MICROCAPITAL BRIEF: Inter-American Development Bank (IDB) to Create $30m Credit Line for Retail Lenders to Support Micro-, Small, Medium-Sized Enterprises (MSMEs) in the Dominican Republic

The Inter-American Development Bank (IDB), a US-based multilateral financial institution that seeks to support sustainable economic development in Latin America and the Caribbean, recently announced that it will create a USD 30 million credit fund that retail lenders in the Dominican Republic can access to expand financing deemed “medium- and long-term” to micro-, small and medium-sized enterprises (MSMEs). The fund will have a term of 25 years; a grace period of 5 years before the initial repayment is due; and a variable interest rate tied to the London Interbank Offered Rate (LIBOR), an international benchmark interest rate used to set rates on consumer loans. Furthermore, the fund will be supported by an auxiliary guarantee fund of an undisclosed amount and will include technical assistance from IDB to train MSME managers and coordinate public agency support.

The aim of the loan is to improve the productivity of MSMEs by “(1) making it easier for them to access medium and long term credit; (2) raising the quality of business management; and (3) improving the coordination of public management of support for the sector.”

IDB has satellite offices in 26 countries in Latin America and the Caribbean as well as in Japan and France. As of December 2013, IDB reported total assets of USD 97 billion.

By A’kos Szebeni, Research Associate

About the 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 non-governmental 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. Its Board of Executives is elected by 48 member countries, 26 of which are located in Latin America and the Caribbean. 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:

Inter-American Development Bank: “IDB supports improved productivity of MSMEs in the Dominican Republic,” http://www.iadb.org/en/news/news-releases/2014-01-02/productivity-of-msmes-in-the-dominican-republic,10729.html

MicroCapital, February 25, 2014, “Inter-American Development Bank (IDB), MasterCard Partner to Support Financial Inclusion, Transparency in Latin America, Caribbean,” https://www.microcapital.org/microcapital-brief-inter-american-development-bank-idb-mastercard-partner-to-support-financial-inclusion-transparency-in-latin-america-caribbean/

MicroCapital, November 29, 2013, “Inter-American Development Bank (IDB) Approves $20m Loan to Edyficar of Peru to Support Housing Finance,” https://www.microcapital.org/microcapital-brief-inter-american-development-bank-idb-approves-20m-loan-to-edyficar-of-peru-to-support-housing-finance/

MicroCapital, October 24, 2013, “Asociación Dominicana para el Desarrollo de la Mujer (ADOPEM) of the Dominican Republic Lends $1.6m to 728 Micro-, Small, Medium-Sized Enterprises (MSMEs),” https://www.microcapital.org/microcapital-brief-asociacion-dominicana-para-el-desarrollo-de-la-mujer-adopem-of-the-dominican-republic-lends-1-6m-to-728-micro-small-medium-sized-enterprises-msmes/

MicroCapital, May 6, 2013, “IFC to Advise La Nacional of the Dominican Republic on Strengthening Risk Management, Corporate Governance,” https://www.microcapital.org/microcapital-brief-ifc-to-advice-la-nacional-of-the-dominican-republic-on-strengthening-risk-management-corporate-governance/

MicroCapital Universe Profile: Inter-American Development Bank (IDB), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Inter-American+Development+Bank+%28IDB%29

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