The Inter-American Development Bank (IDB), an important source of financing for Latin America and the Caribbean, wants to be an “umbrella” for all climate-related projects in the Amazon, said the institution’s president, Brazilian Ilan Goldfajn , in an interview with AFP.
Multilateral development banks like the IDB play a crucial role in ongoing efforts to further integrate climate issues into the international financial architecture, which will be discussed on Thursday and Friday (22nd and 23rd) at a summit meeting in Paris.
“The Amazon is not a single country”, emphasizes Goldfajn, who took over the presidency of the IDB in December and aspires to “create an umbrella program in which we can join all the initiatives”.
The Amazon covers nearly 40% of South America and spans nine countries. In the last century it lost almost 20% of its surface due to deforestation, but there are initiatives to recover the forest.
“Brazil, Colombia and Peru have bilateral initiatives involving European countries, such as France, initiatives by our development bank and NGOs”, says the economist, former president of the Central Bank of Brazil and who also worked at the IMF.
In early June, Brazilian President Luiz Inácio Lula da Silva presented a plan to combat deforestation in the Amazon, one of his government’s priorities.
– More efficient loans –
The IDB, created in 1959, became the main international long-term financing institution for Latin American and Caribbean countries.
Last year it approved 14 billion dollars (67 billion reais) in loans, in particular to Argentina, Brazil and Mexico, for projects mostly related to water, energy and business development.
“These billions are important, but the most important thing is what we do with them”, emphasizes Ilan Goldfajn, who wants more efficient financing for climate projects on an international scale.
The argument gains even more importance after several internal studies on the effectiveness of loans granted in recent years by the evaluation and control department of the IDB. In 2022, between 25% and half of projects will be positively evaluated.
The IDB has a dual objective: to grant loans on better terms compared to previous administrations and to grant more loans to countries that have suffered economic crises since 2020 and climate disasters, such as the drought that affected much of Argentina and its neighbors for three years, with catastrophic consequences for local agriculture.
“How many people are rising out of poverty, how many have access to toilet facilities, clean water, how many are connected? All of this is the ultimate goal,” said Goldfajn, who advocates “innovative” funding and greater private sector participation, in the absence of international public funding.
Among the possibilities, he mentions, for example, relieving a country’s debt with its creditors in exchange for the government’s commitment to decarbonize its economy. Or organize IDB development aid and loans more efficiently to try to lower interest rates on payments.
“We know how much we need for the climate, one trillion dollars (4.8 trillion reais), which is a lot. Do we have the money? We still have to see how much we can raise,” added the IDB president.
Ilan Goldfajn also defends the bet on lithium – whose reserves are immense in the region, estimated at two thirds of world reserves -, an essential mineral for the economy of the future, in particular for the production of batteries.
“Applying the right public policies, the right approaches, we will become one of the main suppliers of minerals needed for the future”, he points out, before recalling that 30% of the energy produced in Latin America and the Caribbean is already clean.
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