This week, the Inter-American Development Bank (IDB) approved the second phase of a $450 million USD loan to Colombia for financial system reforms designed to increase the country’s economic growth.
According to the IDB, the proposed reforms will aim to solidify macroeconomic stability, boost development, encourage public/private partnership financing, strengthen regulation of the financial system, promote financial inclusion, and heighten the country’s ability to monitor progress in these areas. The loan has a 20-year term — with a 5.5-year grace period — as well as a LIBOR-based interest rate
“Among other things, the program will seek to ease the access of micro-, small-, and mid-sized enterprises to financing through the use of secured transactions and electronic invoices as financial collateral,” said the Washington-based bank in a statement. “It will also deepen the structuring of productive infrastructure projects through the Financiera de Desarrollo Nacional (FDN).”
Another goal of the $450 million USD in funding will be to help raise transparency within the financial system and hasten the development of Colombia’s capital markets. Both of these initiatives are seen as key steps as the Andean nation continues down the path of trying to join the Organization for Economic Cooperation and Development (OECD). Such progress will also help in terms of establishing deeper financial integration within the Pacific Alliance framework, according to the IDB.
“Furthermore, issuance of the Financial Inclusion Act’s implementing regulations and implementation of financial education initiatives will provide enhanced access of unbanked persons to financial services,” stated the bank. “This operation is being carried out under the Programmatic Policy-Based Loan modality, designed to provide financial support to priority reforms in member countries.”