Export promotion fund

Project consists of providing financial resources to the Banco Latinoamericano de Exportaciones (BLADEX) for extending short- to medium-term credit to export industries of the Central American Common Market (CACM) to: (1) finance importation of basic goods; (2) provide interim credit; and (3) restore investor confidence in the CACM. BLADEX will provide a maximum of $million in short-term (up to 180 days) advances, bankers acceptances, and/or usance letters of credit to finance importation of working capital required by export firms to import raw materials, intermediate goods, and spare parts needed to produce export commodities. Private commercial bank co-financing will be required at a ratio of 2:1. Borrowers must be exporters of manufactured goods or non-traditional agricultural commodities, with emphasis on small- and medium-sized, labor-intensive enterprises with significant backward linkages. Commodities produced will be exported to hard currency areas; loans will be made at current market rates; and profits will be channeled into a revolving fund. Existing foreign exchange mechanisms will be used. As a second objective, greater than usual emphasis will be put on the provision of post-export credit to exporters to cover the time lag between shipment of the export product and payment by the foreign buyer. A third objective, to be initiated after 2 years, will be to use revolving fund profits to finance medium-term loans of up to 5 years for capital improvements by export industries. As a result of the project, net imports should rise from $60 million in 1983 to $300 million in 1987, yielding a GDP increase of $600 million annually beginning in 1988. Some 22,000 new jobs should result, mostly in the formal employment sector.