US$1.5 billion facility and additional lines of credit

(Special, October 13, 2008).- Given the magnitude of the current financial crisis, various multilateral organizations have coordinated efforts to ensure financing resources flow into the region. The announcement was made jointly in Washington by the Andean Development Corporation (CAF), the Inter-American Development Bank (IDB), and the Latin American Reserve Fund (FLAR). The World Bank, the International Financial Corporation, and the Caribbean Development Bank are also participating in the initiative.

CAF President & CEO Enrique García announced that his institution had put in place a US$1.5-billion contingency liquidity line of credit to support member countries facing difficulties in accessing capital markets.

García also offered to raise the lines of credit that CAF has for the financial system of the region from US$1.5 to US$2.0 billion.

These increases, together with other more traditional loans and financing mechanisms in the economic and social areas aimed at the public and private sectors of the 17 CAF member countries, will bring total approvals to US$16 billion in 2008-09.

“Even though Latin America has enjoyed important economic growth in recent years, the deterioration of the international financial situation could affect the region’s performance in the short term. It is precisely at these times when development finance organizations such as CAF need to make available to their shareholders facilities to mitigate the possible negative effects of the crisis. As a result, the Corporation has created this facility for US$1.5 billion to support its member countries.”

IDB will create a new fast-disbursing $6 billion liquidity facility to help the countries of Latin America and the Caribbean sustain economic growth, while FLAR will also extend a facility for US$1.8 billion.

During the press conference in Washington, IDB President Luis Alberto Moreno said “our countries have made strides in recent years to promote growth and reduce poverty levels. These gains need to be protected defended and that is why the IDB and its sister institutions are moving quickly.”

Countries eligible to borrow from IDB’s ordinary capital can tap the liquidity programs. The loan amounts will be determined on a case-by-case basis. In addition, the IDB is prepared to accelerate loans to finance projects and enhance social programs and approve up to a record $12 billion in 2009, up from about $10 billion this year.