IDB regional funding slash will not have immediate impact on Guyana

Mar 11, 2009 News

– Jagdeo

Guyana does not anticipate any immediate problems with the Inter-American Development Bank’s regional slash in financing.
This is according to President Bharrat Jagdeo, who told the media on Monday that Guyana’s access to financing from the institution is ‘fairly’ secure for at least the next five years.
The President explained that the entire Caribbean will now see decreased lending activities at this time when more is needed.
“What will happen is that overtime the funds from special operations from which we borrow (soft loans) will shrink…so overtime (4-5 years into the future) you will be having less of an access for soft loans from the IDB.”
The same situation does not occur if countries are borrowing on a higher level, where the interest rates are higher.
“The window for the funds for special operations is limited and we borrow from that window…but this is an overall cut for the region and not only Guyana,” the Head of State said.
On March 8 last, IDB country representative to Guyana, Marco Nicola, said that the bank will have less money for Guyana.
According to him, the previous financial package for a five-year period was more than US$500M.
This has now been reduced to between US$113 and US$115M.
Nicola added that his management team in Washington is working on a proposal to replenish the concessional financing funds.
This, he said, will take a long time, pointing out that for 2009 to 2012 there will be less money for Guyana and other countries in the region.
During a recent interview, IDB President Luis Alberto Moreno had said that the crisis is reducing the availability of credit to emerging market countries and reducing demand for commodities, which are the main source of exports from Latin America and the Caribbean.
According to Moreno, the IDB has been partnering with countries to mitigate current risks and prevent the negative outcomes of the crisis from taking place.
The IDB, he said, created a $6B emergency liquidity fund in October to provide financing for banks in the region so they can continue to provide loans to companies.
Additionally, Moreno said that the bank’s lending or operations have not been materially affected.
He said that the bank is making a tremendous effort to increase its financing this year.

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