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Uruguay and IDB sign $200 million for program to strengthen the banking system

MIAMI, Florida – At the end of a ministerial summit of negotiations of the Free Trade Area of the Americas (FTAA) Inter-American Development Bank President Enrique V. Iglesias and Economy and Finance Minister of Uruguay Isaac Alfie today signed a $200 million loan that will assist the Uruguayan Government in implementing a Reform Program to stabilize bank liquidity and solvency and build depositor confidence.

The Reform Program is supported by the International Monetary Fund, the World Bank and the IDB. Since the August 2002 crisis and in the context of the Reform Program, Uruguayan authorities have adopted measures to maintain access to sight and savings accounts, establish mechanisms to efficiently and quickly attend to bank issues, liquidated three banks and established limits on banks’ public sector exposure.

These measures, undertaken in the framework of new laws to strengthen the banking system and reform the financial system, implied substantial operational changes to correct consequences of the financial crisis and to minimize the risk of a repetition of similar crises.

The loan will support measures designed to maintain an adequate macroeconomic environment to carry out the program, stabilize banks and strengthen the regulatory framework for the supervision of public and private banks in accord with adjustments and reforms agreed upon with the IMF, the World Bank and the IDB.

The policy-based loan is for a 20-year term, with a five-year grace period, at an interest rate based on LIBOR. It will be disbursed in three tranches, the first for $80 million and the second and third for $60 million each, after verifying the fulfillment of the specified conditions.

The IDB strategy for Uruguay is focused in supporting development programs and government policies to promote sustained growth and greater social equity in a context of macroeconomic stability.

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