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A $500 million vote of support

Shareholders of the Inter-American Investment Corporation (IIC) have agreed to a $500 million capital increase for this private-sector arm of the IDB Group.

The move, which was announced during the joint annual meetings of the IIC and the IDB in Paris last March, more than triples the IIC's capital from $200 million to $700 million. The increase must now be approved by the IIC member governments.

The increase successfully concludes a three-year turnaround plan initiated in 1995 when shareholders and management decided to reevaluate the Corporation and place it on a sounder financial footing. Today, the IIC is acknowledged to be an effective source of support for the region's small and medium-sized businesses.

According to IIC General Manager John Rahming, the increase also "demonstrated what we all know: the small and medium-sized business sector is the driving force of growth in Latin America and the Caribbean and an excellent investment choice."

"For every dollar that the IIC invests in a project, six additional dollars from the private sector are also invested, generating wealth and employment at a growing rate," said Rahming.

With the additional $500 million, the IIC expects to assist 10,000 small and medium-sized businesses in the next 10 years, according to Jorge Roldán, the IIC's chief economist.

The IIC resources were further strengthened during the Paris meeting with the signing of a $50 million credit facility from Caja de Ahorros y Monte de Piedad de Madrid. The Corporation will use the resources from the three-year facility to expand operations and fund loans for development projects.

FOCUSED INVESTMENTS. While the IIC may invest in virtually all sectors, it expects to focus its investment and lending activities on small and medium-sized firms in the areas of exports, technology, environmental protection, and capital market development, said Roldán. Support for local financial institutions, such as credit rating agencies, is also high on the list of iic priorities. "We also have a deliberate strategy to help companies go public," he added.

Established in 1986, the IIC has used its $200 million in capital to benefit 1,700 firms in the region through loans, investments, and other financial services. The Corporation now supports a wide range of activities that include small energy projects, small agribusiness, tourism development, manufacturing and leasing. Its loan and investment operations are conducted without government guarantees. In addition, the IIC has established partnerships and alliances with financial institutions to achieve economies of scale and has invested $100 million in 20 private investment funds that have a combined total capitalization of $1.3 billion.

Also at the Paris meeting, Belize formally joined the IIC, with the result that all 26 borrowing country members of the Inter-American Development Bank are now IIC members. The IIC total membership of 37 includes non-borrowing countries.

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