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Peru to strengthen Agroperú fund as Agrobanco faces uncertain fate

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Peru to strengthen Agroperú fund as Agrobanco faces uncertain fate

Peru's government plans to add resources to the development fund Agroperú as state-run Banco Agropecuario, or Agrobanco, goes through its restructuring plan and faces an uncertain future, Agricultural Minister José Arista told El Comercio.

According to the minister, the fund, which already co-exists as a creditor to the Peruvian farming sector along with the troubled development bank, will be used as a "plan B" to disburse credit to farmers if the lender is forced to halt credit operations.

"If Agrobanco cannot operate any longer, we need another fund that allows us to reach farmers. We can not leave the farmers helpless," Arista said.

Agroperú was established in 2009 and has reportedly financed projects since that time amounting to 766 million Peru soles through Agrobanco.

Meanwhile, Agrobanco has reportedly cut around 70 jobs under a restructuring plan which entails the shut down of various departments. The government also created a rescue management team which focuses on debt collection to save the bank from collapsing.

The lender is battling a severely deteriorated loan portfolio after years of what politicians and regulators alike have described as lackluster risk management control. Peru's Congress is looking into alleged crimes committed in the granting of Agrobanco's loans while the country's comptroller's office revealed irregularities in credits granted by the bank.

As of March. 2, US$1 was equivalent to 3.26 Peruvian soles.