A US$230 million loan will allow the implementation of policy reforms that support the development of this sustainable development strategy.
Costa Rica is making progress in its transition to a modern, resilient, inclusive and net-zero emission economy by 2050 as outlined in its National Decarbonization Plan, thanks to a US$230 million loan approved by the Inter-American Development Bank (IDB). This is the first of two operations under the policy-based program modality based on Policies that will support the country in its decarbonization.
The loan aims to support the implementation of political reforms focused on strengthening the management and monitoring of climate action in Costa Rica in the planning, investment and public budget process; conserve and restore high-carbon ecosystems; replace emitting agricultural practices; and encourage the use of electric energy, particularly moving towards electro-mobility and modern and efficient public transport.
These actions will benefit Costa Rican society in general, through the creation of the necessary conditions for the reduction of greenhouse gas emissions that will also result in increased agricultural productivity, reduced road congestion and decreased air pollution, in addition to responding to the climate crisis and the country’s commitments with the Paris Agreement. The populations of the Gulf of Nicoya will be particularly benefited thanks to the improvement in the sustainable management of mangroves, by increasing resilience to climate risks, as well as agricultural producers by improving resilience to climate disasters.
In February 2019, Costa Rica launched its National Decarbonization Plan - considered an international example - which aims at becoming a net-zero emission economy by 2050, focusing on 10 lines of action that include nature-based solutions such as reforestation, and the expansion of electric transport. The IDB supported the government with the design of the plan through the Deep Decarbonization Pathways in Latin America and the Caribbean (DDPLAC) project and the NDC Invest platform. This innovative loan, which is the first of its kind in the world, shows how a multilateral development bank can support a country’s long-term decarbonization plan.
The IDB loan of $230 million has a repayment term of 20 years, a grace period of five and a half years, and an interest rate based on LIBOR. It also has a parallel funding of USD 150 million from the French Development Agency (AFD). The IDB and AFD will also provide technical assistance to support the development of policy reforms.
The DDPLAC project recently launched its flagship publication, Getting to Net-Zero Emissions: Less from Latin America and the Caribbean, which was launched at the UN climate change conference in Madrid, Spain, in December 2019.
About the IDB
The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is the leading source of long-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.