VIENNA, The OPEC Fund for International Development (OFID) has announced that it is providing a US$100 million sovereign policy-based loan (PBL) to Paraguay to strengthen the country’s sustainable economic development and increase its resilience to climate change.
The programme also supported with a US$300 million loan by CAF the Development Bank of Latin America aims to improve the efficiency and effectiveness of public resources for implementing sustainable policy measures.
OPEC Fund Director-General Dr. Abdulhamid Alkhalifa said, “The current severe droughts have demonstrated Paraguay’s vulnerability to climate change. This programme will help combat adverse effects and secure long-term economic sustainability. Our loan will support Paraguay in adopting measures to strengthen its resilience and reduce its vulnerability to climate change.”
Policy-based lending contributes to countries’ financing needs by providing fast-disbursing resources conditional on policy and institutional reforms that help strengthen the economic framework and support the creation of conditions for sustainable and inclusive growth. These loans support a reform agenda and the implementation of policies agreed between co-financiers and the government.
Paraguay’s programme, supported by the OPEC Fund and CAF, focuses on two main components: sustainable development and fiscal sustainability. Policy actions include, among others, approving a national electric mobility strategy, updating the National Determined Contributions of the Paris Agreement and measures to protect water resources.
Fiscal sustainability entails policy actions focusing on public spending and concrete actions to promote private-sector financing for public works.
The OPEC Fund has supported Paraguay’s sustainable development since 1978, with more than US$600 million loans to date in support of transport, energy, agriculture, and water and sanitation projects.
OFID was established in January 1976 by the then 13 member countries of OPEC, including the United Arab Emirates. It is the development finance institution established as an aid channel to developing countries.
Esraa Esmail/ Rola AlGhoul
Source: Emirates News Agency