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IDB approves $100 million loan for competitiveness in El Salvador

The Inter-American Development Bank today announced the approval of a $100 million fast-disbursing loan to El Salvador in support of reforms to increase its private sector’s levels of competitiveness.

The IDB resources will help the Salvadoran government strengthen its fiscal stability and carry out reforms designed to boost economic growth. Among other goals, these measures seek to:

  • improve the efficiency and quality of maritime and air transport services and regulatory frameworks,
  • raise the quality and expand the coverage of vocational education and job training services offered by the private and the public sectors,
  • enable the development and adaptation of technologies and innovations, and
  • establish legal frameworks against abusive and anticompetitive conducts in goods and services markets.

These reforms are aimed at eliminating obstacles that hinder output, inflate the cost of resources, limit market access and the productivity of economic factors and deepen disparities in participation in domestic and foreign markets. Export diversification is expected to help lessen domestic and external imbalances and the Salvadoran economy’s vulnerability to external shocks.

This loan reflects the strategy shared by the IDB and El Salvador to promote stability, economic growth and competitiveness. The president of the Bank, Enrique V. Iglesias, emphasized the importance of this operation within the framework of the integration process between Central American countries and the United States. Over the past decade the IDB has supported projects to improve the country’s transport infrastructure and electricity services, strengthen its financial sector and modernize its public sector. It has also financed programs to raise productivity and expand access to credit for micro, small and medium-size enterprises.

The new loan was granted for 25 years, with a 5-year grace period and a variable interest rate. Part of the interest costs will be covered with resources from the IDB’s Intermediate Financing Facility. The first disbursement of $40 million will be followed by three $20 million tranches.

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