Reprinted from Caribbean Net News
caribbeannetnews.com

IDB approves $25 million soft loan to Haiti for financial sector reform
12-14-2006

WASHINGTON, USA: A $25 million fast-disbursing soft loan from the Inter-American Development Bank will support Haiti’s reforms to strengthen and raise the efficiency of its financial sector.

The resources will be disbursed in two tranches, the first one of $10 million and the second one of $15 million, as the Haitian government goes forward with the reforms, which include measures to recapitalise the Haitian central bank (Banque de la République d’Haïti) and strengthen its accounting and internal audit systems.

The loan will support the modernisation of the banking legal framework, in keeping with international best practices to protect private savings. It will also support measures to strengthen banking supervision, including onsite inspections by international experts to improve risk-based supervision and analysis, as well as to establish a training programme for Haitian bank inspectors.

The reforms will strengthen the supervision of credit unions, which have mushroomed since the 2002-2003 crisis that hit these institutions. New regulatory standards will be introduced, inspections will be enhanced and efforts will be made to promote strategic alliances and mergers of cooperatives.

The Haitian central bank will establish a credit information office to monitor the overall levels of indebtedness and the concentration of credit risks in businesses and individual borrowers, providing accurate, reliable and timely information for the whole financial sector.

As of the reforms, the Haitian government will promote legislation on secured financial transactions that will enable more borrowers to pledge assets other than real estate as collateral to obtain loans.

The loan is for 40 years, with a 10-year grace period. Annual interest rates will be 1 percent during the first decade and 2 percent thereafter.