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IDB increases financial support to Bolivia, Guyana, Honduras and Nicaragua

Bolivia, Guyana, Honduras and Nicaragua will collectively have access to up to $485 million in lending resources per year from the Inter-American Development Bank during 2009 and 2010, to help these countries overcome the effects of the global economic crisis.

By increasing the concessionary funds available for these four countries through a supplementary allocation, total IDB lending can expand 39 percent, from $349 million per year in 2007 and 2008, to $485 million per year in 2009 and 2010.

“This crisis is inflicting real hardship on working families in our member countries,” said IDB President Luis Alberto Moreno, who is in Honduras today to attend the OAS General Assembly. “These resources will give the governments of Bolivia, Guyana, Honduras and Nicaragua additional flexibility to finance counterciclical policies and strengthen social safety nets for their most vulnerable citizens.”

The IDB lends to these four countries with a blend of resources in which loans from its Ordinary Capital are made available together with resources from the Fund for Special Operations, in proportions designed to balance each borrower’s needs with its long-term capacity to absorb additional debt productively.

The supplementary resources will enable Bolivia to increase its borrowing from the IDB from $113.2 million to $157.4 million yearly during 2009–2010. Honduras will be able to borrow $165.7 million yearly during this period, up from the previously approved limit of $119.2 million. For Nicaragua, the limit will rise to $133.5 million from $96 million, and Guyana will be able to borrow up to $28.6 million, from $20.6 million.

The supplementary allocation of $136 million, approved by the Board on May 20, is a temporary measure for the next two years while longer-term solutions are sought for providing concessional funds to the Bank’s poorest member countries. It expands the total lending amount for 2009 and 2010 that the Board had approved for the four countries earlier this year.

The IDB’s Board approved the measure after considering a careful analysis that indicated that these four countries have the capacity to take on the additional debt without degrading their risk of debt distress, and that the additional lending would not threaten the long-term sustainability of the FSO.

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