Press Release: World Bank Group Mobilizes Over $14.4 billion for Latin America and the Caribbean Development in Fiscal Year 2019
Wednesday, July 24, 2019
The World Bank Group mobilized over $14.4 billion in lending and guarantees to support sustainable development and poverty reduction in Latin American and the Caribbean during the 2019 fiscal year ending June 30. This included a combined $6.4 billion from the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) typically referred to as the World Bank, a record $6.2 billion from the International Finance Corporation (IFC) to promote private sector led sustainable development, and almost $1.8 billion in guarantees by the Multilateral Investment Guarantee Agency (MIGA).
“We have one overriding priority in Latin America and the Caribbean: to eliminate poverty and improve the lives of the people in the region,” said World Bank Vice President for Latin America and the Caribbean (LAC) Axel van Trotsenburg. “That means laying the foundations for inclusive economic growth, investing in people, and building resilience. We are supporting our partner countries to attain their objectives through a multi-billion dollar financial program, technical assistance, as well as analytical and advisory services. In this context, our credit program jumped by over 40% in the last fiscal year.”
The World Bank provided financial support for close to 40 new projects during the last fiscal year. These projects focused on policy and economic reforms, inclusion, climate change and human capital development. Examples of World Bank lending include the Expanding Rural Finance Project in Mexico, which helped the financial system reach areas where the traditional presence of banks was modest or nonexistent, providing more than 150,000 loans and expanding credit for rural smaller-scale enterprises, with a focus on women and marginalized areas; the Quito Metro Line One Project in Ecuador, done in collaboration with other multilateral development banks; a US$750 million operation to Colombia to support fiscal sustainability and competitiveness, also addressing the impact of the migration crisis in the country; and a $27 million operation to help Dominica recover from Hurricane Maria, which damaged 75% of its power network, by supporting the construction of a seven-megawatt geothermal power plant.
The IFC saw its lending in the region jump 26% in the last fiscal year while it continued to focus on financing innovative climate-friendly projects and helping increase financial inclusion in the region, especially for SMEs, many of them women-owned, which continue to face hurdles to obtain loans to grow their operations.
A few examples of the IFC lending include the financing of a wind farm in Argentina that will inject approximately 390 gigawatt-hours of electricity per year into the country’s electricity grid, contributing towards its target of achieving 20% of its total generation from renewable sources by 2025; the expansion of Clinicas del Azucar in Mexico, a chain of specialized diabetes clinics. Mexico has one of the highest rates of people suffering from diabetes in the world and treatment options are limited in the country; and financial backing to a microfinance institution in Haiti to support small and medium enterprises (SMEs), agribusiness and help foster job creation.
“We have stepped up our efforts in the last 12 months to help the private sector in Latin America and the Caribbean carry out new projects that are focused on solving some of the region’s most critical development challenges,” said Georgina Baker, IFC Vice President for Latin America and the Caribbean. “We are working closely with the private sector in the region to help mitigate climate change, create more jobs, more affordable housing, better transportation options, and more livable cities,” she said.
MIGA’s guarantees also increased 11% from 2018. MIGA is the largest multilateral political risk insurance provider, with a mandate of creating development impact by helping drive foreign direct investment to developing countries. An example of MIGA involvement in the region is the Vientos Los Hercules wind farm in Argentina, where MIGA’s coverage mobilized Mitsui & Co.’s investment for the 97.2MW renewable energy project.
“Preparing the region to better adapt to climate change and helping the financial sector expand credit are priority areas for MIGA,” said MIGA Vice President and Chief Operating Officer S. Vijay lyer. “MIGA will continue to work with clients and governments in these areas and others to help deliver meaningful and tangible development impact.”
Lending from the World Bank (IBRD and IDA) was up by about a third from the previous year. In total, more than 200 projects, most of which focused on policy and economic reforms, inclusion, climate change and human capital development, received IBRD and IDA support across the region.
The strong results of the last fiscal year are testimony to the World Bank Group’s deep engagement in Latin America and the Caribbean. The World Bank Group will continue to work closely with governments, the private sector, and civil society to promote inclusive growth and help in creating more jobs and opportunities for all across the region.
Photo courtesy of Bioversity International.