Donors to provide $317 million for the Multilateral Investment Fund
In 2016 the IDB Group approved 239 operations for $11.5 billion
Latin America and the Caribbean urged to deepen regional integration to boost growth, trade
ASUNCIÓN, Paraguay – The Inter-American Development Bank and the Inter-American Investment Corporation today wrapped up the annual meeting of their Boards of Governors after reaching an agreement to replenish the Multilateral Investment Fund (MIF), the IDB Group’s innovation lab.
An ample majority of the IDB Group’s member countries agreed to provide $317 million to ensure the continuity of the MIF, which finances small projects that take unusual risks and test new approaches to combat poverty.
More than half the fresh resources for the MIF will be donated by Latin American and Caribbean countries. Historically, the fund was mostly seeded by North American, European and Asian donor nations.
“What we’re witnessing is a region that’s shouldering its own responsibilities,” said IDB President Luis Alberto Moreno. “Our countries decided to significantly increase [the MIF’s] resources, and that’s in line with these new times. It’s the new Latin American reality.”
Established in the early 1990s, the MIF was a pioneer in supporting the development of microfinance. At present, it focuses on promoting climate-adapted agriculture, inclusive cities and the knowledge economy, seeking to generate income opportunities and raising living standards, especially for marginalized groups and communities.
During the IDB-IIC annual meeting, held this weekend at a sports complex in the outskirts of Asuncion, Paraguay’s capital city saw an outbreak of political violence. Moreno made a plea for peace and dialogue, echoing a message from the Paraguayan Conference of Bishops urging citizens to settle their differences through democratic means.
Moreno also expressed his condolences to families of victims of recent landslides and floods in northern Peru and southern Colombia. Besides voicing his solidarity with both nations, he said these tragedies underscore the need to fight the effects of climate change.
The Boards of Governors are the top decision-making bodies of the IDB and the IIC. Their members are finance ministers, central bank presidents and other high-ranking officials of the IDB Group’s 48 member countries.
During their sessions, the governors approved the annual reports of the IDB and the IIC. Last year the Bank approved 86 sovereign-guaranteed operations totaling $9.3 billion. The IIC approved 153 non-sovereign guaranteed operations totaling $2.3 billion for businesses in the region. These amounts confirm the IDB Group as the leading source of multilateral financing for Latin America and the Caribbean.
The governors also received a Sustainability Report on the operations financed by the IDB Group during 2016, of which $2.7 billion supported climate change-related goals.
Highlights of the meeting in Asuncion
Before the start of the formal sessions of the Boards of Governors, the IDB and the IIC held events on key development issues for Latin America and the Caribbean. Demand Solutions featured 17 young female entrepreneurs, scientists and artists who underscored the role of women as drivers of innovation and creativity.
The Business Forum of the Americas gathered more than 800 public and private sector leaders to discuss ways to boost economic growth and deepen regional integration, with an eye to form a single free trade area with a population of 600 million inhabitants and a GDP of $5 trillion.
The IDB’s Research Department presented its annual Macroeconomic Report, where it noted that the region’s economic prospects are improving thanks to a stronger global economy, improved fiscal positions, lower inflation and better outlooks for Argentina and Brazil.
The IDB and the IIC formalized several alliances to increase the impact of their operations. The Bank signed a joint financing framework agreement with the government of Spain to broaden its collaboration in natural disaster preventions, sustainable energy, climate change, and water and sanitation, among other topics. Spain is the IDB’s most active European member country, having contributed more than $855 million since 2008.
The IIC, for its part, signed an agreement with BlueOrange Capital, an investment fund focused on achieving social and environmental returns, aiming to mobilize around $1 billion in financing for private sector projects that help achieve the UN’s Sustainable Development Goals.
The Corporation also agreed to seek more co-financing operations with three European development banks, FMO of the Netherlands, Proparco of France, and DEG of Germany. The IIC has worked successfully with these institutions in the past.
The IIC also took advantage of the meeting in Asuncion to announce it will become the first multilateral lender to issue bonds denominated in guaranies. The bonds will help develop the local capital market and provide financing in local currency to Paraguayan companies.
The next annual meeting of the Boards of Governors of the IDB and the IIC will be held in March 2018 in the city of Mendoza, Argentina.
The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a 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.
- Pablo Bachelet