MICROCAPITAL BRIEF: Inter-American Development Bank (IDB) to Loan $100m to El Salvador for On-Lending to Micro-, Small and Medium-sized Enterprises (MSMEs)

The Inter-American Development Bank (IDB), a US-based multilateral finance institution operating in Latin America and the Caribbean, reportedly has approved a loan of USD 100 million to promote lending to micro-, small and medium-sized enterprises (MSMEs) in El Salvador. The funding will be primarily available for MSMEs that operate production-oriented ventures with the aim of increasing their productivity and competitiveness. It is expected that approximately 1,000 MSMEs and a further 500 MSMEs led by women will benefit from the funding.

The term loan will be disbursed for 25 years with a grace period of 5.5 years. The interest rate of the loan will be calculated based on the London Interbank Offered Rate (LIBOR). The executing agency will be the El Salvador Development Bank (BANDESAL), the development financial institution of El Salvador, which will on-lend the funds to the country’s financial institutions.

According to a statement attributed to Ms Maria Netto, IDB’s project team leader, “the new, more service based economy needs stronger and more productive smaller firms that can promote the development of the country’s exports and create more jobs. This project is squarely aligned with that objective”[1].

As of December 2013, IDB reported total assets of USD 97 billion.

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. 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

[1] Inter-American Development Bank, News Releases, El Salvador to improve productivity with IDB support

MicroCapital, July 24, 2014, Mentors International Implements Mambu’s Cloud Banking Software to Support Lending to Small, Medium-sized Enterprises in El Salvador, Guatemala, Honduras, Peru, Philippines

MicroCapital, March 30, 2014, 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

MicroCapital, February 25, 2014, Inter-American Development Bank (IDB), MasterCard Partner to Support Financial Inclusion, Transparency in Latin America, Caribbean

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