IDB Suffers Big Mark-to-Market Loss

The IDB expects to report a net investment loss of approximately $1bn on the portfolio for 2008. “The results were mostly unrealized and were recognized in compliance with mark-to-market accounting rules,” says the multilateral, adding that realized losses were $71m. “The results have not materially affected the Bank’s lending or operational capacity,” it adds. The multilateral says it upped loan and credit guarantee approvals by 18% last year to $11.2bn as the global crisis fueled demand for financing in LatAm and the Caribbean. Disbursements totaled $7.6bn, nearly $500m more than the previous year. Some $7.2bn of total approvals, or 64%, was for projects to improve competitiveness and quality of life. The IDB approved $2.4bn in financing for transportation and communication projects and close to $1.2bn in loans for water and sanitation, one of the IDB’s main initiatives. An additional $3.6bn supported projects in energy, capital markets, tourism and agricultural infrastructure, such as irrigation systems. Meanwhile, $3.3bn went to projects that included components to reduce poverty and enhance social equity. “A key set of projects focused on reducing the impact of rising food prices and the financial crisis through conditional cash transfer programs for the poor,” says the IDB. The remaining $707m financed projects to reform and modernize governments. The Bank supported, among other projects, efforts to improve fiscal management and strengthen financial systems. The IDB plans to strengthen its anti-cyclical role to help LatAm and the Caribbean weather the downturn. For 2009, it expects to have another record year of lending by frontloading approvals for key projects across the region. The IDB says it maintains a liquid investment portfolio that covers on average 18 months of loan disbursements, debt service and other liabilities.