LATIN AMERICAN COMPANIES WILL ALSO HAVE ECONOMIC SUPPORT TO FACE THE COVID-19 PANDEMIC
The world economy went into recession and at this point in the evolution of the coronavirus pandemic, no one doubts it.
The president of the International Monetary Fund (IMF), Kristalina Georgieva, and the executive secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), Alicia Bárcena, were among the first persons to confirm that the economic scenario for the coming months will be complicated.
Latin America’s foreign trade will be impacted on both supply and demand. In particular, those companies that have extensive commercial ties with Europe and China. However, the response of funds was quick. At least $14.5 billion is now available in the region to respond to the economic effects of the COVID-19 pandemic.
At Credit Report we want all businesses to be aware of the opportunities available in the region, especially in South America, Central America, and the Caribbean, to support them at this juncture.
What funds are active to support Latin American businesses?
The Inter-American Development Bank Group (IDB) and the Latin American Development Bank (CAF) have published that their lines of credit are now open to serve governments and businesses in Latin America.
This is a rapid action by the large funds because “the historical dimensions of this crisis require a multi-sector strategy to anticipate social and productive impacts in the medium and long term,” as Luis Alberto Moreno, president of the IDB, said in the presentation of the immediate response plan.
How much money is available for support?
The IDB Group has $12 billion available for Latin American countries to respond to the crisis caused by the new coronavirus and its consequences. While the CAF made available a total of $2.5 billion in its “Emergency Credit Line” to address the situation.
Are foreign trade companies among the priorities?
Although most of the funds will be used to strengthen public health care systems in the various countries of Latin America and the Caribbean, foreign trade companies were also included as one of the four priorities in the emergency response.
IDB Invest will be the financing agency for private companies and has $5 billion available for private sector support. This multilateral development bank will give priority to requests from small and medium-sized enterprises (SMEs) so that they can obtain
Most of this money ($4.5 billion) will come from his investment fund and will go to firms impacted by the crisis of this new coronavirus. The remaining, another $500 million, will be used to create the new “Crisis Mitigation Facility” fund and will focus on serving health care companies, in terms of financing for their supply chains and short-term credit.
Which countries does IDB Invest serve?
As a member of the IDB Group, this is a bank specialized in financing private companies and sustainable projects.
It now works in 24 countries in Latin America and the Caribbean and has a total of 333 clients with a portfolio equivalent to $12.088 billion.
Has any country already been benefited during the COVID-19 situation?
Uruguay was one of the first beneficiaries. The Republic Bank (Banco de la República) in this southern country received an initial payment of US$50 million to finance credit programs for small and medium-sized enterprises. Another 75 million dollars will be sent in a second contribution in the short term so that this entity can support a wide range of companies affected by this unprecedented crisis.
There is no doubt that this health emergency by COVID-19 will have a broad impact on international trade, but in a crisis like this, it is key that companies of any kind strive to increase their cash flow and mitigate credit risk. At Credit Report we are ready to provide you with our support and experience to achieve these two business objectives that are more important than ever.
Banco de Desarrollo de América Latina (2020) “Coronavirus: CAF pone a disposición USD 2.500 millones a los países para proteger a la población y sus economías”. Nota de prensa. Recuperado de: https://www.caf.com/es/actualidad/noticias/2020/03/coronavirus-caf-pone-a-disposicion-usd-2500-millones-a-los-paises-para-proteger-a-la-poblacion-y-sus-economias/
Banco Interamericano de Desarrollo (2020) “Grupo BID anuncia áreas prioritarias de su apoyo a países afectados por el COVID-19”. Comunicado de prensa. Recuperado de: https://www.iadb.org/es/noticias/grupo-bid-anuncia-areas-prioritarias-de-su-apoyo-paises-afectados-por-el-covid-19
Banco Interamericano de Desarrollo (2020)“BID concreta apoyo a Uruguay para enfrentar pandemia del COVID-19”. Comunicado de prensa. Recuperado de: https://www.iadb.org/es/noticias/bid-concreta-apoyo-uruguay-para-enfrentar-pandemia-del-covid-19