Nicaragua gets $10 million from the IDB

IDB loan will help small and medium-sized enterprises expand export and attract foreign investment.

Wednesday, November 25, 2009

The Inter-American Development Bank (IDB) approved a $10 million loan to finance a foreign trade program that will help small and medium-sized enterprises (SMEs) in Nicaragua expand exports and attract foreign investment.

The IDB loan will help to identify new export opportunities for the country and will finance workshops for the private sector to promote their products and the creation of a trade promotion office in Europe. The IDB will also support training for small and medium-sized companies seeking to start exporting or increasing their exports.

The program will help maintain and enhance market access for beef and beef products, the country's second-leading export product. It will boost the number of cattle meeting traceability requirements for exports. The loan will finance the purchase and administration of identification tools needed for tracing 900,000 head of cattle, together with the implementation of a farm registration program that would use the latest technology for locating, recording, and identifying individual animals.

This project comes as major export markets are imposing increasingly rigorous sanitary, quality, and safety demands, and these threaten to close off international market access for Nicaraguan products.

In terms of institutional strengthening, the IDB financing will support the design of a national quality policy, and a strategy and comprehensive action plan for improving the National Export Quality System and its infrastructure. This will facilitate exports of greater value added and will foster a culture of quality and consumer protection.

The project will improve investment promotion policies, institutions, and instruments. It will also finance studies to adapt legislation to current trade agreements as well as training of public officials on specific issues related to the management of trade accords, such as dispute settlement. In addition, the program will improve the country's institutional capacity to negotiate and administer trade agreements.

Half of the loan will come from IDB's ordinary capital and it will be for a 25-year term, with a 5.5 year grace period and a fixed interest rate. The other $5 million will come from the IDB's Fund for Special Operations, with a 40-year term and grace period and an interest rate of 0.25 percent. The Government of Nicaragua will provide $437,000 in local counterpart funds.

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