The Inter-American Development Bank (IDB) has announced the approval of a stand-by line of credit for up to $300 million to help Ecuador protect its social spending from potential external economic shocks.
The stand-by credit line, which will be in place for three years, will allow the government of Ecuador to temporarily sustain its levels of spending in programs to reduce poverty should exogenous events limit its revenues.
The IDB made the assistance available under its Contingent stand-by credit line for Sustainable Development , which made available up to $6 billion for the IDB's lending nations from 2012 to 2015.
This stand-by line of credit aims to help countries to protect social programs that focus on their poorest and most vulnerable citizens in case of financial problems caused by external factors, such as sudden fluctuations in the prices of basic products or a sudden freeze in international financial markets.
In the line of credit for Ecuador, the triggers for the disbursements are linked to oil prices, exports and refining capacity, as well as changes in the LIBOR rate.
The credit will be for six years, with a grace period of three years and a variable interest rate.