MONTEVIDEO, Uruguay – The Inter-American Development Bank (IDB) and the Export-Import Bank of China (China Eximbank) are advancing in the creation of an investment platform for Latin America and the Caribbean that will mobilize as much as $1 billion for equity investments to promote sustainable economic development in the region.
The investment platform is expected to be operational this year following a letter of intent signed between the IDB and China Eximbank in 2011, when both institutions announced they intended to establish an investment mechanism to finance public and private sector projects in the IDB’s 26 borrowing member countries in Latin America and the Caribbean.
The IDB will provide a $150 million loan to the new China Latin America and the Caribbean investment platform while China Eximbank will provide an equal amount of investment.
“This new platform will promote stronger investment ties between China and Latin America and the Caribbean, helping our region overcome some of the most important development challenges,’’ said IDB President Luis Alberto Moreno. “This partnership is an example of how the IDB can play a pivotal role in increasing cooperation between our region and China to promote greater trade and investment.”
Liu Liange, Vice President of China Eximbank, said “the demands and aspirations in economic and technical cooperation between China and Latin America and the Caribbean are growing gradually. IDB and China Eximbank have undertaken this initiative to develop an investment mechanism to meet the common interests of Latin America, the Caribbean and China.” Mr. Liu indicated that the mechanism will demonstrate the principle of “co-governance.” The two banks will work together to promote prosperity in the region.
The IDB and China Eximbank are in the process of selecting internationally recognized asset management firms to manage the investments and raise funds from the markets. The Fund will follow the two banks’ standards on social and environmental protection as well as sustainability and financial reporting requirements.
The new platform will pave the way for the IDB and China Eximbank to continue expanding their efforts to promote development through the private sector in Latin America and the Caribbean. Equity provided by the new platform will complement loans and credit guarantees that already are directly offered by the IDB and China Eximbank in the region.
About the IDB
The IDB is the world´s biggest regional development bank and the lead source of long-term financing for the Latin America and the Caribbean. Founded in 1959, the IDB has 48 member countries, of which 26 are borrowing member countries from Latin America and the Caribbean. China joined the IDB in 2009. The Structured and Corporate Finance Department (SCF) leads the IDB's non-sovereign guaranteed operations for large-scale projects, as well as those linked to companies and financial intermediaries.
Export-Import Bank of China (China Eximbank)
China Eximbank is a state bank solely owned by the Chinese government. Its international credit ratings are compatible to the national sovereign ratings. As an important force in promoting foreign trade and economy and a significant component of the financial system, China Eximbank has been assisting Chinese companies and promoting Sino-foreign relationships and international economic and trade cooperation.