Within its policy of facilitating access to credit in Colombia, the government establishes guarantee programmes through the National Guarantee Fund (known by its Spanish acronym as FNG). The FNG promotes the provision of microcredits by the formal financial industry, to the low-income people.

The present circular defines a new exposure limit per borrower that the FNG must comply with, known as the Maximum Discretionary Value or VMD. This is intended to avoid the over-indebtedness of the clients.

From 1st February 2016, VMD per borrower will be increased to COP $1,560,000,000 (approx. USD $520,000). It means that the FNG shall not authorise a loan or collateral to a given borrower that, on its own or all debts considered, exceed the new exposure limit per borrower.

These guarantee programs are fundamental for the provision of microcredits to the low-income people, because of the higher risk profile of the typical micro-borrowers. State guarantees make it possible to grant microcredits to a greater number of people who, without such finance, would be unable to access finance.

Consequently, the increase in the limit on exposure per borrower or Maximum Discretionary Value (VMD) for the FNG makes it possible to spread a greater amount of funding to the economic sector of micro-borrowers, which enables them to get out of poverty.