The Inter-American Development Bank’s (IADB) loan portfolio to support Argentina’s economic recovery has risen to US$870mn after a reallocation of resources assigned US$414mn to two key programmes for the farm sector and micro, small and medium-sized enterprises.
The enhanced programmes will bolster the recovery of the farm sector, Argentina’s leading source of foreign revenue, and expand access to credit for small businesses, which were ravaged by the country’s recent recession.
The reallocation approved by the IADB’s board of executive directors will focus financing on programmes that will help strengthen Argentina’s economic recovery by generating jobs, increasing output and boosting exports.
“This operation constitutes an important step to focus IADB resources in two areas identified as priorities by the Argentine government to address the economic crisis and promote recovery in the short and medium-term by employing technology, innovation and credit for small businesses,” says IADB project team leader Flora Painter. “It also allows for a more effective portfolio management by reallocating available resources to reflect new priorities”.
Under the reallocation, resources are due to be disbursed over four and a half years. Local counterpart funds for the enhanced programmes will come to US$519mn, which added to the IADB’s financing provides a total US$933mn.
The enhanced programme for farm services will now have US$233mn in IADB resources to support rural sector recovery by investing in the rehabilitation of infrastructure in areas with high potential for agriculture. These public works will help improve water resource management, mitigating floods and soil degradation and expanding the land available for raising cattle and growing grain, which will help boost farm output and exports.
A key goal of the programme is to increase the value of Argentine farm exports by improving the quality and volume of agricultural production.
The enhanced global credit programme will now have US$181mn in IADB resources to help bolster micro, small and medium-sized enterprises, a key sector for economic recovery since these businesses employ between 69-78% of Argentina’s workforce and generate 61% of national output. The programme’s credit component provides resources to finance working capital, purchase fixed assets and contract services.
The reallocation of resources to enhance key programmes reflects the strategy agreed between the IADB and the Argentine government to promote sustainable growth of the country’s productive sectors and to increase productivity by eliminating bottlenecks.
The IADB portfolio includes other programmes that support Argentina’s recovery by providing resources for business restructuring, technological upgrading, border crossings and integration corridors, emergency flood rehabilitation and port modernisation. The IADB’s Multilateral Investment Fund is assisting Argentina through 24 projects, most of them aimed at small businesses.
After the board approved the reallocation, IADB president Enrique Iglesias said: “Argentina’s strong economic recovery is a fact. It must be supported with appropriate loans. The reallocation of resources to these ends is a high priority for the Argentine government, and fully shared by the IADB.”