The Inter-American Development Bank and the governments of El Salvador, Guatemala and Honduras today announced an initiative to unleash an unprecedented series of infrastructure investments as a complement to funding already being provided under the Plan of the Alliance for the Prosperity of the Northern Triangle.
The initiatives would use up to $750 million in funds from the IDB Group to leverage $1.75 billion in additional funds from private and public sources in the three Northern Triangle countries over the next five years.
“Under the Alliance for Prosperity, the countries of the Northern Triangle have been making real progress in areas such as citizen security, strengthening institutions and developing human capital,” said IDB President Luis Alberto Moreno. “The key over the next five years will be to tap the private sector to help build critical infrastructure that will generate jobs, improve competitiveness, and create the conditions that encourage people to build prosperous lives in their homelands.”
In recent months, the IDB has convened a series of discussions between leading members of the business community and government officials in the three countries with the goal of structuring new financial platforms that will generate the confidence needed to jump-start urgently needed infrastructure investment.
As a result of these discussions, authorities in the three countries, along with members of their business communities, have jointly made preliminary pledges that would leverage the IDB funds for a total of $2.5 billion for infrastructure projects. This amount could increase in the future, as the IDB Group and the three governments identify new ways to tap domestic savings, issue bonds and attract other sources of capital.
The announcement of the initiatives came on the eve of the Conference on Prosperity and Security in Central America in Miami on June 15-16. The conference, sponsored by the Governments of Mexico and the United States, will feature the participation of Presidents Jimmy Morales of Guatemala and Juan Orlando Hernández of Honduras, Vice President Óscar Ortiz of El Salvador, U.S. Vice President Mike Pence, Secretary of Foreign Affairs Luis Videgaray of Mexico, Secretary of Finance José Antonio Meade Kuribreña of Mexico, Minister of Finance Mauricio Cárdenas of Colombia, U.S. Secretary of Homeland Security John F. Kelly, U.S. Secretary of State Rex Tillerson, U.S. Treasury Secretary Steve Mnuchin and IDB President Luis Alberto Moreno.
The proposed initiative is intended to improve infrastructure in the three countries as part of a broader effort to promote economic development and integration to provide more employment opportunities at home for people who might otherwise take the risky decision to migrate to the United States in search of work.
Under the initiative, the IDB, the Northern Triangle governments, and representatives of the private sector and civil society would constitute a regional strategic coordination body to identify and plan projects and provide independent oversight. This body would include an executive board, a management team and a Project Preparation Facility, in addition to a committee of experts to include international infrastructure specialists.
Specific technical cooperation grants and loans provided by the IDB Group as part of the initiative will first need to obtain approval from the boards of the IDB and the Inter-American Investment Corporation.
In a related announcement, the IDB today agreed to become a financial intermediary for the Government of Mexico’s Infrastructure Fund for Mesoamerica and the Caribbean, known as the Yucatán Fund. This fund provides offers donations, financing and technical assistance for infrastructure projects and programs in the region. Resources from the Yucatán fund will enable borrowers who have taken loans from the IDB to repay a portion of the principal they owe to the Bank through the use of zero coupon bonds.
About the IDB
The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source oflong-term financing for economic, social and institutional development in Latin America and the Caribbean.The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.
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