Source: Business News America.
Original news wire here.
CHILE, October 14 – International Finance Corporation (IFC), the private sector arm of the World Bank Group, will make USD 2 billion available for its Latin American customers and SMEs to cope with the ongoing financial crisis, IFC spokesperson Adriana Gómez told BNamericas.
The IFC’s plan is comprised of four areas: providing up to USD 500 million for microfinance and loans to Latin American SMEs through regional banks and microfinance institutions that cater to this sector; supporting local financial institutions through its global trade finance program; providing short-term financing or equity to corporate customers; and other support for key areas through specific funding packages.
Furthermore, IFC could mobilize another USD 2 billion in additional funds in collaboration with other multilaterals, Gómez said.
Some IFC clients have already been impacted by the reduced availability of short-term credit, and others have expressed a desire for contingency plans to be put in place, Atul Mehta, head of IFC’s Latin America department, said in a press release.
“Therefore, we are increasing the availability of trade finance and putting in place funding packages such as the USD 150 million package for housing finance in Mexico we announced last week,” he said.
Last week, IFC announced a USD 150 million facility to support Mexico’s housing finance sector and help mitigate potential liquidity shortfalls and approved a USD 500 million increase to its Global Trade Finance Program to bring it to USD 1.5 billion.
“The extended capacity of the program comes at a critical time of severe credit constraints in the market and improves IFC’s counter-cyclical role in supporting trade with emerging markets,” Gómez said.
Since the launch of the Global Trade Finance Program, IFC has issued USD 900 million in guarantees to facilitate trade flows with Latin America and the Caribbean. The network of issuing banks for the region has expanded to 26 banks in 12 countries.
WORLD BANK AID
On Tuesday, the World Bank also announced it would double the amount of funds available to Latin American and Caribbean countries through the International Bank for Reconstruction and Development (IBRD).
IBRD – the World Bank’s the lending facility for middle-income countries – disbursed funds to the tune of USD 13.5 billion last fiscal year, with USD 4.35 billion going to Latin America.
“This means we could double that figure for Latin America to around USD 8.7 billion in 2009,” Ana Elisa Luna, a World Bank spokesperson told BNamericas, adding these funds would support jobs, social gains and inject liquidity as well as boost ongoing public sector programs through policy lending and contingent financing instruments.
Earlier this week, other multilaterals IDB, CAF and FLAR stepped in with a combined USD 9.3 billion liquidity lines to aid Latin American countries to face the ongoing credit squeeze.
These moves have been met by central banks in several Latin American countries such as Chile and Brazil, which have recently come out to inject liquidity into local financial markets.
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