The Asian Infrastructure Investment Bank (AIIB) approved $50 million in financing for the first Latin American country to join as a non-regional member: Ecuador. Project is a $50 million sovereign guaranteed loan to Ecuador’s largest public bank, Corporación Financiera Nacional B.P. (CFN). The objective is to counteract the liquidity constraints faced by micro, small, and medium-size enterprises (MSMEs) because of the COVID-19 induced economic crisis. The World Bank is also participating in the financing. The loan was provided through the AIIB’s COVID-19 Crisis Recovery Facility (CRF), which involves some $13 billion in financing for public and private sector entities of any AIIB member facing severe adverse shocks because of COVID-19.
The AIIB is co-financing the “Capitalization of the National Guarantee Fund (NGF) for the COVID-19 special program” and the extension of a loan to CFN for on-lending (through loans or guarantees) to Participating Financial Intermediaries (PFIs) for further on-lending to eligible beneficiary MSMEs. Under the project, the AIIB provides, through the borrower, short-term liquidity financing for MSMEs in the form of partial credit guarantees and/or lines of credit to mitigate the impacts of the COVID-19 pandemic-induced economic crisis. As the first project approved by the AIIB in Latin America, this loan has the eyes of not only the other non-regional Latin American members, such as Argentina, Brazil, Chile, and Uruguay, but also the countries that have not yet become members: Bolivia, Peru, and Venezuela. AIIB has reported the approval of 151 projects in 31 countries for almost $30 billion. Ecuador’s project is a first sign of a future that Latin American countries hope to be able to take advantage of to pay off their infrastructure backlog, although there is still no information on other projects submitted to the financial organization.