WASHINGTON, D.C., November 16, 1998— The International Finance Corporation today signed an agreement to provide a US$25 million credit line to Banco Cuscatlán for on-lending to small and medium sized enterprises. The agreement marks IFC's first investment in El Salvador's banking sector, which was reprivatized in 1991.
Banco Cuscatlán will use the IFC credit line to provide long-term, US-dollar funds for small and medium sized enterprises to modernize, expand, and undertake financial restructuring. Loans will go to businesses in El Salvador and, to a lesser extent, in other Central American countries.
The investment will strengthen Banco Cuscatlán's long-term lending capabilities, diversify its funding sources, and increase the maturity of its liabilities. IFC's involvement will enhance Banco Cuscatlán's operating procedures, particularly in lending policies and environmental risk management.
The financing agreements were signed by Banco Cuscatlán President Mr. Mauricio Samayoa and Ms. Yolande Duhem, IFC Resident Representative for Central America and Panama.
According to Ms. Duhem, this investment exemplifies IFC's new effort to support the development of financial markets in El Salvador and in the region. It should stimulate economic activity in key sectors such as manufacturing, agriculture, transport, resource extraction, and tourism, which provide significant employment throughout the region. IFC plans to continue promoting the development of the Salvadorian financial sector by supporting private financial institutions.
IFC is giving special emphasis to El Salvador through a program called "Extending IFC's Reach." The program is designed to increase support to smaller firms and to widen the geographical coverage of IFC's investment activities.
IFC, part of the World Bank Group, fosters economic growth in the developing world by financing private sector investments, mobilizing capital in the international financial markets and providing technical assistance and advice to governments and businesses.
