IDB will increase loans after reforms, says Goldfajn – 03/10/2024 – Market

Latin America’s largest development bank plans to increase lending by around US$112 billion (R$557 billion) over the next decade, increasing annual lending by almost half following an increase in its capacity and internal reforms.

The Inter-American Development Bank (IDB) won board approval for the measures at its annual meeting in the Dominican Republic, including sweeping changes in which it will focus on larger loans and measure results more rigorously.

The additional lending capacity will come from a US$3.5 billion (R$17 billion) capital increase for the bank’s private sector arm, IDB Invest, and a US$400 million (R$2 billion) ) for venture capital unit IDB Lab, along with balance sheet optimization and loan guarantees provided by member countries for specific projects, such as Sweden’s support for an Amazon biodiversity scheme.

Ilan Goldfajn, president of the IDB, said Latin America and the Caribbean face a triple challenge of growing social demands, scarce government resources and climate change, but also a “great opportunity” to address these issues and profit from growing global demand. for food, critical minerals and renewable energy.

He told the Financial Times: “We can make an additional US$112 billion (R$557 billion) in 10 years. Today we have a total of [anuais] around US$24 billion (R$119 billion), so it’s an increase of almost 50 percent.”

Goldfajn wants the bank to direct loans to areas where there can be greater impact and for disbursements to be based on the results delivered. “We need to show that we are more effective, that we are having more impact, that we are using every dollar in the best way,” he said in an interview.

Goldfajn, a former president of Brazil’s Central Bank, moved from the IMF to lead the Washington-based IDB in November 2022 after the board fired former Trump-appointed president Mauricio Claver-Carone.

This followed an internal investigation that found evidence of a sexual relationship between Claver-Carone and a female subordinate, to whom he gave large pay raises. Claver-Carone and the woman denied the relationship.

Goldfajn intends to begin talks with the bank’s 48 member countries about a capital increase for the IDB’s main public sector lending portion. He did not give a deadline for this process, which will depend largely on support from the USA, its largest shareholder.

As examples of the types of projects that the IDB now intends to support, he cited a US$400 million (R$2 billion) investment in green hydrogen in Chile and a waste management project in the Dominican Republic. “We want to be the ones who do the project that will make a difference,” he said.