IDB, BNDES, CAF, FONPLATA Announce US$10 Billion for Regional Integration Routes

Alliance between banks was articulated together with the Ministry of Planning and Budget of Brazil, where it will also include an "Integration Pack"

Four development banks today announced in Rio de Janeiro, Brazil, a cooperation agreement to provide financial and technical support for strategic projects, mainly infrastructure projects, to create a South American network of routes for integration and development.

Articulated by Brazil's Ministry of Planning and Budget, the alliance of the Inter-American Development Bank (IDB), Brazil’s National Bank for Economic and Social Development (BNDES), CAF – Development Bank of Latin America and the Caribbean, and FONPLATA, a development bank of five countries, will make available $10 billion over the next three years for integration projects.

The cooperation agreement, called "Routes for Integration", was signed by IDB President Ilan Goldfajn and his colleagues Aloizio Mercadante (BNDES), Sergio Díaz-Granados (CAF), and Luciana Botafogo (FONPLATA). The signing ceremony was also attended by Brazilian President Luiz Inácio Lula da Silva, Vice President Geraldo Alckmin, Planning and Budget Minister Simone Tebet, Foreign Minister Mauro Vieira, and other federal government officials.

The IDB will make $3.4 billion available for integration over the next three years and has set up a team exclusively dedicated to supporting this goal. The Bank has a track record of knowledge and project development and has the technical expertise to help different countries generate a joint plan.

"The IDB is fully committed to South America's integration agenda. In the context of this new partnership, we are mobilizing $3.4 billion in financial and technical assistance for infrastructure projects in support of South American integration. In addition to financing, the IDB will support countries in the region by providing a team with technical expertise to help generate this joint plan and prioritize concrete interventions," Goldfajn said.

Minister Simone Tebet, with the support of the secretariats of International Affairs and Development (SEAID) and Institutional Affairs (SEAI), participated in the coordination of the regional development banks partnership. The Ministry presented to each of the banks the report of the South American Development and Integration Subcommittee, outlining five integration routes between Brazil and its neighboring countries from a Brazilian perspective. In addition to promoting infrastructure, trade and integration in the areas of culture, tourism, health, and environmental protection, among others, the routes will also significantly reduce freight transport times between Brazil and Asia.

Tebet reported on the work carried out at the Planning Ministry to explore integration routes in detail. More than 20 meetings were held with other ministries, state governments and federal administration agencies. In the face of the challenges and opportunities that were identified, it became clear that much more needs to be done and that dialogue with neighbors needs to be intensified. "That is why we have launched the Routes to Integration Initiative together with BNDES, CAF, IDB and FONPLATA,” Tebet said. “Each bank, within its competencies, will prioritize financing under adequate conditions and technical assistance to support the investments that South American integration and sustainable development require."

FONPLATA's President Luciana Botafogo stressed that enhancing regional integration will boost the countries’ joint potential "and generate new trade and investment opportunities that will strengthen national economies, generate employment, improve the quality of life, and create better opportunities to access the international market." FONPLATA will make up to $600 million available for the initiative between 2024 and 2026.

With the support of the development banks and the presentation of the report to the South American ministers at a meeting to be held on Friday in Rio de Janeiro, the five routes, designed on the basis of the Brazilian reality, will begin to be discussed with other countries in the region. In the view of the Brazilian government, integration must be designed to benefit all countries and their populations.

Regional Integration

The subcommittee was created at the Planning Ministry five days after the Brasilia Consensus, when President Lula da Silva met with leaders of the 11 South American countries, and all participants reaffirmed their commitment to deepen regional integration. So far, the subcommittee has carried out intense listening work: all of South America’s 11 nations were heard at the Ministry and presented infrastructure work proposals that they considered crucial for regional integration. These projects were then compared with the PAC works and, after being placed on the map, resulted in five priority integration routes. There were more than 24 meetings, in which other ministries and agencies such as the Federal Treasury and Anvisa also participated. On November 6, Tebet presented the project to President Lula da Silva, who approved the initiative.

As Minister Simone Tebet explained, "In the New Pack there are 124 initiatives, distributed in the border states of these five routes prioritized by the Planning Ministry, with a direct integration character. It is an "Integration Pack", which includes infoways, waterways, highways, railroads, ports, airports and power transmission lines."

She also said that, "although intra-regional trade represents a bit less than 20% of Brazil's trade relations with the world, South America has consolidated itself as a key market for Brazilian products with higher added value." South American neighbors account for less than 1.5% of total Brazilian imports, but the countries in the region buy more than 35% of all the high and medium-high technology-intensive products exported by Brazil.

In the document, BNDES, IDB, CAF and FONPLATA state: "The focus of this joint action will be strategic infrastructure integration projects, including support both through the availability of financing lines and the structuring of projects." They have also agreed that in addition to investing in infrastructure projects, the Initiative will promote financing of integration projects in the areas of healthcare, education, culture, human rights, and environmental protection, among others.

In Ilan Goldfajn's view: "Integration is always the best way. In essence, integration is about improving lives by achieving benefits on a larger scale. We also know that almost no other public policy can stimulate growth as effectively as integration.”