The Hindu : Business : IFC launches crisis response initiatives

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Wednesday, Jan 07, 2009
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IFC launches crisis response initiatives

Special correspondent

These facilities are expected to deploy about $ 30 billion

NEW DELHI: The IFC board on Tuesday approved a package of crisis response initiatives to support the private sector in emerging markets hit by the global financial crisis.

According to an IFC statement here, the initiatives will support the private sector which is critical to employment, recovery and growth.

The crisis response facilities consist of a doubling of the IFC global trade finance programme to $ 3 billion, a new $ 3-billion ‘bank recapitalisation fund’, and an ‘infrastructure crisis facility’ which is expected to mobilise at least $ 1.5 billion.

These will be supported by advisory services to address the needs of clients affected by the crisis. On December 9 last year, the board also approved a ‘Sovereign funds initiative’ to enable the private lending arm of the World Bank to raise and manage commercial capital from sovereign funds for equity investments in some of the poorest developing countries.

To source new capital

Hailing the approval and endorsement of these initiatives, IFC’s Executive Vice-President and CEO Lars Thunell said: “With the support of donors and partners, these IFC facilities will provide critical assistance to many businesses and entrepreneurs and reduce the impact of the crisis on the poor. In addition, our new Sovereign Funds Initiative should mobilise new sources of commercial capital for long-term investment in frontier regions and countries.”

The four crisis response facilities are expected to deploy about $ 30 billion over the next three years. IFC will fund the facilities and has invited other donors, including governments and international financial institutions to contribute financing and expertise. The Japanese government has announced that it will become a founding partner and invest $ 2 billion in the bank recapitalisation fund.

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