Introduction to the BID and Its New Initiative
The Inter-American Development Bank (BID) aims to attract private capital to Latin America, transforming a regional common fund of up to $50 billion in local loans into global assets for investment. This initiative, called ReInvest+, is a collaboration between the BID Group and the Brazilian presidency of COP30.
Transforming Local Loans into Global Investment Assets
ReInvest+ plans to convert existing productive loans from local bank balances into foreign currency-denominated securities with an investment grade, adding political and currency risk insurance. This move targets institutional investors who typically avoid early-stage, unrated, and local currency projects.
“Until now, we’ve asked investors to adjust their risk appetite,” said Ilan Goldfajn, President of the BID. “We’re turning the script around. Projects need to go where the money is.”
Addressing Climate Finance Gap in Developing Countries
This initiative is part of a broader effort to close the $1.3 trillion annual climate financing gap in developing countries outside of China. Public funds only cover a portion of these needs, while private flows have lagged due to perceived additional risks.
Potential Impact and Next Steps
A BID-commissioned study estimates that loans eligible for the fund could exceed $3 trillion. The BID has called on commercial and international banks to submit proposals by October 24.
Selected partners will be announced at COP30 in Brazil, where they are expected to commit to purchasing assets over the next year. No preliminary target has been set. The BID will act as a trusted intermediary, establishing criteria and providing financial technologies to support the transition.
Key Questions and Answers
- What is the BID’s goal with this initiative? The BID aims to attract private capital to Latin America, transforming local loans into global investment assets.
- Who is involved in this initiative? The BID Group and the Brazilian presidency of COP30 are collaborating on ReInvest+.
- What types of loans will be included in the fund? Productive loans from local bank balances that can be converted into foreign currency-denominated securities with an investment grade will be included.
- Why is this initiative important? It addresses the climate financing gap in developing countries and encourages private investment in local projects.
- How will the BID support this transition? The BID will act as a trusted intermediary, setting criteria and providing financial technologies to facilitate the process.
