IDB approves $1 billion program for loans to cities and regions across Latam and Caribbean

June 26 (Reuters) - The Inter-American Development Bank said on Thursday it approved an initiative to extend up to $1 billion in loans over five years to governments of cities and regions in Latin America and the Caribbean.

"It will provide local governments with direct access to financing for infrastructure, urban development, and delivery of services to promote sustainable growth," the IDB said in a statement.

Projects with "high impact" from creditworthy cities, states and regions are eligible for the program, which will avoid crowding out private sector financing.

Loans will be in local currency or U.S. dollars and structured based on credit risk, have a grace period between three and four years and should be paid off between 10 and 15 years according to the IDB. Amounts are expected between $20 million and $100 million per project. The cost is based on market pricing and credit risk assessments.

The five-year pilot program requires a non-objection from the national government while the city, state or region must have a legal authority to borrow without a sovereign guarantee.

The IDB will also offer technical cooperation for reforms and capacity building, it said.