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Emergency Liquidity Facility

Oficentro La Virgen No. 2
Edificio 1, Piso 1, Zona Industrial de Pavas
San Jose
Costa Rica

Contact: Juan Carlos Pereira, General Manager
Phone: 506-2220-4122
Fax: 506-2290-2345
URL: www.emergencyliquidityfacility.com
Email: jcpereira@omtrixinc.com
Emergency Liquidity Facility

The Emergency Liquidity Facility (ELF) is a fund located in San Jose, Costa Rica with operations throughout Latin America and the Caribbean. ELF has more than $35 million available to assist in emergencies and was created with the participation of bilateral and multilateral institutions, as well as private investors. Its purpose is to serve as a lender of last resort to microfinance institutions (MFIs) affected by natural disasters or man-made crises.

Program

MFIs that are interested in pre-qualifying for an emergency loan must allow ELF's staff members to evaluate their structures and financial situations. If the MFI is approved, it must then regularly send its financial statements to ELF for periodical monitoring. The MFIs that qualify are eligible for ELF's programs which include: liquidity to MFIs affected by an external shock, emergency loans are provided to MFIs that allow them to continue their financial activities without interruptions and to overcome liquidity difficulties that occur after disasters, and prevention activities and training in risk administration. Through non-reimbursable funds from the Technical Support Facility (TSF), ELF provided technical assistance aimed at strengthening the emergency prevention and mitigation practices of MFIs during its first four years of operation. ELF has already used all funds from the Technical Support Facility (TSF). During 2008 ELF's management worked in the TSF Replenishment, a first closing in the amount of US$278,700, including US$178,700 from MIF/IADB, US$75,000 from SEDF (Soros), and US$25,000 from Calmeadow took place on November 24, 2008.

Client Population

ELF is committed to aiding Latin American finance institutions with at least 50 percent of their loan portfolio corresponding to loans to micro and small enterprises, a lending track record of at least three years, a profit margin, an excellent loan portfolio, strong management and governance practices, and good solvency. As of June 30, 2009, ELF has pre-qualified a total of 51 MFIs located in 13 different countries throughout Latin America and the Caribbean.

Impact

ELF has a $35 million loan facility that provides loans with terms ranging between 6 and 24 months to MFIs whose liquidity position has been affected by unforeseen externally inflicted circumstances. ELF also had close to $0.7 million invested in their Technical Services Facility (TSF), which provided grant funding to eligible MFIs to improve their internal structure so that they may cope with future liquidity crises. As of June, 2009 , ELF had assisted in seven emergencies and provided liquidity loans to a total of seventeen MFIs in six different countries. Total loan disbursements to date amount to $22.8 million. The last of these emergencies has been caused by the international financial crisis and has affected MFIs mainly through funding restrictions as the international and local funding markets dry up.

Story

Emergency Liquidity Facility
"First we received technical assistance to prepare a Contingency Plan should we face an emergency situation. Second, our affiliation to ELF allows us to access funds during emergency situations. The US$1,000,000 liquidity loan provided by ELF in December 2008 allowed us to continue placing loans that where previously frozen due to the lack of funds brought about by the international financial crisis. ELF's disbursement was the first we received after the international crisis caused a contraction in the availability of funds in October 2008. The disbursement was very timely thanks to the periodic monitoring ELF performs as well as the agile lending process. Based on this experience, we can safely affirm that, in emergency times, when other lenders are not willing to disburse funds, ELF is available to support our liquidity needs." Full Story

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