Haitian banks get stability funding

The World Bank is providing US$3 million to Haiti to support a partial credit guarantee programme to help local banks and cooperatives restructure the loans of borrowers affected by the January 12 earthquake.

The Washington-based financial institution said the grant will also help restart lending in anticipation of a stronger demand for credit in the context of the French-speaking CARICOM country's reconstruction.

"The project will benefit local banks and cooperatives, as well as firms and individuals, especially those who have been affected by the earthquake and need temporary relief to continue running their businesses," said Yvonne Tsikata, World Bank director for the Caribbean.

"These resources will be leveraged by grant funding from other donors, and form part of a larger initiative to revive the Haitian credit market," she added.

Tsikata said the grant will help reduce the credit risks of financial institutions on small loans to borrowers affected by the earthquake, and micro, small and medium enterprises and housing loans.

In addition, she said the grant would provide technical assistance to the financial sector by designing and putting in place measures to remove obstacles to credit growth.

Specifically, the World Bank said the US$3 million grant would support stabilisation of Haiti's banking sector.

"Eligible financial institutions will be able to restructure loans without damaging their asset base, since credit risk will be shared with the partial-credit guarantor," the statement said.

The grant will also help in the rehabilitation of the productive sector, it added, stating that many firms and borrowers have lost collateral and have difficulty accessing financial resources for reconstruction.

"The guarantees will place firms in a better position to negotiate loan restructuring with their financial institutions, obtain new loans, and continue running their businesses," the statement said.

In the aftermath of the January earthquake, the World Bank said it is providing US$479 million in reconstruction support.

Of that amount, it said US$320 million has already been issued for various government-led projects under new and ongoing projects.

Another US$39 million was used to cancel Haiti's bank debt, and US$49 million from the World Bank's private-sector arm, IFC, funded Haiti's private development.

- CMC