IDB launches liquidity facilities for Caribbean

Published: Friday October 24, 2008

The Inter-American Development Bank (IDB) plans to approve a record volume of loans in 2009 and is setting up a new fast-disbursing US$6-billion liquidity facility to help Latin American and Caribbean economies sustain growth in the face of the global financial crisis.

In addition, the Andean Development Corporation (CAF) has announced a liquidity facility of US$1.5 billion and the Latin American Fund of Reserves (FLAR) has offered US$1.8 billion as part of its liquidity arrangements.

"We are rallying to respond to our clients' needs," said IDB President Luis Alberto Moreno. "The origin of the crisis is outside of the region but can have potentially serious repercussions in Latin America and the Caribbean. Our countries have made strides in recent years to promote growth and reduce poverty. Those gains need to be protected, and that is why the IDB and its sister institutions are moving quickly."

The IDB's US$6 billion Liquidity Programme for Growth Sustainability will be provided to member governments. The aim is for the funds to be made available to domestic firms via commercial banks that may face transitory difficulties in accessing foreign and inter-bank credit lines as a result of the financial crisis in the United States and Europe.
Countries eligible to borrow from the bank's ordinary capital can tap the fund. The loan amounts would be determined by the IDB on a case-by-case analysis.

In addition, the IDB said it is prepared to accelerate loans to finance projects and enhance social programmes and approve up to a record US$12 billion in 2009, up from about US$10 billion this year.

If the liquidity facility is fully utilised, the resulting flow of committed funds to Latin America and the Caribbean would amount to about US$18 billion in the course of 2009, an exceptional effort by the IDB prompted by the international financial circumstances. This would be an almost 80 per cent increase in lending to the region and would be the largest and most rapid mobilisation of resources in the IDB's 49-year history.


Source: Jamaica Observer
http://www.jamaicaobserver.com/magazines/Business/html/20081023T220000-0500_141679_OBS_IDB_LAUNCHES_LIQUIDITY_FACILITIES_FOR_CARIBBEAN.asp