SAN SALVADOR, El Salvador – The president of the Inter-American Development Bank (IDB), Luis Alberto Moreno, announced today that under the framework of the Bank’s capital increase, it will allocate about $1.8 billion annually to integration projects for Central America, South America and the Caribbean.
Moreno made the announcement at the Special Summit of Heads of State and Governments of member countries of the Central American Economic Integration System (SICA, for its initials in Spanish), held today in the Salvadorian capital.
The Summit was opened by the president of the Republic of El Salvador, Mauricio Funes, and was attended by the presidents of Guatemala, Costa Rica, Panama, Honduras, the Vice prime minister of Belize and the Vice president of Dominican Republic. “Without the commitment of these presidents any initiative to relaunch the integration of Central America would have little future,” said Moreno. “So today we celebrate their determination and vision. A deeper and better integration of Central American countries is essential to support economic recovery, compete globally, create jobs and opportunities and ultimately advance equity and the reduction of poverty.”
The Summit takes place at a time when Central America is looking past the economic crisis and exploring ways to extend its links to the global economy and the Asian emerging markets in particular. The region is also poised to take advantage of trade agreements like CAFTA and the European Union Association Agreement, for which negotiations concluded recently.
IDB experts point out that Central America is the most integrated developing region. Reciprocal trade levels in Central America are among the highest in the world and the trade liberalization is advanced, with a harmonized common external tariff that already applies to 95 percent of all commerce.
Regional energy integration is one of the most significant advances that Central American countries have made with the support of the IDB. The Central American Electricity Interconnection System (SIEPAC, for its initials in Spanish), which consists of a 1,800-kilometer power transmission line and the creation of a Regional Electricity Market, was financed with around $500 million from the IDB, and the project is now 93 percent complete. "Now what we need is the political will to approve regulatory frameworks that will stimulate investment in power generation projects with a regional scale that can lower the cost of electricity for all Central Americans," Moreno said.
“The Central American presidents propose a modern agenda of integration. We have the opportunity to enhance the integrative effect of trade promoting the generation of Regional Public Goods in areas related to economic integration, physical integration and regional cooperation on key issues for Central America such as security and climate change,” said Antoni Estevadeordal, manager of the IDB’s integration and trade sector.
The IDB is a historic partner of Central American integration. Over the past decade, the Bank has been the main source of financing for regional integration in Central America, mobilizing more than $1.5 billion in investment loans and more than $50 million in non-reimbursable technical cooperation. This amount is equivalent to 13 percent of the total portfolio of the Bank in Central America, which totals $11 billion. The funds have been allocated to integration in the transportation sector ($720 million), energy ($725 million), and the environment (more than $10 million).