The Inter-American Development Bank approved a $100 million loan to support Ecuador's Housing Incentives System (or SIV, for its Spanish initials), which provides economic assistance to low-income families that lack housing or live in substandard homes in urban and rural areas.
Lending from the Bank will allow the government to maintain its housing policy amid the global financial crisis affecting countries in the region, by providing financial resources and promoting institutional change to enhance SIV's effectiveness, equity, and transparency.
Under the four-year plan, nearly 30,000 families will receive subsidies to either buy, build, or improve their homes in a country where 70 percent of houses are built informally by their owners, without respecting building or urban development standards. As a result, Ecuador has a stock of makeshift housing, with deficiencies in basic services, lack of ownership title, and, in some cases, located in hazard zones.
The plan's goals include:
- Some 4,300 urban families will receive up to $5,000 for the purchase of a house.
- About 6,100 urban households will get up to $3,600 for the construction of a home on individual land plots.
- Roughly 9,200 urban families will get up to $1,500 for home improvements.
- Approximately 9,300 households in rural and urban fringe areas will receive up to $5,000 to build a home.
The funds will also support institutional strengthening of the sector, including personnel training, installation of a comprehensive information system for SIV, and implementation of supervision and oversight mechanisms to boost SIV's efficiency and transparency.
The loan is for a 25-year term, with a four-year period of grace, at a LIBOR-based interest rate. The Government of Ecuador will provide an additional $5.8 million in local counterpart funds.