Development Finance Institution actions and measures to support the crisis
The global health crisis of Coronavirus is generating exceptional negative impacts. In this scenario, governments around the world implement measures to stabilize the advance of the pandemic and reduce damage, strengthen their health systems, and alleviate the effects on the economy or help the most vulnerable sectors to cope with the crisis.
As instruments of government financing policy, development banks in Latin America and the Caribbean, as well as international financial organizations, are taking specific measures to support the productive and social sectors to face the negative impacts generated by the crisis.
In this section, created as an observatory, the actions and measures implemented are presented. The purpose is to learn from example to act more effectively. Stop the crisis with action and shared knowledge.
Initiatives from the banks
REGIONAL | Debt reduction for developing countries must be part of response to post COVID-19 economic situation
October 6, 2021.- An effective response to the post Covid-19 economic situation must include significant and broad debt reduction for all developing countries. This was one of the prescriptions put forward by CARICOM Secretary-General Her Excellency Carla Barnett as she participated in a panel discussion during the World Leaders Summit Dialogue on Inequality at UNCTAD XV in Barbados on Tuesday 5th October.
REGIONAL | TNFD launched of the Development Finance Hub
October 6, 2021.- The new Taskforce on Nature-related Financial Disclosures (TNFD) has just held its first plenary in Paris. After the plenary session, the Development Finance Hub (DevHub) was launched and presented to Public development banks (PDBs) from AFD’s headquarters.
REGIONAL | EBRD launches GEF-supported circular economy program
October 5, 2021.- To address barriers to the transition to a circular economy, the European Bank for Reconstruction and Development (EBRD) is launching a new program, called the “Circular Economy Regional Initiative,” in Turkey and the Western Balkans.
GERMANY | Systematically assessing and managing environmental and social risks
October 4, 2021.- KfW and DEG offer joint e-learning platform for financial institutions. Employees of financial institutions can learn in interactive courses how to identify, avoid and manage the risks and impacts of their financing in accordance with international standards.
CANADA | BDC and Cossette launch All for entrepreneurs
October 4, 2021.- BDC, Canada’s bank for entrepreneurs, is launching All for entrepreneurs, a national integrated campaign developed and produced in partnership with Agency of Record Cossette, which will be rolled out across multiple media touchpoints starting October 4.
REGIONAL | CDB President calls for strengthening social resilience to place the Caribbean on a sustainable welfare path
September 29, 2021.- The President of the Caribbean Development Bank (CDB), Dr Gene Leon, urged the region to take bold and innovative steps to surmount the significant development challenges that have been amplified by the ongoing COVID-19 pandemic and to shift to a new development trajectory.
REGIONAL | Short-cycle programs can help boost employment and economic recovery in Latin America and the Caribbean
September 28, 2021.- Short-cycle higher education programs (SPCs), can be a highly effective tool in times of crisis such as the current COVID-19 pandemic, when millions of people across Latin America and the Caribbean need to acquire the training and skills to urgently join the formal job market, according to a new World Bank report.
REGIONAL | City Climate Finance Gap Fund completes first year of operation with support to 33 cities
September 23, 2021.- The City Climate Finance Gap Fund (the Gap Fund) has approved technical assistance for 33 cities since its operational launch in September 2020, filling a critical gap in technical assistance funding to help cities turn their climate ambitions into finance-ready projects.
REGIONAL | EIB leaders urge investment in innovation for climate and post-pandemic recovery at Bled Strategic Forum
September 3, 2021.- Financing innovation is key to driving the development of low-carbon technologies, European Investment Bank President Werner Hoyer said at the Bled Strategic Forum in Slovenia, Thursday.
REGIONAL | Record demand for World Bank USD 5 Billion 7-year sustainable development bond
September 2, 2021.- The World Bank priced a USD 5 billion 7-year Sustainable Development Bond maturing in September 2028. The deal attracted nearly 150 orders and an orderbook reaching over USD 10.2 billion, a record for the World Bank in the maturity.
REGIONAL | GCF boosts COVID-19 low-carbon energy relief with anchor investment
September 1, 2021.- The USD 80 million Energy Access Relief Fund (EARF) has drawn together a unique coalition of financial support for 90 companies in Africa and Asia that have been filling energy access gaps with low-carbon solutions but now face bankruptcy form the COIVD-19 fallout.
REGIONAL | African Development Bank to launch new initiative to integrate natural capital into finance in Africa
September 1, 2021.- On 9 September, the African Development Bank Group, Green Growth Knowledge Platform (GGKP(link is external)), and other partners will launch a new initiative on integrating natural capital into development finance in Africa.
REGIONAL | Gender-focused solutions for the post-COVID return to rural areas
September 1, 2021.- The COVID-19 pandemic has given rise to a new wave of migration, the people are leaving the cities to return to rural areas. By mid-2020 in Peru, for example – just a few months after the pandemic began – 167,000 people had left the capital city to return to rural regions.
REGIONAL | CABEI, KfW and EU contribute US$350 million to MSMEs affected by COVID-19
May 29, 2020.- Through the Facility, CABEI makes credit resources amounting to US$350 million available to MSMEs to finance their working capital and investment needs through its network of financial institutions throughout the region
HONDURAS | CABEI approves US$50 million to Honduras for prevention, detection and treatment of COVID19
May 26, 2020.- Honduras is the first country in the region to receive resources from the Development Policy Operation (DPO) program, reaffirming CABEI’s support to increase actions to contain the Pandemic in the country.
REGIONAL | ADB Governors Approve Corporate Financial Matters in First Virtual Annual Meeting
May 22, 2020.- The second stage of the Annual Meeting, including seminars with Governors and other senior government officials, members of the private sector, representatives of international organizations and civil society organizations.
SPAIN | Scaling up cooperation among Development Finance Institutions (DFIs) in response to COVID19
May 16, 2020.- Our group of more than 25 development finance institutions (DFIs)4 has an important role to play by responding quickly and flexibly to support the private sector in developing countries through the crisis.
BRAZIL | First funding granted by FONPLATA to non-sovereign public sector, the Brazilian BDMG
May 15, 2020.- FONPLATA granted an 8-year US$36-million revolving line of credit to the Development Bank of Minas Gerais – BDMG, Brazil, which will be used to fund projects initiated by the municipalities of the State of Minas Gerais.
REGIONAL | IDB, World Bank sign the first Framework Agreement for mutual reliance in procurement
May 8, 2020.- The Agreement will allow the IDB and the World Bank to leverage each other’s capacities and move in a more expeditious manner, to prepare and implement projects in countries and channel much needed resources to address the needs of the Region.
GUATEMALA | CABEI approves US$193.2 million to Guatemalan healthcare system
May 5, 2020.- It is noteworthy that US$79.0 million of the US$193.2 million will be provided by the Korea Development Co-Financing Facility for Central America; an agreement between the Ministry of Economy and Finance of the Republic of Korea and CABEI.
REGIONAL | Japan to Support ADB Developing Member Countries' Response to COVID-19 Challenges
April 30, 2020.- The Asian Development Bank (ADB) has provided several targeted interventions to support its developing member countries (DMCs) in combating the effects of the novel coronavirus disease (COVID-19) pandemic from its early stages.
CANADA | BDC launches Bridge Financing Program to support Canadian venture capital-backed companies
April 29, 2020.- In response, BDC Capital, the investment arm of Business Development Bank of Canada (BDC), has recently launched the BDC Capital Bridge Financing Program, to maintain and protect the growth of the Canadian venture capital sector.
BRAZIL | Government and institution measures in response to COVID-19
April 26, 2020.- The Minister of Economy, Paulo Guedes, announced in March 26th that the economic stimulus package, closed by the Ministry of Economy, Public Banks and the Central Bank will be US$ 150 billion (R$ 750 billion), to face the economic impacts of COVID-19 in Brazil.
COLOMBIA | National Government authorizes Findeter and Bancóldex to offer loans to face COVID-19
March 25, 2020.- Findeter may grant credits with compensated rate to the territorial entities to face the coronavirus, Bancóldex will do the same with companies or entities that meet the conditions of Decree 468.
REGIONAL | Coronavirus: CAF makes USD 2.5 billion available to countries
March 23, 2020.- As an ally of development in Latin America, CAF makes available an Emergency Credit Line of rapid disbursement of up to USD 2.5 billion, which will allow the authorities to offer a rapid and timely response to mitigate the effects of the expansion of COVID-19 .
BRAZIL | BNDES takes its first steps to shore up company cash flows and assist workers against coronavirus
March 22, 2020.- The Bank anticipates making an initial R$55,000 million injection into the economy to enable companies in all sectors to continue operating. The amount involved represents almost all of BNDES’ disbursements in 2019.
REGIONAL | IDB ready to support Mercosur countries in response to COVID-19
21 March, 2020.- The IDB responded today to the call for support from the four Mercosur member countries to collaborate with other multilateral organizations to evaluate lines of action that contribute to effectively face the challenges derived from combating the spread of the coronavirus.
HONDURAS | Banhprovi announces three-month freeze on loan capital and interest payments in Honduras
March 20, 2020.- The President of Banco Hondureño de la Producción y la Vivienda (Banhprovi), Mayra Falck, announced in HRN that capital and interest payments on loans in affiliated banks would be frozen for a period of 3 months.
BRAZIL | CAIXA announces more measures to mitigate the negative impact of Covid-19
March 19, 2020.- These loans will benefit individuals, construction companies and developers. One of the most important measures is the possibility of pausing the payment of financing contracts by diluting the difference over the full term of the loan.
COSTA RICA | Banco Nacional announces measures in response to the Presidential Instruction
March 19, 2020.- This will bring down the Base Interest Rate on Deposits (BIR), today located at 4.35% and to which the interest rate of loans in colones are linked; this is what individuals and companies pay for loans.
BRASIL |BRDE: R$300 million will be available to promote public relations
March 18, 2020.- Projects of priority for the state’s development will have access to R$300 million at Banco Regional de Desarrollo Económico del Extremo Sur (BRDE). The Promove Sul permanent revolving fund was launched on Tuesday (03/17).
COSTA RICA | Infocoop and Banco Nacional announce lending terms to cope with the impact of Covid-19
March 18, 2020.- Infocoop adopted the agreement to lower all lending interest rates charged to the country’s cooperative associations, in order to support that sector –particularly agricultural cooperatives– , which has been suffering the effects of different encumbrances.
ECUADOR | Moreno: Public banking system postpones interest and loan payments
March 18, 2020.- President Lenín Moreno stated that interest and loan payments would be postponed for public banking customers. He also declared that in the next few days he will be announcing long-term contingency loans for the recovery of the production system, as well as a plan for self-employed entrepreneurs and workers.
Related Publications
Summary
Responses of Latin American Development Banks to the economic crisis
Development banks are at the forefront in mitigating the impact of the pandemic through their efforts to design and implement government programs in cooperation with local financial systems and regional and multilateral financial organizations. The sector’s immediate aim is to provide liquidity to families by social assistance programs, and to the business sector. These were identified in the study published by ALIDE and based on an analysis of the measures taken by Latin American and Caribbean banks. An initial version of this study was presented to the World Bank as a collaboration.
Summary
The Counter Cyclical Role of Development Banking to Face the International Economic Crisis
The current financial crisis has called to reflection not only on the operation of the markets, but also on the role of the State in regulation the financial system and its transparency, among other topics. This means that the action of the State should be directed to help the financial markets to operate increasingly better, and there is not doubt that their activity is fundamental in times of crisis when the operation of the payment and credit mechanism is in danger