CAF approves quick credit of USD 800 million for Ecuador, while money arrives from the IMF

These days, the CAF will disburse a quick loan for Ecuador, while the new credit arrives from the IMF, which must still be approved by its Board of Directors.

The Board of Directors of the Bank of Latin America CAF approved a short-term bridge loan of USD 800 million for Ecuador, the multilateral confirmed.

These resources will be added to those disbursed by the International Monetary Fund (IMF), which on April 25, 2024 reached a technical agreement with Ecuador for a new credit program for USD 4,000 million.

According to CAF, the operation was approved under the instrument called Extraordinary Liquidity Financing (FEL) available to CAF.

And he added that it will serve as financing so that Ecuador can continue with the negotiation of an Extended Facilities Agreement with the IMF, today approved at the staff level, for the benefit of its fiscal stability, macroeconomic stability, promotion of inclusive growth and protection of the more vulnerable.

CAF explained that, in the extraordinary virtual meeting of the Board of Directors, it reflected on the need for Latin America and the Caribbean, through CAF, “to respond in an agile and effective manner, with a sense of urgency and a spirit of solidarity and trust, to the need for a shareholder country”.

The multilateral also reported that the operation was carried out in close coordination with the IMF.

And it highlights CAF’s countercyclical role and its capacity for effective action in the global financial safety network, by dynamically making agile financial solutions available.

This type of quick credit, according to the multilateral, allows countries to “face situations of economic complexity and support the strategic management of public finances and the responsible management of public debt.”

In 2023 CAF became an authorized SDR holder, one of the few institutions in Latin America and the Caribbean with such authorization. This allows the bank to respond quickly to pressing situations in its shareholder countries.

CAF has annual credit approvals that exceed USD 16 billion for projects from 21 shareholder countries. It was founded in 1968.

The Ministry of Finance reported that it will receive these resources in the coming days, which “constitute a dynamic financial situation to face illiquidity situations and thus consider strategic management in the management of public finances.”