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Colombia, IDB sign $1.25 billion emergency loan

MILAN, Italy – Colombia’s Finance Minister Roberto Junguito Bonnet and Inter-American Development Bank President Enrique V. Iglesias today signed documents for a $1.25 billion emergency loan designed to assist the government in maintaining marcoeconomic and fiscal stability while protecting social investments and reforms.

The signing ceremony took place as part of the activities of the Annual Meeting of the Bank’s Board of Governors now being held in Milan.

The resources will enable the government to protect the poorest sectors of the population through social investments in education, health, and poverty alleviation and to continue its ongoing social reform projects. The program will cushion the effects of fiscal discipline that accompany Colombia’s implementation of a macroeconomic stabilization agreement with the International Monetary Fund.

Among the poverty alleviation programs that are being supported by the loan are the Social Support Network, which provides temporary employment to persons in extreme poverty, youth job training and subsidies that provide incentives for low-income families to keep children in school and protect them through preventive health.

The resources will also support the Social Solidarity Network, which provides assistance to populations that have been displaced and affected by violence, as well as to indigent elderly and ethnic minorities; the Beneficiary Identification System (SISBEN), which is an important preparatory administrative procedure in distributing social benefits to the poor; and the Colombian Family Welfare Institute, which provides day care and feeding programs for poor children.

Support for ongoing social reforms will allow for greater access and quality in education, higher vaccination rates against childhood illness – consistent with the Millennium Development Goals – and greater quality and efficiency in the national health insurance scheme.

The program reflects the IDB strategy for Colombia of promoting social development, protecting the most vulnerable groups and investing in human capital to raise the potential for economic growth.

The IDB is committed to provide Colombia with financing to support a broad range of development projects, with special attention to financing fiscal needs for 2003.

The loan is for a five-year term, with a three-year grace period, at an interest rate based on the six-month U.S. dollar LIBOR rate plus 400 basis points.

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