Local Currency Fund II Expansion

in implementation

In January 2015, the IDB approved a Loan to Locfund II comprised of an A Loan of up to US$15 million funded by IDB with its Ordinary Capital resources and up to US$7.5 million in a Co-Loan from the China Co-Financing Fund (the “China Fund”) to provide financing in local currency to microfinance institutions (“MFIs”), contributing to reduce the MFIs’ foreign exchange risk exposure and to support the expansion of their local currency lending capacity to micro- and small-sized enterprises (“MSEs”) in Latin America and the Caribbean (“LAC”).As of August 2017, Locfund II has provided local currency loans to 47 MFIs that attend more than 1.3 million final clients in 13 countries of LAC. Locfund II has reached its initial targeted size. However, since the demand for local currency loans is still strong, Locfund II is looking for additional debt to increase its size and to benefit a larger number of MFIs’ clients.The IIC, as member of the IDB Group, will support Locfund II’s expansion through a Loan of up to US$10 million (the “IIC A Loan”). Thus, the number of MFIs reached and final clients benefited will also increase. Locfund II expects to increase the number of MFIs’ clients by 13% totalizing 241,000 final beneficiaries during its life.