The IDB group expects to more than double its annual financing to private companies in Latin America and the Caribbean to reach US$3bn annually by 2015, enabled by a US$70bn increase of the bank's ordinary capital, Steven Puig, the IDB's VP for the private sector and non-sovereign guaranteed operations, told BNamericas.
The group is comprised of the Inter-American Development Bank (IDB), the Inter-American Investment Corporation (IIC) and the Multilateral Investment Fund (MIF).
"Since the private sector creates on average nearly 90% of all the jobs in the region, increasing support for this sector can be a very effective tool to speed up the region's lagging growth, create more jobs, and improve the lives of the poor," Puig said
According to the terms of the capital increase, which was approved by IDB governors in Cancún in March 2010 and must be ratified by all member countries, IDB's borrowing capital will increase to US$171bn from US$101bn through 2015.
This will allow the IDB to raise its support for traditional infrastructure projects, such as roads and airports, as well as projects in areas such as health care, education, renewable energy and energy efficiency throughout the region, Puig said in Calgary, where the multilateral is celebrating its annual meeting.
IDB's governors also agreed to lift the group's annual private sector financing to 20% of its capital, and it delegated the approval of future changes to this limit to the bank's executive board.
The capital increase will allow the multilateral to lend US$12bn on average annually through 2022, Koldo Echebarría, who heads the development bank's strategic planning department, told BNamericas earlier this year.
SUPPORT FOR MORE VULNERABLE COUNTRIES
IDB is also expected to increase its operations without a sovereign guarantee in small and vulnerable countries in the region, while also boosting lending to private sector projects that will help promote greater social inclusion and poverty reduction.
Under the capital increase, IDB is expected to boost total lending to small and vulnerable countries to 35% of its total lending by end-2015, Puig said.
Lending in support of climate change adaptation initiatives as well as projects in renewable energy and environmental sustainability is expected to reach 25% of total lending by 2015, from an average of 5% during 2006-09.
Meanwhile, lending for poverty reduction and equity enhancement programs is expected to increase to as much as 50% of the bank's total lending by end-2015, Puig said.