Annual Report highlights new initiatives to make IDB an “indispensable partner” for region
The Inter-American Development Bank Group delivered a record lending program in 2007, approving $9.6 billion in financing for projects in Latin America and the Caribbean, according to the IDB’s latest Annual Report.
The amount was a record high, excluding emergency loans. For the 14th year in a row the IDB was the main source of multilateral lending to Latin America and the Caribbean.
The total includes $9 billion for 111 loans and 16 credit guarantees from the Bank; $470 million for the Inter-American Investment Corporation (IIC), the IDB affiliate specialized in small and medium-sized enterprises; and $135 million in financing from the IDB-administered Multilateral Investment Fund (MIF), including $100 million in grants.
Disbursements in 2007 amounted to nearly $7.6 billion, the highest figure in four years.
The IDB also approved $167.8 million in grants for technical cooperation projects in 2007, compared with $104 million in 2006.
President Luis Alberto Moreno said these results show that the IDB is meeting its goal of becoming an “indispensable partner for Latin American and Caribbean governments and businesses, and international institutions serving the region.”
A majority of the financing approved in 2007—$5.7 billion—went to projects for infrastructure and competitiveness in such areas as transportation, energy and ports in export-intensive areas.
Poverty-targeted operations totaled over $2.7 billion (30 percent of the volume of IDB lending), but many other projects are contributing indirectly to poverty reduction. Notable among such projects during 2007 were programs for social development through music in Venezuela, primary health care in Argentina and sustainable development in the highlands of Peru.
IDB lending to the private sector without government guarantees rose to $2.3 billion for 29 projects in 2007, compared with $920 million for 20 projects in 2006. Last year’s approvals included 12 operations under the IDB Trade Finance Facilitation Program, which provides short- to medium-term funding for exporters and importers. Among the pioneering transactions was a $400 million loan to Peru LNG, the first liquefied natural gas production facility in South America.
During 2007 the IDB launched its first operations under the Opportunities for the Majority Initiative, which seeks to expand the benefits of growth to the 70 percent of the Latin American and Caribbean population with annual earnings under $3,000. In one project the MIF made a $1 million grant to expand a groundbreaking microfinance model involving microlender FinComun and baked goods giant Grupo Bimbo, which works with some 450,000 small stores as part of its distribution network in Mexico.
The IDB also approved 20 environmental loans totaling $1.1 billion, primarily for water and sanitation projects. These included three loans to Peru totaling $350 million for water resources and sanitation reform and the “Water for Everyone” program. In addition, a total of 81 grants totaling $32.4 million were approved for environmental projects such as disaster risk management, integrated natural resource management, rural development and sustainable agriculture.
In 2007 the IDB approved two loans totaling $21.6 million and 14 grants totaling $4.1 million for trade-related projects. The latter included a $1.6 million MIF grant for a simplified postal export system based on a model pioneered in Brazil for four other countries in South America under the Initiative for the Integration of South American Regional Infrastructure.
In addition, in 2007 the IDB approved full debt relief for loan balances outstanding at end-2004 for Bolivia, Guyana, Haiti, Honduras and Nicaragua—a total of $3.4 billion in principal payments and $1 billion in future interest. The debt cancellation will help countries devote more resources to priority poverty-reduction programs.
Recognizing the critical importance of energy security for the region, in 2007 the IDB launched its Sustainable Energy and Climate Change Initiative. The $20 million fund is financing feasibility studies and technical cooperation for projects to lay the groundwork for biofuels industries and energy efficiency programs.
Two other new initiatives are contributing to the goal of improving economic and social conditions for the region: the $20 million Infrastructure Investment Fund (InfraFund) to identify and develop major infrastructure projects and the $10 million Disaster Prevention Fund to assist countries in identifying risks associated with natural disasters, which directly affect some four million people in the region each year. In addition, the Special Program to Support the Millennium Development Goals - Social Fund was approved during the year.
In 2007 the IDB approved a new Disaster Risk Management Policy and completed policy guidelines. The policy reinforces a comprehensive, proactive approach, with an emphasis on pre-disaster assistance, and enhances the effectiveness of Bank support for borrowers in risk management measures and post-disaster response.
Moreno was optimistic about growth in the region: “Despite the recent instability in international financial markets and the projected slowdown in the U.S. economy,” he said. “The outlook for Latin America and the Caribbean is brighter than it has been in decades.” Referring to the IDB’s recent reorganization, Moreno added: “At this seminal moment in the region’s history, I consider it a great honor to serve as president of a revitalized Bank that is infused with new talent and purpose. We look forward to the challenges of the coming year.”