

> _4_ For BKK, LKP, and BKD, the volume of loans in arrears for each year is estimated by netting out of the programs' stated figures the cumulative defaults that the programs experienced in previous years. In this way, the author simulates asituation in which the programs wrote off defaults each year. It was not possible to make this adjustment for PHBK and P4K. Thus, to the exten **t** hat these programs do not write off defaults adequately, arrears are somewhat overstated.

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