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IDB approves $310.9 million to strengthen financial system in Peru

The Inter-American Development Bank today announced the approval of $310.9 million in financing to help strengthen the Peruvian financial system and to assist the development of capital markets, mortgage markets, and greater access of low-income groups to financial services.

The program is supported by two IDB loans, a sector loan of $300 million to strengthen the capacity of the financial system to withstand external and internal shocks, and a $10.9 million loan for technical assistance to complete financial sector reforms.

The larger loan provides financial support to Peru while the country continues to deepen the financial reform process to improve efficiency and to strengthen the regulatory framework, expanding access to housing finance and increasing the access of financial services to low-income sectors.

In conjunction with the program, the Japan Special Fund is contributing $543,100 for project preparation, and the Multilateral Investment Fund is providing $3.5 million in grants to strengthen the Superintendency of Banks and Insurance in its on-site supervision of microfinance institutions, as well as to assist the reform and privatization of rural and municipal credit unions and to strengthen the on-site supervision of the national federation of credit unions.

The $300 million IDB loan is for a five-year term, with a three-year grace period, at a variable annual interest rate of 400 basis points above Libor.

The $10.9 million IDB loan is for a 20-year term, with a five-year grace period, at a variable annual interest rate of 6.98 percent. Local counterpart funds for this loan and the three MIF grants total $7,498,900.

Both programs will be carried out by the Ministry of Economy and Finance.*

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