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IDB announces comprehensive lending program to assist countries in adapting economies to integration, freer trade and competition

The Inter-American Development Bank announced today it will provide a special comprehensive loan and technical assistance package to support the adjustment of the Latin American and Caribbean economies to the challenges of the new world environment of greater integration and more open trade.

The Lending Program for Trade, Integration and Competitiveness will make available the option of a package of loans and technical assistance to enable the governments of the region to undertake a broad multisector approach to addressing short, medium and long-term needs in adjusting to integration and trade agreements. These agreements are being actively negotiated by governments on the bilateral, subregional, hemispheric and multilateral levels.

“Notwithstanding the expected benefits of trade liberalization on growth and employment, transition processes toward a freer external market may entail temporary adjustment costs due to a variety of reasons, such as fiscal revenue shortfalls and reallocation of factors of production, including labor,” the IDB said. “Nonetheless, these costs associated with the opening-up process are expected to be outweighed by medium- and long-term benefits, including institutional modernization, market access and business opportunities generated by competition and greater participation in world markets.”

Among the areas where the IDB is ready to provide support are modernization of the productive sectors, especially small and medium enterprises, assistance for displaced labor, institutional strengthening, customs modernization, strengthening of export promotion, and attraction of greater flows of foreign direct investment. Other areas of activity will be investments for infrastructure, tax policy reforms, enhancement of the business environment, and civil society outreach.

Resources for the initiative will be available under the umbrella of the $26 billion lending framework approved by the IDB Board of Governors for the three-year period from 2002 to 2004.

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