Monday, 23 February 2009

IADB May Report $1 Billion Loss in Investment Portfolio. Another Victim of the Sub-Prime Debacle

The way the IADB bankers announce their screw-ups is quite peculiar: ''The financial crisis has driven down market prices of several types of assets worldwide and the IADB has not been immune to its effects. As part of its liquidity policy, the bank maintains a liquid investment portfolio that covers on average 18 months of loan disbursements, debt service and other liabilities.´´ Too much of that.

Then, they say: ''For 2008, the IADB expects to report a net investment loss of approximately $1 billion on the portfolio. The results were mostly unrealized and were recognized in compliance with mark-to-market accounting rules. The realized losses were $71 million for the year.´´ Last year, such net investment loss had been worth $300 million more or less (it was quite a long time ago, so that it is why I can't recall the exact number.)

Ah! and they finish it with style:
''The results have not materially affected the bank’s lending or operational capacity.´´ It might be partially true -- they will surely finance a fewer number of projects across the region this year than they did in 2008. On the other hand, the IADB said it boosted loan and credit guarantee approvals by 18 percent last year to $11.2 billion, citing renewed demand for financing in Latin America and the Caribbean amid the global crisis. Disbursements totaled $7.6 billion, or about $500 million more than in 2008.

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