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IDB backs measures to boost productivity in Paraguay

Loan of $200 million will support key measures to develop the private and financial sectors 

The Inter-American Development Bank (IDB) has approved a $200 million policy-based loan to support reforms aimed at boosting economic productivity in Paraguay

The reforms are key to improving inclusive and sustainable growth in Paraguay in a context marked by international financial uncertainty, the economic evolution of its main trading partners and a fall in commodity prices. 

The planned reforms incorporate institutional and regulatory changes in the areas of transparency, financial regulation and development of tools to support the private sector, especially for small- and medium-sized companies, keeping in mind the principle of gender equality as a key to enhancing the system's inclusiveness and depth. 

The loan is designed to support reforms aimed at increasing transparency through initiatives to boost people's access to information in the public sector and improve transparency in commercial transactions and business governance. 

The loan also supports measures aimed at improving the workings of the financial system in Paraguay, such as changes to the Banking Law and the charter of the Central Bank — modifications that are designed to strengthen risk-based regulation and oversight of the banking system. 

Finally, the program backs up reforms to modernize tools designed to encourage productive development and financial inclusion through reforms of state-owned banks and development plans, the creation of funds to support small- and medium-sized companies and the regulatory framework for secured transactions. 

The transaction is a PBL made up of two tranches. The IDB provides this facility to borrowing member states in support of their policies. Disbursement of the funds is contingent on verification of compliance with reforms that are ageed on. 

Paraguay's Finance Ministry will execute the operation and coordinate with the Central Bank, the Financial Development Agency, the Justice Ministry, the National Anti-Corruption Secretariat and other agencies. The ministry will also monitor progress made to comply with the terms of the program. 

The IDB loan has a repayment period of 20 years, a grace period of 5.5 years and an interest rate based on the LIBOR.

About the IDB

The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.