IDB and IDB Invest Close Year with Nearly $20 Billion in New Financing for Latin America & Caribbean
- Total is second highest in the history of the IDB and IDB Invest and is helping countries address COVID-19, strengthen supply chains, invest in digitalization, build climate-change resilience, reduce gender inequality, and help small companies create jobs.
- IDB Invest expects to provide $5.5 billion in commitments and a record-breaking $2.8 billion in mobilizations. That represents a dollar-for-dollar match in long-term financing closed on its own account, an increase of 50% on the year.
The Inter-American Development Bank (IDB) and its private-sector arm, IDB Invest, expect to close the year 2021 with $19.5 billion in new financing for Latin America and the Caribbean, as they helped countries recover from the pandemic and usher in an era of sustainable and inclusive growth.
The financing is the second-highest annual total in the history of the IDB and IDB Invest and helps countries invest in priorities ranging from COVID-19-era healthcare and digitalization to climate change action, supply chains and education. The funding will also help reduce gender inequality, expand entrepreneurial ecosystems, and empower small and midsize companies, which account for over two-thirds of the region’s jobs.
The combination of IDB loan approvals ($14 billion) and expected IDB Invest financial commitments ($5.5 billion) and private-sector mobilizations ($2.8 billion) totaled $22.3 billion.
Latin America and the Caribbean is the region hardest hit by the pandemic. Home to about 8% of the world’s population, it accounts 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. 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,” said IDB President Mauricio Claver-Carone.
“The pandemic created unprecedented challenges, but it also opened historic opportunities for Latin America and the Caribbean to grow, especially in areas including digitalization, nearshoring and supply chains – and we are proud to be there, focused on helping countries seize those opportunities,” he added.
From Vaccines to Recovery Ecosystems
In total, the IDB approved 103 projects in 2021 for a total of $14 billion, while disbursements are expected to reach $12.1 billion. 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.
New projects and financing will accelerate digitalization 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 $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 also worked with 16 countries to identify critical export and supply-chain advantages, including, for example, in Costa Rica’s semiconductor sector and the textile sector in Central American countries.
Gender, Climate Change and Small Countries
In 2021, the IDB continued to make it easier for countries to accelerate pandemic recovery, while simultaneously addressing critical, longstanding issues, such as climate change and gender inequality.
The IDB launched its Amazon Initiative and approved about $4.5 billion in resources for climate-related operations, the highest amount ever. The IDB also took a leading role among multilateral development banks at COP26, the annual United Nations conference on climate change, announcing a plan to fully align operations with the Paris Agreement and provide $24 billion for climate and green finance over the next four years.
Of all projects approved in 2021, nearly 70% included one or more components to tackle climate change, while 75% addressed gender issues.
Almost 40% of approvals went to small and vulnerable countries.
These numbers are aligned with the Bank’s institutional priorities and its blueprint for economic recovery, Vision 2025.
Institutional Reforms Drive Efficiency and Private-Sector Investment
The IDB also piloted a streamlined process for projects that slashed approval times by 30%, enabling the bank to quickly meet the needs of its 26 regional member countries.
“The IDB stepped up and delivered the second-highest level of approvals for sovereign guaranteed operations in the Bank’s history in response to the pandemic, natural disasters and multiple other crises,” President Claver-Carone said. “I am confident that as we implement new initiatives and roll out ongoing operational efforts, the IDB will be even more productive in 2022 to meet the needs of Latin America and the Caribbean as the region’s partner of choice.”
In addition, the IDB dramatically scaled up its engagement with the private sector by creating the Private Sector Partners Coalition. The Coalition 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-mobilization platform to identify investment opportunities and channel new technology, know-how and other private-sector resources to the region.
A strategic alliance with Coalition partner NTT Data everis, a top IT company, led to the creation of a platform that allowed Guatemala, El Salvador and Honduras to continue providing digital services during the pandemic. Another alliance with Mastercard and MercadoLibre led to an initiative to increase the financial resilience of smaller companies, women entrepreneurs and gig workers.
To further catalyze 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 $55 billion in expected business deals. In 2022, the IDB plans to hold another round of investment and trade forums in Jamaica, Panama and Paraguay, among other countries.
Innovating at IDB Invest
IDB Invest, the IDB’s private-sector arm, provided a total of $8.3 billion in financing in 2021. This includes $5.5 billion in short- and long-term commitments, and a record-breaking $2.8 billion in mobilizations. IDB Invest has mobilized $1 for every dollar closed on its own account in long-term financing, a 50% increase over the previous year.
At COP26, 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.
IDB Invest’s financial commitments also surpassed sectoral targets, with about 45% going toward gender, diversity and inclusion projects, while 30% targeted climate change and nearly 32% was for small and midsize companies.
IDB Invest also increased its focus on digitalization and regional integration projects, which accounted for 15% and 25% of financial commitments, respectively. In addition, IDB Invest spearheaded innovative equity investments in the digital space, including in ProducePay, Recarga Pay, Kubo and Merqueo.
IDB Lab, the innovation laboratory of the IDB, approved 124 operations for a total of $103.8 million, with almost 60% earmarked for small and vulnerable countries. Approvals reflected IDB Lab's "innovation for inclusion" mission and were aligned with Vision 2025. More than 60% of projects addressed gender gaps.
IDB Lab also continued to partner with the IDB’s Social Sector on fAIrLAC, an alliance between the public and private sectors, civil society, and academic institutions to influence public policy and the entrepreneurial ecosystem to promote the responsible and ethical use of artificial intelligence.
About the IDB
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. Take our virtual tour.
About IDB Invest
IDB Invest is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social and environmental development. With a portfolio of $13.1 billion in asset management and 385 clients in 25 countries, it provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries. https://idbinvest.org/en
About IDB Lab
IDB Lab is the IDB’s innovation laboratory, promoting development through the private sector by identifying, supporting, testing and piloting new solutions to challenges and seeking to create opportunities for poor and vulnerable populations in Latin America and the Caribbean. www.idblab.org