by STAFF WRITER
December 20, 2021
WASHINGTON, Dec 20, CMC – The Inter-American Development Bank (IDB) Monday said together with its private-sector arm, IDB Invest, they expect to close this year with US$19.5 billion in new financing for Latin America and the Caribbean (LAC) as they helped countries recover from the coronavirus (COVID-19) pandemic while ushering an era of sustainable and inclusive growth.
The Washington-based financial institution said that the financing is the second-highest annual total in the history of the IDB and IDB Invest and helps countries invest in priorities ranging from COVID-19-era healthcare and digitalization to climate change action, supply chains and education.
It said the funding will also help reduce gender inequality, expand entrepreneurial ecosystems, and empower small and midsize companies, which account for over two-thirds of the region’s jobs.
The combination of IDB loan approvals ($14 billion) and expected IDB Invest financial commitments ($5.5 billion) and private-sector mobilizations ($2.8 billion) totalled $22.3 billion.
The IDB said that Latin America and the Caribbean is the region hardest hit by the pandemic. It said home to about eight per cent of the world’s population, the LAC accounts for almost a third of all COVID-19 deaths – over 1.5 million people. The region also continues to face high inequality and serious economic and social challenges.
“This year, we demonstrated how a 21st-century IDB can empower countries to overcome unimaginable challenges and pave the way to a new decade of prosperity.
“We did so by listening carefully to our clients and member countries and by leveraging our exceptional human capital to create innovative financing and private-sector partnerships that will accelerate the region’s recovery,” said IDB President Mauricio Claver-Carone.
“The pandemic created unprecedented challenges, but it also opened historic opportunities for Latin America and the Caribbean to grow, especially in areas including digitalization, near shoring and supply chains – and we are proud to be there, focused on helping countries seize those opportunities,” he added.
In total, the IDB approved 103 sovereign guaranteed projects in 2021 for a total of US$14 billion, while disbursements are expected to reach US$12.1 billion.
The bank said in the context of COVID-19, financing helped countries secure life-saving vaccines and increased access to credit so that small and midsize companies, the main drivers of employment, can expand their businesses.
It said new projects and financing will accelerate digitalization so countries can improve public services, expand educational access, increase transparency and combat corruption. Funding will also help improve digital-skills training to enrich the region’s human capital.
Amid a historic reconfiguration of international trade, the IDB approved US$2.3 billion to strengthen regional supply chains, nearly doubling the average amount of the three years before the pandemic. “This will help countries take advantage of a tangible new opportunity, amplified by the pandemic and the global supply-chain crisis, to attract foreign direct investment and increase exports of goods and services.”
The IDB said it also worked with 16 countries to identify critical export and supply-chain advantages, including.
In 2021, the IDB continued to make it easier for countries to accelerate pandemic recovery, while simultaneously addressing critical, longstanding issues, such as climate change and gender inequality.
The IDB launched its Amazon Initiative and approved about US$4.5 billion in resources for climate-related operations, the highest amount ever. It also took a leading role among multilateral development banks at COP26, the annual United Nations conference on climate change, announcing a plan to fully align operations with the Paris Agreement and provide $24 billion for climate and green finance over the next four years.
Of all projects approved in 2021, the IDB said nearly 70 per cent included one or more components to tackle climate change, while 75% addressed gender issues, almost 40 per cent of approvals went to small and vulnerable countries.
The IDB said it also piloted a streamlined process for projects that slashed approval times by 30%, enabling the bank to quickly meet the needs of its 26 regional member countries.
“The IDB stepped up and delivered the second-highest level of approvals for sovereign guaranteed operations in the Bank’s history in response to the pandemic, natural disasters and multiple other crises,” President Claver-Carone said.
“I am confident that as we implement new initiatives and roll out ongoing operational efforts, the IDB will be even more productive in 2022 to meet the needs of Latin America and the Caribbean as the region’s partner of choice.”
In addition, the IDB dramatically scaled up its engagement with the private sector by creating the Private Sector Partners Coalition.
The Coalition began with 40 of the world’s leading companies and has since expanded to over 160 of the world’s most innovative firms. Its activities span 13 working groups in areas including nearshoring, climate change, women’s empowerment and digital transformation. The Coalition is creating a resource-mobilization platform to identify investment opportunities and channel new technology, know-how and other private-sector resources to the region.
To further catalyze investment, the IDB also hosted a series of investment-promotion forums in Belize, Brazil, Ecuador and Miami, as well as 12 trade promotion forums, which drew almost 100,000 participants. The events generated $55 billion in expected business deals. In 2022, the IDB plans to hold another round of investment and trade forums in Jamaica, Panama and Paraguay, among other countries.
IDB Invest provided a total of US$8.3 billion in financing in 2021 including US$5.5 billion in short- and long-term commitments, and a record-breaking US$2.8 billion in mobilizations.
IDB Invest has mobilized one dollar for every dollar closed on its own account in long-term financing, a 50 per cent increase over the previous year.
At COP26, IDB Invest announced the first blue bond in Latin America and the Caribbean, highlighting the IDB’s commitment to designing innovative financial solutions for climate action.