MICROCAPITAL BRIEF: Inter-American Development Bank (IDB) Loans $30m to Paraguay to Fund Small, Medium-sized Enterprises

The Inter-American Development Bank (IDB), a US-based multilateral finance institution that operates in Latin America and the Caribbean, recently approved a loan of USD 30 million to the government of Paraguay. The duration of the loan is 25 years including a grace period on repayments of five and a half years. The interest rate to be charged on the loan is pegged to the London Interbank Offered Rate (LIBOR).

The loan consists of two financing elements and a technical assistance component. The financing elements include the “Propyme financing product”[1] that is valued at USD 20 million and a “guarantee fund”[1] for small and medium-sized enterprises (SMEs) that is valued at USD 8 million. The “Propyme”[1] component will be available for the funding of investment projects, working capital and short-term credit needs of SMEs. The guarantee fund is expected to help SMEs source credit from third-party financial institutions. The funding package will also include a technical assistance component intended to improve the business skills of beneficiaries to boost their productivity.

Mr Francisco Demichelis, IDB’s project team leader working on the transaction, said that “the project seeks to provide a set of a tools that are fundamental for the development of small- and medium-size companies, both through medium- and long-term credit to support their investment plans and improvement in their business skills and their profile as candidates for credit in the financial system”[1].

As of December 2013, IDB reported total assets of USD 97 billion. During 2014 in Paraguay, IDB lent USD 30 million for an urban development and housing project, funded a transparency initiative for the judiciary and provided USD 20 million for a scholarship program.

By Alíz Crowley, Research Associate

About Inter-American Development Bank (IDB)

The Inter-American Development Bank (IDB) is a US-based multilateral finance institution that was established in 1959 and operates in Latin America and the Caribbean. IDB works with governments, companies and nongovernmental organizations (NGOs) to provide both loans and grants to support small and medium-sized enterprises (SMEs), health, education and other sectors. IDB also provides technical assistance and research in these areas. With 48 member countries, IDB is headquartered in Washington, DC, with offices also in Japan, France and all 26 member countries in Latin America and the Caribbean. As of December 2013, IDB reported total assets of USD 97 billion.

Sources and Additional Resources

[1] Inter-American Development Bank (IDB), News Releases, IDB backs program to give SMEs in Paraguay greater access to credit

[2] Inter-American Development Bank (IDB), PR-L1081 : Program for the Financing of Paraguayan SMEs

[3] Inter-American Development Bank (IDB), PR-L1082 : Improvement of Housing and Habitat Program

MicroCapital, October 15, 2014, African Development Bank (AfDB), Asian Development Bank (ADB), European Bank for Reconstruction and Development (EBRD), European Investment Bank (EIB), Inter-American Development Bank (IDB), World Bank Group (WBG) Issues Joint Statement on Climate Finance

MicroCapital, October 13, 2014, International Finance Corporation (IFC) Syndicates Loans Totaling $60m to BBVA Paraguay to Fund Small, Medium-sized Enterprises

MicroCapital, August 17, 2014, Inter-American Development Bank (IDB) to Loan $100m to El Salvador for On-Lending to Micro-, Small and Medium-sized Enterprises (MSMEs)

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