The Inter-American Development Bank today approved two loans totaling $86 million to support the modernization of production and small- and medium-sized enterprises in the province of Rio Negro and tourism development in the province of Salta.
The financing approved by the Board of Executive Directors consists of a $51.9 million loan for Rio Negro and a $34.1 million loan for Salta.
The IDB loans are guaranteed by the Argentine federal government and reflect the Bank strategy of supporting steps to achieve policy reforms, protect social spending and reactivate the economy through investments that promote competitiveness in the productive sectors and fiscal reforms in the provinces.
The loans are for a 20-year term for Rio Negro and 25 years for Salta. The interest rates are variable, with 5-year grace periods. Local counterpart funds total $34.6 million for Rio Negro and $22.6 million for Salta.
Modernization of production in Rio Negro
The program for the province of Rio Negro is designed to help small- and medium-size firms become more competitive in international markets.
Among the activities financed by the program are the modernization of state services that support the productive sector, the promotion of exports and investments in the province, assistance to increase productivity and the quality of goods and services produced by small- and medium-sized businesses, and a system of follow-up, monitoring, evaluation and learning. Continuous, up-to-date information on the progress of the project will be provided.
A privately administered trust fund, which will operate as a second-tier financial institution, will be established for a limited duration to provide financing for modernization and reconversion projects and projects to improve competitiveness. These projects will be clearly aimed at generating foreign exchange.
The initiative is expected to improve the profile and volume of exports from the province, attract private investment, generate employment and increase tax receipts.
Tourism promotion in Salta
The IDB loan will contribute to the development of Salta’s productive sector by spurring the growth of tourism as an engine of economic development. At the same time the program will improve social infrastructure and fiscal management.
The project will strengthen the province’s institutional capacity to both promote and provide services to improve tourism infrastructure, restore cultural and historical heritage and make the increases in tourism of recent years sustainable.
The financing will help resolve deficiencies in basic infrastructure – sewage disposal, urban drainage and solid waste – which affect not only tourism, but also the quality of life of the general population.
Steps will be taken to increase the province’s revenues and improve the management of spending.