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II SÉRIE-A — NÚMERO 46

agencies, educational institutions or others, to develop the human resource base needed for increased investment flows and an expanded private sector, and, in particular, to finance:

a) The training of workers who may be displaced as governments implement investment reforms, reduce public expenditures, restructure or privatize;

b) The training of workers and managers to assure that skilled workers and managers are available to meet the manpower needs of investors and an expanded private sector, and that managers are familiar with international practice in such areas as finance, accounting, planning, marketing and distribution, management information systems and so forth;

c) The training of individuals who can serve those regulatory functions essential for the operation of a market-oriented system, including training in such disciplines as consumer protection, worker protection, the administration of competition laws and the protection of the environment;

d) The training of professionals who are considered important to the development of the local economy, through strengthening the scientific, technical and managerial capabilities of the human resource base; and

e) The strengthening of vocational training and other institutions which will serve the purposes set out in a), b\ c) and d).

Section 4 The Small Enterprise Development Facility

a) Under the Small Enterprise Development Facility, financing shall be provide to indigenous micro-enterprises and smaller businesses directly or through intermediaries, and to institutions serving them, to achieve the purposes of the Fund, as set out below.

b) For the purposes set out in paragraph a), grants may be provided for technical cooperation to non-governmental organizations and domestic financial institutions (including financial intermediaries) to expand the volume and range of services available to micro-enterprises or smaller businesses. Such grants for technical cooperation may be used to help those organizations and institutions to:

i) Improve financial and business pratices so that

they may become self-sustaining; it) Develop innovative financial services, such as leasing and rediscount facilities, and participate in interbank markets; and Hi) Develop services to assist micro-enterprises or smaller businesses to prepare business plans, identify business opportunities and sources of financing, and solve particular marketing or other business problems.

c) To also achieve the purposes of paragraph a), a Small Enterprise Investment Fund shall be established, and shall at all times and in all respects be held, used, obligated, invested and accounted for separately from other resources of the Multilateral Investment Fund. The resources of the Small Enterprise Investment Fund may be used to make loans, equity investments, and quasi-equity investments to

smaller business and micro-enterprises, and to nongovernmental organizations and domestic financial institutions which are creating or expanding services to micro-enterprises or smaller businesses, or which are lending to or investing in micro-enterprises or smaller businesses. The Donors Committee shall determine the basic terms and conditions of such loans and investments. Any amounts, whether dividends, interest or otherwise, received by the Bank from the operations of the Small Enterprise Investment Fund shall be deposited to the account of the Multilateral Investment Fund, for allocation by the Donors Committee pursuant to article 4, section 3.

Section 5 Principles for Fund operations

a) Financing from the Fund shall be provided under the terms and conditions of this Agreement consistent with the rules set out in articles ni, iv and vi of the Agreement Establishing the Inter-American Development Bank (hereinafter referred to as the «Charten>), the policies of the Bank applicable to its own operations, and the rules and policies of the Inter-American Investment Corporation where relevant. In addition, while all developing member countries of the Bank are potencially eligible recipients, finacing from the Fund shall be provided only if:

i) In the case of grant assistance, the recipient has established that the assistance will likely have a catalytic impact on investment flows;

ii) The developing member country of the Bank, in the territory of which the resources will be utilized; either:

A) Is in compliance with an investment sector loan agreement between that country and the Bank; or

B):

1) In the case of financing under section 2, a), b) or c), of this article, is committed to sound macroeconomic policies and to investment reform; or

2) In the case of any other financing under this Agreement, is implementing both sound macroeconomic policies and policies and practices which have removed and continue to remove impediments to metered investment flows, and which are resulting in a significant expansion of the private sector; and

Hi) The developing member country of the Bank, in the territory of which the resources will be utilized, is in compliance with agreements with relevant international financial institutions.

b) In deciding on providing grant funds, the Donors Cornmittee shall pay particular attention to the commitment of specific member countries to poverty reduction and investment reform, the social costs of economic reforms, the financial needs of the prospective recipients and the relative levels of poverty in specific member countries.