IFC, the private sector arm of the World Bank Group, will make US$2bn available for its Latin American customers and SMEs to cope with the ongoing financial crisis, IFC spokesperson Adriana Gómez told BNamericas.
The IFC's plan is comprised of four areas: providing up to US$500mn for microfinance and loans to Latin American SMEs through regional banks and microfinance institutions that cater to this sector; supporting local financial institutions through its global trade finance program; providing short-term financing or equity to corporate customers; and other support for key areas through specific funding packages.
Furthermore, IFC could mobilize another US$2bn in additional funds in collaboration with other multilaterals, Gómez said.
Some IFC clients have already been impacted by the reduced availability of short-term credit, and others have expressed a desire for contingency plans to be put in place, Atul Mehta, head of IFC's Latin America department, said in a press release.
"Therefore, we are increasing the availability of trade finance and putting in place funding packages such as the US$150mn package for housing finance in Mexico we announced last week," he said.
Last week, IFC announced a US$150mn facility to support Mexico's housing finance sector and help mitigate potential liquidity shortfalls and approved a US$500mn increase to its Global Trade Finance Program to bring it to US$1.5bn.
"The extended capacity of the program comes at a critical time of severe credit constraints in the market and improves IFC's counter-cyclical role in supporting trade with emerging markets," Gómez said.
Since the launch of the Global Trade Finance Program, IFC has issued US$900mn in guarantees to facilitate trade flows with Latin America and the Caribbean. The network of issuing banks for the region has expanded to 26 banks in 12 countries.
WORLD BANK AID
On Tuesday, the World Bank also announced it would double the amount of funds available to Latin American and Caribbean countries through the International Bank for Reconstruction and Development (IBRD).
IBRD - the World Bank's the lending facility for middle-income countries - disbursed funds to the tune of US$13.5bn last fiscal year, with US$4.35bn going to Latin America.
"This means we could double that figure for Latin America to around US$8.7bn in 2009," Ana Elisa Luna, a World Bank spokesperson told BNamericas, adding these funds would support jobs, social gains and inject liquidity as well as boost ongoing public sector programs through policy lending and contingent financing instruments.
Earlier this week, other multilaterals IDB, CAF and FLAR stepped in with a combined US$9.3bn liquidity lines to aid Latin American countries to face the ongoing credit squeeze.
These moves have been met by central banks in several Latin American countries such as Chile and Brazil, which have recently come out to inject liquidity into local financial markets.
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