Washington, D.C., March 16,
2005 —The International Finance Corporation, the private sector arm
of the World Bank Group, has expanded a technical assistance program aimed
at improving access to housing finance in Central America and Peru. The
program is supported by the Canadian International Development Agency (CIDA),
the Italian Ministry of Finance, and IFC’s own resources.
The new program phase will explore ways to develop the primary mortgage
markets of Costa Rica, El Salvador, and Panama into an integrated regional
primary mortgage market and, at a later stage, a secondary market. In addition,
IFC will provide technical assistance to Fondo Mivivienda in Peru, a fund
that finances the mortgage lending of commercial banks and non-bank financial
institutions. This project will review and update Mivivienda’s underwriting
manuals in order to standardize their mortgage products and help facilitate
the development of a secondary mortgage market.
The interventions build on technical assistance projects undertaken for
the less developed markets of Guatemala, Honduras, and Nicaragua during
the first program phase. In these countries, IFC has conducted in-depth
assessments of capital market and legal frameworks and made specific recommendations
to overcome constraints in housing finance.
Jyrki Koskelo, IFC’s director for Global Financial Markets, said, “In
small emerging markets viable housing finance systems are crucial for poverty
alleviation and financial sector development. Our challenge is to use technical
assistance in an effective way to support the sector and our investment
Atul Mehta, IFC’s director for Latin America and the Caribbean, added,
“In Central America, we are helping establish regional mortgage markets.
This allows us to contribute to the scaling up of mortgage finance and
advance the financial sector as a whole.”
A key element of poverty reduction, housing finance plays an important
role in the World Bank Group’s overall financial sector strategy. Mortgages
account for a large portion of household debt and support the efficient
functioning of domestic and international financial markets through secondary
markets and securitization. In addition, the housing market is an essential
driver of the construction industry and its suppliers and thus an important
contributor to employment.
The mission of IFC (www.ifc.org)
is to promote sustainable private sector investment in emerging markets,
helping to reduce poverty and improve people’s lives. IFC finances private
sector investments in transition and developing countries, mobilizes capital
in the international financial markets, helps clients improve social and
environmental sustainability, and provides technical assistance and advice
to governments and businesses. From its founding in 1956 through FY04,
IFC has committed more than $44 billion of its own funds and arranged $23
billion in syndications for 3,143 companies in 140 developing countries.
IFC’s worldwide committed portfolio as of FY04 was $17.9 billion for its
own account and $5.5 billion held for participants in loan syndications.