Bank investments mobilize capital from financial institutions
The Inter-American Development Bank has approved more than $2.4 billion in direct financing for 51 private infrastructure projects in Latin America and the Caribbean since the Bank’s Private Sector Department began operations in 1995.
In addition, the Bank has been the lender of record for $3.1 billion in syndicated loans for private sector projects during the same period. Counting both the syndicated loans, equity, and other sources of financing, for each one dollar in Bank financing to the private sector, counterpart investors from other financial institutions have responded by investing an additional five dollars.
During 2000 the Bank approved financing for 11 private sector projects for a total of $512 million in loans and guarantees from ordinary capital and $851.3 million in syndicated loans from funds from financial institutions with subscription of participation agreements with the IDB.
Among the innovations during 2000 were the first credit guarantee, which supports capital market development. The operation - also the first private sector IDB guarantee for a project in Chile - involves guaranteeing the insurance of a local currency bond, both principal and interest payments, up to $75 million in support of a project for upgrading of the toll road linking Santiago and Valparaíso. By joining efforts with private sector insurance and guarantee companies, the total financing to be raised for this project will be $306 million.
The Private Sector Department approved the Bank’s first operation to support a natural gas pipeline connecting Brazil and Argentina with a $40 million loan from ordinary capital and a $30 million syndicated loan, and the first operation for Panama was also approved, a $20.3 million loan from ordinary capital and a $39.5 million syndicated loan to support a 96 megawatt power plant of IGC/ERI Pan Am Thermal Generating Limited.
During 2000 Project Finance magazine cited two IDB operations in Mexico as "deals of the year." The Bajío power plant was cited as "Latin American Merchant Power Deal of the Year, " and Termoeléctrica del Golfo power operation was named "Latin American Private Power Deal of the Year."
Global Finance magazine’s yearbook also named the Termoeléctrico del Golfo project as the deal of the year for power in Latin America, and the IDB operation to help finance the Rosario-Victoria Bridge over the Paraná River was named the magazine’s deal of the year for infrastructure and transportation in Latin America.
MIF
The Multilateral Investment Fund, an independent fund that is administered by the IDB, provided about $115 million in grants and investments during 2000 for 80 projects designed to strengthen the private sector in Latin America and the Caribbean.
In the past three years the volume of MIF operations has grown to between $115 million and $135 million annually from $60 million to $70 million annually, making the fund the largest source of technical assistance grants for the private sector in Latin America and the Caribbean.
MIF works directly with private and public partners to improve the environment for business, build the capabilities and skills standards of both the workforce and of entrepreneurs, and broaden economic participation of smaller enterprises.
It has introduced a cluster of projects that create regional quality management capacity that meet the standards of the International Organization for Standardization (ISO) and other internationally recognized standards, enhancing global competitiveness of small firms. The MIF also supports the transition of informal microfinance institutions, many run by NGOs, into regulated financial institutions with a much broader range and economic impact, and it invests in cutting edge technologies that enable small and medium-size firms to take advantage of the information revolution and improve quality and environmental standards.
IIC
The Inter-American Investment Corporation promotes the development of private sector small and medium-size enterprises in Latin America and the Caribbean through loans, guarantees, and equity investments.
Its operations, in all sectors of economic activity, support both urban and agricultural firms, and focuses on innovations in such areas as technology, environment protection, and management. Operations include nontraditional areas such as leasing, mortgage-backed securities, and rural telephony.
During 2000 the IIC approved nineteen transactions for a total of $143 million. These projects will create more than 10,000 jobs, generate annually more than $420 million in value added and close to $100 million annually in foreign currency income in the IIC's regional borrowing countries.