Latin American development bank to ramp up lending after reforms

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Latin America’s biggest development bank plans to increase lending by about $112bn over the next decade, pushing up annual loans by almost half following an increase to its firepower and internal reforms.

The Inter-American Development Bank on Sunday won board approval for the moves at its annual meeting in the Dominican Republic, including sweeping changes under which it will focus on fewer, bigger loans and measure outcomes more rigorously.

The additional lending capacity will come from a $3.5bn capital increase for the bank’s private sector arm, IDB Invest, and a $400mn boost for venture capital unit IDB Lab, along with optimisation of the balance sheet and loan guarantees provided by member nations for specific projects, such as Sweden’s support for a biodiversity scheme in the Amazon.

Ilan Goldfajn, IDB president, said Latin America and the Caribbean faced a triple challenge from rising social demands, scarce government resources and climate change but also a “great opportunity” to address these issues and profit from growing global demand for food, critical minerals and renewable power.

He told the Financial Times: “We can do an additional $112bn in 10 years. Today we have total [annual] lending around $24bn, so it’s a near 50 per cent increase.”

Goldfajn wants the bank to channel lending to areas where it can have a bigger impact and to make disbursements against results delivered. “We need to show that we’re more effective, that we’re having more impact, that we’re using every dollar in the best way,” he said in an interview.

Goldfajn, a former head of the Brazilian central bank, moved from the IMF to head the Washington-based IDB in November 2022 after the board fired the Trump-nominated former president, Mauricio Claver-Carone.

That followed an internal inquiry which found evidence of a sexual relationship…