International Financial Institutions Pledge Closer Collaboration to Support Role of the Private Sector in Development
Washington, D.C., October 18, 2013 — The Inter-American Investment Corporation (IIC) and some 20 multilateral and bilateral development institutions (IFIs) held their annual roundtable meeting to foster collaboration among IFIs and strengthen the role of the private sector in development.
The following themes were discussed during the meeting:
• Agreement to harmonize development results indicators: The IIC and 24 IFIs signed a memorandum of understanding to harmonize key development indicators, with a view to reducing the reporting burden on shared clients of different IFIs. This will facilitate knowledge transfers among development institutions and will help provide a coherent global narrative on proven, quantifiable development results.
• Support for “Let’s Work”, a new global partnership of development institutions coordinated by the International Finance Corporation, will help develop practical approaches to overcoming obstacles to job creation. The IIC’s involvement in the Let’s Work initiative demonstrates its strong commitment to promoting the job creation potential of Latin American small and medium-sized enterprises (SMEs).
• Endorsement of common guidelines for the use of concessional finance where there are market failures but the potential development impact is high. Development institutions offer financing on commercial terms when investing in private sector projects. However, in some carefully structured investments, concessional funds—for example, from donor partners—catalyze investments in areas such as climate change and food security that otherwise would not be possible.
• Endorsement of a strategic focus on domestic capital market development. IFIs are collaborating to develop domestic capital markets and to increase the availability of local-currency financing for the private sector. These strategies are essential for long-term private sector development. The IIC has been recognized as an innovator and leader in local-currency investments. Over the last two years, the IIC has placed three bonds in the Mexican capital market to establish its own local currency treasury. SMEs financed by the IIC in local currency have natural coverage against exchange rate fluctuations.
The IIC’s general manager, Carl Muñana, added: “The IIC’s mandate is to promote economic development in Latin America and the Caribbean and we are very pleased to partner with other IFIs to contribute to developing the best strategies for creating more and better jobs. We believe that innovation and selective financing will yield improved development results for our region.”
About the IIC
The IIC, a member of the Inter-American Development Bank (IDB) Group, promotes private-sector development in Latin America and the Caribbean with a focus on small and medium-sized enterprises. We help companies streamline management processes and provide them with financing in the form of equity investments, loans, and guarantees, as well as innovative technical assistance, advisory services, and knowledge products. In 2012, the IIC approved more than 70 operations totaling some US$400 million. Since its inception in 1989, the IIC has approved approximately 800 direct loans to SMEs and financial intermediaries, for a total of US$4.8 billion. An additional US$2.8 billion has been mobilized through cofinancing and syndication agreements. For more information on IIC activities, visit www.iic.org
Contact: Maria Kronsteiner
Telephone: +1(202) 623-2634