The maximum period of the guarantee is 20 years and will cover future payment obligations to be contracted by Ecuador under a sovereign bond or a loan.
The Inter-American Development Bank (IDB) approved a guarantee in support of policy reform (GARP) to Ecuador for $ 400 million to promote sustainable and inclusive economic reactivation through a program.
This program will help to strengthen the institutional and regulatory framework to improve the business climate, promote international trade, improve financial stability and access to financing.
IDB Board of Directors approves a new loan of $ 500 million for Ecuador
This operation is aligned with the IDB’s 2025 Vision “Reinvesting in the Americas: a decade of opportunities”, to achieve the recovery and inclusive growth of Latin America and the Caribbean, in the areas of regional integration, reactivation of the productive sector, gender and inclusion and climate change.
The GARP is an instrument that allows the issuance of a guarantee with sovereign counter-guarantee once the country has complied with a series of policy conditions agreed with the Government. The maximum warranty period is 20 years.
This is the first of two consecutive operations under the Programmatic modality in Support of Policy Reforms (PBP) financed independently, although technically linked to each other.
The guarantee will cover future payment obligations to be contracted by Ecuador under a sovereign bond or a loan of up to $ 400 million.
The guarantee has the potential to mobilize private resources for at least the same amount as the resources provided by the IDB, while improving the general profile of Ecuador’s public debt by reducing borrowing costs and longer repayment terms. , compared to an issuance of unsecured debt.
IDB disburses $ 200 million to Ecuador; are destined to the recovery of employment
Meanwhile, the program will support macroeconomic stability and promote a set of reforms to strengthen the business climate and trade regulation, and to improve the institutional framework for economic reactivation and competitiveness.
It will also support the reduction of commercial tariffs and simplification of procedures, the improvement of public-private collaboration to promote investment and the promotion of private sector development with an environmental focus.
Likewise, it will promote a set of reforms that foresee the strengthening of governance for monetary and financial stability, prudential regulation for the orderly transition towards a stable post-COVID-19 financial system, the expansion of access to financing and improvements to the protection of the financial consumer.
In particular, the program will support measures within the financial system that have an equity focus and promote the financial inclusion of women. (I)
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