The IDB hired consultants who looked in-depth at social funds in Bo-
livia, Chile, El Salvador, Guatemala, Haiti, Honduras, Nicaragua and
Peru. They spoke to recipients of projects and assessed their satisfac-
tion. The IDB examined these projects for sustainability; it also did a
desk study of all social funds.
Social funds were created as a response to an alarming rise in poverty.
Some social funds have political objectives. FONAPAS helped in the
consolidation of the peace process in Guatemala. FONCODES was aimed
at ensuring governability in frontier regions of Peru.
From a banking group’s perspective, a range of factors play a role in the choice of
branching versus subsidiarization, including banks’ business focus and differences in
regulatory and tax regimes across jurisdictions. Banks with significant wholesale operations
tend to prefer a more centralized branch model that provides the flexibility to manage
liquidity and credit risks globally and serve the needs of large clients.
As we have seen, the banks in Georgia are liquid, stable, and poised in their growth to
undertake an expansion of their long-term loan portfolio to sectors beyond real estate secured
loans. In addition, Georgian banks have extensive branch systems so implementing a long-
term credit program would be straightforward. Branch networks are in place, ready pools of
customers are present, and the bank operational systems already exist.
As demonstrated by the small percentage of loans to the agriculture and industrial sector,
banks are risk averse to both sectors.