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At the end of a ministerial summit of negotiations of the Free Trade Area of the Americas (FTAA), Inter-American Development Bank (IADB) president, Enrique Iglesias, and economy and finance minister of Uruguay, Isaac Alfie, have signed a US$200mn loan that will assist the Uruguayan government in implementing a reform programme to stabilise bank liquidity and solvency and build depositor confidence.

The reform programme is supported by the International Monetary Fund (IMF), the World Bank and the IADB. Since the August 2002 crisis and in the context of the reform programme, Uruguayan authorities have adopted measures to maintain access to sight and savings accounts, establish mechanisms to efficiently and quickly attend to bank issues, liquidated three banks and established limits on banks” public sector exposure.

These measures, undertaken in the framework of new laws to strengthen the banking system and reform the financial system, implied substantial operational changes to correct consequences of the financial crisis and to minimise the risk of a repetition of similar crises.

The loan will support measures designed to maintain an adequate macroeconomic environment to carry out the programme, stabilise banks and strengthen the regulatory framework for the supervision of public and private banks in accord with adjustments and reforms agreed upon with the IMF, the World Bank and the IADB.

The policy-based loan is for a 20-year term, with a five-year grace period, at an interest rate based on Libor. It will be disbursed in three tranches, the first for US$80mn and the second and third for US$60mn each, after verifying the fulfilment of the specified conditions.

The IADB strategy for Uruguay is focused in supporting development programs and government policies to promote sustained growth and greater social equity in a context of macroeconomic stability.