IDB approves US$300 million to support competitiveness and economic recovery in Peru

Photo: ANDINA/Ricardo Cuba

Photo: ANDINA/Ricardo Cuba

18:16 | Lima, Sep. 21.

As part of its efforts to boost competitiveness and productivity in Latin America and the Caribbean, the Inter-American Development Bank (IDB) approved a US$300 million loan to help the Peruvian government reactivate its economy and accelerate growth.

In a release, the IDB indicated that the Reform Program to Support Economic Recovery and Competitiveness will facilitate the alignment of public innovation programs with national productive challenges, particularly those related to economic, social and environmental sustainability

Additionally, it will promote private and public investment in infrastructure and improve access to financing to continue production.

Economic recovery

As noted by the Inter-American Development Bank (IDB), the economic effects of the COVID-19 pandemic in Peru had negative consequences for innovation and investment. 

The health emergency ended two decades of growth in the country. Its GDP shrunk by 11% in 2020, and then rebounded by 13.6% in 2021 and continued to grow by 2.9% in 2022. 

Within this context, it stressed that this operation will help Peru cement its economic recovery and enhance its business environment to foster the investment and innovation needed to sustain its growth.

The program will promote regulatory and tax reforms to improve the way private and public investments are implemented. It will also strengthen channels for public-private dialogue to unlock investments and launch new financial tools to address the liquidity problems of micro-enterprises and small businesses.

Fund to fill financing gap

The program will also create a fund to fill the financing gap for entrepreneurship. It will also promote formalization and digitalization of micro and small businesses.

The reform program will generally benefit formal-sector businesses in Peru, especially microenterprises and small businesses participating in the economic recovery and digitalization program, as well as businesses that are working to transition to more complex formal production models through the services of the network of centers for productive innovation and technology transfer (CITE, its Spanish acronym). 

It will also benefit companies participating in government research and development programs.

Venture capital funds 

Moreover, the IDB noted that other direct beneficiaries include venture capital funds and entrepreneurs that secure investments from those funds. 

In terms of inclusion, the operation will help close gender gaps in the use of digital technologies by deploying flexible and easy-to-access training strategies like bootcamps

It will also encourage the participation of indigenous communities by taking steps like a project to boost resilience and livelihoods in the Loreto region.

The US$300 million IDB loan has a 20-year repayment period, a 5.5-year grace period, and an interest rate based on the Secured Overnight Financing Rate (SOFR).

About the IDB

The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean.

The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public- and private-sector clients throughout the region. 

Editor's note: Information provided by the Inter-American Development Bank (IDB).


Published: 9/21/2023