The Inter-American Development Bank (IADB) has approved a US$200mn emergency loan to support the Dominican Republic’s efforts to maintain macroeconomic stability and protect social programs for its poorest people.
The loan is part of a financial assistance package agreed on by the Dominican government with the IADB, the World Bank and the International Monetary Fund in 2003, after the collapse of one of the country’s leading commercial banks touched off a financial crisis.
The multilateral assistance, which is being closely coordinated between the international financial institutions and the Dominican Republic, bolsters the government’s programme to restore macroeconomic and fiscal stability, strengthen the financial system and cushion the effects of the crisis on the most vulnerable groups of the population.
The IADB resources will help the Dominican Republic safeguard spending on priority social programmes for the indigent, as well as continue with reforms already underway to improve efficiency in public sector spending and investments in education, health and social protection.
This operation draws on lessons learned from the preparation and implementation of similar programs in Argentina, Colombia and Uruguay, where conditions centred on protecting social spending to mitigate the impact of economic crises on the poor.
The loan is for a five-year term, with a three-year grace period. The annual interest rate will be based on six-month dollar Libor plus 400bp. Resources will be disbursed in two tranches, the first one for US$150mn.