LIMA (Reuters) - The Inter-American Development Bank (IDB) is evaluating the creation of a “guarantee fund” to attract investments to Latin America, which needs financing for infrastructure projects, Luis Moreno, the bank’s president, said on Thursday.
The Washington, D.C.-based multilateral lender received a mandate to study the creation of such a fund at its annual meeting late last month in Mendoza, Argentina, Moreno said in a telephone interview. It would serve as a form of insurance for investors in private and public projects in the region.
“We have to look for ways to mobilize many more resources,” he said. “One of these methods that we discussed - and that we could say had almost unanimous backing from all the shareholders - is that we study the possibility of making a guarantee fund.”
Many infrastructure projects around the region are on hold and struggling to find financing due to investor concern about corruption scandals related to Brazilian construction company Odebrecht, which has admitted to paying bribes to win public works contracts in many countries.
In the final moments of the meeting on March 25, delegates from the United States - which is the bank’s largest shareholder and controls around a third of its votes - and several European countries said they were not prepared to support a proposal to “better leverage the financing available in the markets.”
On Thursday, Moreno declined to provide details on how much money the fund would include or when it may launch. He said none of the bank’s member countries had expressed opposition to allowing the private sector to play a larger role in financing projects.
“In general, these institutions can help achieve the process of achieving sustainable development goals,” he said, referring to the private sector.
Moreno said the IDB has a loan portfolio of $18 billion for the region this year, including $13 billion in loans from the bank to governments around the region and $5 billion from IDB Invest, its private sector arm.
That exceeds the $14.6 billion the bank disbursed throughout Latin America last year.
In the context of trade disputes between the United States and China, it is more urgent “than ever” that Latin America accelerate regional integration, he said, adding that the Summit of the Americas in Lima next week is an opportunity to discuss converging various countries’ norms and regulations.
Reporting by Marco Aquino; Additional reporting by Luc Cohen in Mendoza, Argentina; Editing by Gopakumar Warrier