Leaders of IDB and IMF commit to stronger collaboration to address climate change and boost green finance in Latin America and the Caribbean

Ilan Goldfajn, President of the Inter-American Development Bank (IDB) and Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF) met to discuss the details of an enhanced collaboration to support climate reforms and catalyze private sector resources in Latin America and the Caribbean, within the parameters of their respective mandates.

To achieve their goals of building resilient and decarbonized economies by 2050, countries in the region need to make substantial investments in climate change adaptation and mitigation. Enhanced cooperation between the two institutions aims to further strengthen combined efforts to identify and design reforms and provide capacity development in support of climate goals and can help attract such investments, including private capital.

The IDB and IMF already enjoy a strong partnership across the Latin America and Caribbean region, with the IMF benefitting from the IDB’s longstanding relationships in the region and its analytical and expertise at the sectoral level. This has been further boosted through collaboration under the new IMF Resiliency and Sustainability Facility (RSF) that was operationalized in October 2022. The RSF was established to help countries reduce macro-critical risks, strengthen economic stability and build resilience by tackling long-term structural challenges, including those related to climate change. To this end, reform measures under the RSF will support countries’ mitigation and adaptation efforts. Both institutions are looking for ways to deepen their ties to strengthen collaboration, building on each institution’s expertise and capacity — to provide the best support possible to countries in the region. Working groups are being set up to work on the design and implementation of climate finance solutions both at regional and country level.

In parallel, the IDB is designing a facility to identify, prioritize and prepare a robust pipeline of green and resilient infrastructure projects across all key sectors. It will also help governments in Latin America and Caribbean in their upstream regulatory and institutional work. This is part of a joint effort with other multilateral partners to help countries to develop prudent and well-structured investment project pipelines, consistent with their national development plans.

The IMF and IDB will enhance strategies for countries to accelerate climate financing, including through policy reforms, capacity-development support, and evaluating tailored financing arrangements — such as blended finance instruments, green bonds and others, including potential designs for a regional green fund structure — with each institution acting within its respective mandate in order to explore further complementarities between the RSF-supported reforms and IDB funding and guarantees, to scale and mobilize much-needed private climate financing.

IDB President Ilan Goldfajn said: “In the context of global calls for enhanced multilateral cooperation among IFIs, we are happy to identify complementarities with the IMF and work to adopt concrete actions in Latin America and the Caribbean to address climate change. We are committed to further explore strengthening our partnership with the IMF to mobilize capital and to find innovative solutions to multiply climate financing for the countries in the region.”

IMF Managing Director Kristalina Georgieva said: “We are excited to start a new chapter of collaboration with the IDB to help countries tackle the impact of climate change, which threatens growth, jobs, and prosperity across Latin America and the Caribbean. Vast resources are needed, so working together is vital, and we see many complementarities between the work of the IMF and the IDB. We look forward even stronger collaboration in support of our membership as they address climate and resilience challenges.”