IDB Governors Approve Initiatives for Financial Institution
The Inter-American Development Bank (IDB) and IDB Invest say they approved a roadmap for a series of institutional reforms for the Washington-based financial institution and mandated a capital increase proposal for IDB Invest, the bank’s private sector arm.
The decision of the Board of Governors will modernize the IDB, IDB Invest and IDB Lab, ushering in a new 21st century business model that will help countries in Latin America and the Caribbean more effectively address challenges including poverty and inequality, the climate change and the need for digitization.
The IDB says the proposed reforms will empower the bank to accelerate inclusive and sustainable growth by strengthening synergies between the public and private sectors, ensuring equal opportunities for women in areas such as education , business and justice, and doing more to help countries achieve net-zero emissions goals.
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“Our banner year in 2021 has proven how well the IDB can optimize its balance sheet and mobilize resources, but the new IDB can do even better. This is a historic moment for the IDB and IDB Invest. The actions of the Boards mean that we are gaining power, flexibility and tools to meet the urgent needs of Latin America and the Caribbean in the 21st century,” said IDB President Mauricio Claver-Carone during the meeting. annual meeting of the Bank.
“The pandemic has hit our most vulnerable citizens hard. Today, the region faces rising inflation, higher global interest rates, and shifting geoeconomic and geopolitical concerns. We rose to the occasion in 2020 and 2021, but now we can do even more by leveraging our strengths. Thanks to the governors’ actions, we are now able to better assist the region by mobilizing more resources from the private sector and doing more in critical areas such as climate change and gender equality,” he said. declared.
The new business model envisaged for IDB Invest, or IDB Invest 2.0, will be developed over the next six months and submitted to the Boards for approval this fall.
Approval to move forward with the new vision signifies confidence in IDB Invest’s ability to develop an even more impactful approach to development.
The bank said the new model will allow it to scale up work with investors and businesses across the region. IDB Invest’s innovative approach will focus on creating more impactful projects, de-risking private sector investments and using new financial and technical tools to help attract investment.
The new business model goes hand in hand with the mandate of a capital increase proposal for IDB Invest, the details of which will be presented to the Boards of Directors later this year.
These new capabilities will help IDB Invest build on the record level of engagements it achieved in 2021 and strengthen its role as the region’s leading private sector engagement partner for development. A more ambitious IDB Invest will work even more closely with the IDB, which will also have new tools to creatively engage with borrowing member countries and support them to create business environments that attract investment and are more conducive to building new business. jobs.
The reforms at IDB and IDB Invest are part of a new value proposition for institutions and IDB Lab, approved by the governors, which will enable the bank to accelerate regional development by better responding to social challenges, strengthening the sector private sector and by fighting more ambitiously against climate change. change.
The IDB said the new business models will allow the financial institution to take a more sophisticated approach to collaboration. The IDB will function as a hub, linking the private sector work of IDB Invest with partnerships and projects on the public sector side. This will enable the Bank to better leverage trillions of dollars of private sector assets that the region needs to access to successfully address climate change.
The IDB said the innovative approach also calls for transforming the IDB lab from an innovation lab to an innovation hub, enabling it to do more to increase the impact of private sector projects. and leveraging its risk-taking ability to carry out experimental work at the frontier. sectors and invest in early-stage projects. “IDB Lab’s agility and ability to respond quickly to client needs will strengthen the Bank’s ability to test innovative ideas and conduct pilot programs that can be scaled up to achieve regional development goals.”
He said the Governors’ endorsement will make the IDB more innovative and responsive, with improvements in project design, a new global portfolio management system to measure and deliver results, and updated financial and technical instruments.
The IDB said the actions of the Boards of Governors stem from a mandate issued at the 2021 Annual Meeting for the Bank to carry out a thorough analysis of the region’s challenges as well as the role and optimal institutional structure of the bank.
After a period of consultations with national authorities and other stakeholders, the Bank presented Governors with a new value proposition centered on its core mandate of delivering development effectiveness.
The next annual meeting of the IDB and IDB Invest will take place in Panama.