IDB plans to mobilise $2.5bn for Latin America infra

The development bank committed $750m to leverage public and private funds for projects in El Salvador, Guatemala and Honduras. 

The Inter-American Development Bank and three Latin American countries agreed to a framework last week that will use public and private funds to gather $2.5 billion of investments in infrastructure projects.

The IDB said it would use $750 million of its funds to leverage $1.75 billion for projects in El Salvador, Guatemala and Honduras, a group known as the Northern Triangle.

The commitment comes after a series of discussions the IDB held with the three countries and was announced the same week that top US, Mexican and Central American officials met in Miami to find ways to reduce poverty and improve conditions in the region.

The IDB’s plan with the Northern Triangle countries comes at a time many of the leading multilateral development banks are shifting their focus from direct lending to private-sector engagement. MDBs see their role in developing countries changing from project sponsors to risk mitigation.

“The key over the next five years will be to tap the private sector to help build critical infrastructure that will generate jobs, improve competitiveness, and create the conditions that encourage people to build prosperous lives in their homelands,” IDB president Luis Alberto Moreno said.

Along with its financial commitment, the IDB announced it would become a financial intermediary for the Government of Mexico’s Infrastructure Fund for MesoAmerica and the Caribbean, the Yucatan Fund.