Multilaterals Weigh in With Cash

Investors depart IMF annual meetings having seen fear in the eyes of most LatAm finance ministry officials, but there is some relief in the form of multilateral aid. The IDB, CAF, IFC and FLAR Monday unleashed almost $10bn in fresh credit lines, with the aim of safeguarding growth and employment through crisis. “We are coordinating this lending with other multilateral institutions to assure that we have a rapid and agile response,” says IDB president Luis Alberto Moreno. The IDB will provide a $6bn liquidity program, in addition to accelerating specific loans next year as it aims to provide $12bn in total 2009 loans – $18bn if the new facility is fully utilized – versus $10bn in 2008. The loans will be made on a case-by-case basis, most with a tenor of 5 years. CAF has meanwhile made available a $1.5bn liquidity facility to support countries facing difficulty accessing capital markets. It also raised support for financial institutions to $2.0bn from $1.5bn. And FLAR pledged $1.8bn, with up to $2.7bn more possible in coming months via contingency lines. The IFC and World Bank also weighed in with support, the latter offering $500m for microfinance and SMEs. The IDB set an initial limit of $500m per country, which could be adjusted on a case-by-case basis. Moreno did not comment on rates, but says all countries would pay the same. “Given that the crisis started elsewhere and will come to Latin America, we are preparing ahead of time,” says CAF CFO Hugo Sarmiento says of his bank’s contingency facility, which will disburse medium to long-term loans. He adds that so far no countries have requested funds. Multilaterals have beefed up lending to both public and private borrowers in the past year as credit conditions worsened, and they are needed now more than ever. “In this market there is no competition between multilaterals,” Hans Schultz, IDB head of structured and corporate financing, tells LatinFinance. As demand increases, the bank will have to prioritize getting th