MercoPress. South Atlantic News Agency

IDB increased outlays to Latam 25% to 12.2 billion USD

IDB President Luis Moreno

The Inter-American Development Bank Group increased loan, credit guarantee and grant approvals by about a quarter to a record 12.2 billion US dollars in 2008, in an effort to help Latin America and the Caribbean weather the global financial crisis.

"IDB is striving to assist the region in these difficult times," said IDB President Luis Alberto Moreno. "We are working with our member countries to defend the progress they made in recent years in the fight against poverty." The IDB reaffirmed its role as the leading source of long-term funding for Latin America and the Caribbean. The IDB increased backing for social programs designed to prevent millions from falling back into poverty and boosted financing for infrastructure investments and key reforms to boost competitiveness. China is set to become a donor member of the Bank and Spain and the IDB will work together on a big grant fund to improve water and sanitation services in Latin America. Moreno gave the IDB's Board of Executive Directors his annual year-end assessment on Wednesday last December 17th. The total approvals for 2008 include financing from the Bank and its two affiliates: the Multilateral Investment Fund and the Inter-American Investment Corporation. During the year, the Bank approved 11.5 billion USD in loans and guarantees that will use resources from its 2008 Ordinary Capital. The funds will finance 137 private and public sector projects. The total approvals by the Bank also include operations of 900 million from its new fast-disbursing emergency liquidity fund. The 6 billion USD facility, created in October, provides funding for countries facing transitory difficulties in accessing international credit markets due to the financial turmoil. The Multilateral Investment Fund (MIF), which focuses on micro-enterprises, approved 166 million in loans and grants this year. The Inter-American Investment Corporation (IIC), which specializes in financing for small and medium-size companies, approved operations totalling 553 million. All together, this adds up to 12.2 billion, against 9.6 billion approved by the IDB Group last year. More than half the financing approved this year will fund projects in sectors such as energy, transportation, capital markets and information technology. About a third of the total will finance social sectors, including water and sanitation projects and natural disaster prevention. The remainder will finance public sector modernization projects. As a result of the increased approvals, the Bank's loan portfolio expanded to 39.6 billion, up from 34.7 billion a year earlier. The Bank is carrying out 623 projects, compared with 580 at the end of 2007. Latin American and Caribbean nations will continue to face an adverse external environment next year, which will reduce foreign investment flows and the demand for raw materials, Moreno told the executive directors. Growth in the region will slow to between 2 and 2.5% next year from 4.5% in 2008. In the short term, the IDB will focus on supporting government programs to protect the poor from the impact of the slowdown, Moreno said. The Bank will also continue to invest in longer term programs that promote sustainable growth, reduce social inequality and strengthen public institutions. "The IDB reaffirms its commitment to help the region face the effects of the recent financial market turbulence,'' Moreno said. "The region must resist to the temptation of relying too much in the successes of the past and it must be willing to work towards the achievement of the primary goals of promoting sustainable development and reducing poverty."