IDB contributes to SME relief in Ecuador

IDB contributes to SME relief in Ecuador

Loans Economy & Policy Corporate & Sovereign Strategy Debt Regulation Coronavirus Ecuador Andean United States

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The Inter-American Development Bank (IDB) said on Tuesday that it approved a $93.8 million loan for Ecuador to provide support to small businesses during the coronavirus pandemic.

The 25-year loan comes with a five-year grace period and an interest rate based on Libor, the IDB said in a press release without providing additional pricing information.

The financing will help 16,038 micro, small and medium-sized enterprises (MSMEs) stay open or access working capital loans through guarantees. It is also expected to provide short-term financing to 12,691 MSMEs, including women-owned businesses, through the state-run lender Conafips, the IDB said.

Ecuador closed its borders and shut down the economy in March to contain the spread of the coronavirus. According to government statistics, 50% of companies in Ecuador would last less than 37 days without making new sales, while 75% would last less than 70 days, particularly in the agriculture, administrative services and accommodation and catering sectors.

The country has turned to multilateral lenders to fund its response to the health crisis and received $400 million from the Latin America development bank CAF, $500 million from the World Bank and $643 million from the International Monetary Fund (IMF). It also issued $800 million in three-year bonds with a coupon of 2.375% earlier this month.