The Inter-American Development Bank and its affiliates this year approved US$12.2 billion in loan and aid support to Latin American and Caribbean (LAC) member countries, setting a new record in a year of crisis.

The approvals represent a 27 per cent increase over last year's US$9.6 billion, and a reaffirma-tion, said the agency, of its leading role as a source of long-term funding for LAC countries.

The bank's current stress is on social programmes as the multilaterals consider how to prevent the economic decline in the region and worldwide from snowballing into a social crisis.

Those concerns rest on new forecasts that have cropped growth estimates in 2009 to between two per cent and 2.5 per cent - down from 4.5 per cent in 2008 - on expectations of reduced foreign investment and lower demand for raw materials.

Programme to protect poor

IDB President, Luis Alberto Moreno, told the executive directors, in his annual review, that the bank in 2009 would focus support on government pro-grammes to protect the poor from the impact of the slowdown.

"The IDB is striving to assist the region in these difficult times," said Moreno. "We are working with our member countries to defend the progress they made in recent years in the fight against poverty."

The IDB said increased backing for social programmes is designed "to prevent millions from falling back into poverty".

A water and sanitation services programme, for example, is being worked on with Spain.

During 2008, the majority of the funds approved - US$11.5 billion for 137 projects - were from the bank itself.

Aid for several programmes

The Multilateral Investment Fund (MIF) provided another US$166 million in micro-enterprise financing, while the Inter-American Investment Corporation (IIC) approved US$553 million for small and medium enterprises.

More than half the financing will back projects in sectors such as energy, transportation, capital markets and information technology; a third goes to social programmes and natural disaster prevention; and the rest to public sector modernisation projects, said the IDB.

During the year, the bank said the projects it oversees rose to 623, from 580 in 2007, while its loan portfolio grew from US$34.7 billion to US$39.6 billion.

business@gleanerjm.com

IDB 2008 highlights

Creation of a US$500 million credit line to alleviate rising food costs.

Creation of the US$6 billion Liquidity Programme for Growth Sustainability to ease access to credit.

Increased funding for the Sustainable Energy and Climate Change Initiative, the Water and Sanitation Initiative, and Opportunities for the Majority programmes.

China approved as donor member - to contribute US$350 million to the IDB group.

Creation of the Fund for Cooperation for Water and Sanitation, a Spanish initiative expected to provide up to US$1.5 billion in grants over the next four years.

Creation of the Aid for Trade Strategic Fund and the AcquaFund, for finance projects to reduce trade barriers and improve access to water and sanitation, respectively.