IDB provided nearly US$20b in funding in 2021

The Inter-American Development Bank, IDB, said Monday it expects to close this year with US$19.5 billion in new financing for Latin America and the Caribbean, the second highest in its history.

The funds provided by IDB and its private sector arm went towards recovery from the COVID-19 pandemic, and also backed country priorities ranging from COVID-19-era healthcare and digitalisation to climate change action, supply chains and education, among other programmes.

The bank also backed projects that are designed to reduce gender inequality, expand entrepreneurial opportunity, and empower small and midsize companies, which account for over two-thirds of the region’s jobs.

The combination of financing includes IDB loan approvals (US$14 billion), expected IDB Invest financial commitments (US$5.5 billion), as well as private-sector mobilisations (US$2.8 billion) – totalling US$22.3 billion.

The IDB said Latin America and the Caribbean is the region hardest hit by the pandemic. The region is about eight per cent of the world’s population, but accounted for almost a third of all COVID-19 deaths – over 1.5 million people. The region also continues to face high inequality and serious economic and social challenges.

“This year, we demonstrated how a 21st-century IDB can empower countries to overcome unimaginable challenges and pave the way to a new decade of prosperity,” said IDB President Mauricio Claver-Carone.

“We did so by listening carefully to our clients and member countries and by leveraging our exceptional human capital to create innovative financing and private-sector partnerships that will accelerate the region’s recovery,” he said.

“The pandemic created unprecedented challenges, but it also opened historic opportunities for Latin America and the Caribbean to grow, especially in areas including digitalisation, nearshoring and supply chains – and we are proud to be there, focused on helping countries seize those opportunities.”

In total, the IDB approved 103 sovereign guaranteed projects in 2021 amounting to US$14 billion of financing, while disbursements are expected to reach US$12.1 billion.

The bank said in the context of COVID-19, financing helped countries secure life-saving vaccines and increased access to credit so that small and midsize companies, the main drivers of employment, can expand their businesses.

It said new projects and financing will accelerate digitalisation so countries can improve public services, expand educational access, increase transparency and combat corruption. Funding will also help improve digital-skills training to enrich the region’s human capital.

Amid a historic reconfiguration of international trade, the IDB approved US$2.3 billion to strengthen regional supply chains, nearly doubling the average amount of the three years before the pandemic. “This will help countries take advantage of a tangible new opportunity, amplified by the pandemic and the global supply-chain crisis, to attract foreign direct investment and increase exports of goods and services,” the IDB said.

The bank based in Washington said it also worked with 16 countries to identify critical export and supply-chain advantages. It launched a programme called Amazon Initiative and approved about US$4.5 billion in resources for climate-related operations, the highest amount ever.

Of all projects approved in 2021, the IDB said nearly 70 per cent included one or more components to tackle climate change, while 75 per cent addressed gender issues, almost 40 per cent of approvals went to small and vulnerable countries.

During the year, IDB also scaled up its engagement with businesses through the creation of the Private Sector Partners Coalition.

The group began with 40 of the world’s leading companies and has since expanded to over 160 of the world’s most innovative firms. Its activities span 13 working groups in areas including nearshoring, climate change, women’s empowerment and digital transformation.

The coalition is creating a resource-mobilisation platform to identify investment opportunities and channel new technology, know-how and other private-sector resources to the region.

To further catalyse investment, the IDB also hosted a series of investment-promotion forums in Belize, Brazil, Ecuador and Miami, as well as 12 trade promotion forums, which drew almost 100,000 participants. The events generated US$55 billion in expected business deals.

During 2022, the bank plans to hold another round of investment and trade forums in Jamaica, Panama and Paraguay, among other countries.

IDB Invest provided a total of US$8.3 billion in financing in 2021 inclusive of US$5.5 billion in short and long-term commitments and a record-breaking US$2.8 billion in mobilisations.

IDB Invest has mobilised one dollar for every dollar closed on its own account in long-term financing, a 50 per cent increase over the previous year.

At the COP26 UN Climate Summit, IDB Invest announced the first blue bond in Latin America and the Caribbean, highlighting the IDB’s commitment to designing innovative financial solutions for climate action.

CMC