WASHINGTON, D.C., June 26-The International Finance Corporation today announced approval of a US$30 million credit line to support private enterprises in Argentina's northern provinces. The financing will be channeled through a leading privately owned Argentine bank, Banco Roberts, S.A., which through its regional center in Tucuman has a strong presence in these provinces.
The project is part of a coordinated World Bank Group effort to promote economic growth in these provinces (Tucuman, Salta, Jujuy, Santiago del Estero, Catamarca, La Rioja, Misiones, Chaco, Corrientes, and Formosa), all of whose performance has generally lagged behind that of Buenos Aires province. A major aspect of this work is a special initiative the Bank Group launched in mid-1995 to recommend solutions for re-igniting growth in Tucuman. A joint IFC/World Bank study has been completed that diagnoses that province's development issues and recommends new public and private sector responses.
With many initial reforms now having been made in Tucuman, IFC senses that the local business climate is good and its demand for credit high. It has extended the Banco Roberts credit line as part of this continuing initiative for the province.
The credit line is expected to stimulate economic and industrial development in Tucuman and other poorer provinces by providing medium- and long-term funding to small- and medium-sized enterprises. This financing is otherwise in very limited supply. Its lack has historically hindered area companies from undertaking necessary investment projects, making it difficult for the provinces to develop a sound industrial base or fully utilize their natural resources.
The credit line's sub-loans will typically be for maturities of 3-5 years, although some may be for the full 8-year maturity of the facility. Eligible projects will require a maximum of US$20 million of investment. IFC funds would provide the lower of US$5 million or 50% of the total requirement and catalyze the remainder from local sources.
The project is initially expected to finance a high number of agribusiness projects, given the predominance of this sector in the region. It thus compliments an earlier in-depth study of options for restructuring Tucuman's dominant industry, sugar production, that IFC' commissioned from one of the world's leading sugar industry firms, Booker Tate Ltd. of the UK. Many of these recommendations are now being implemented. They are expected to enhance the local sugar industry's competitiveness vis-a-vis future imports anticipated from Brazil as part of the Mercosur regional trade integration process.
IFC, a member of the World Bank Group, is the largest multilateral source of financing for private sector companies in developing countries.
