The President of the Inter-American Improvement Financial institution (IDB) and the Managing Director of the Worldwide Financial Fund (IMF) have agreed to reinforce their collaboration to raised assist the efforts of widespread members in Latin America and the Caribbean to foster sustainable and inclusive development and deal with the structural challenges of local weather change.
Working throughout the scope of every establishment’s mandate, IDB and IMF workers will enhance their cooperation in two principal areas: normal coordination and local weather finance.
As a part of their enhanced normal coordination, the IDB and the IMF workers will deepen their cooperation on 4 subjects: (i) surveillance of macro-economic insurance policies, (ii) IMF preparations, particularly the Resilience and Sustainability Fund (RSF), (iii) IDB lending operations, together with funding and policy-based loans, and (iv) capability improvement.
The local weather finance collaboration will concentrate on: i) figuring out insurance policies to assist member international locations’ local weather goals within the context of the RSF, ii) capability improvement to assist the implementation of the RSF and iii) constructing programmatic approaches to mobilize local weather finance.
By strengthening their collaboration in these areas, the IDB and the IMF workers will improve their assist for designing financial insurance policies and coverage reform applications in widespread member international locations, in addition to mobilize local weather finance extra successfully. This contains working with nation platforms to draw extra funding for local weather motion.
On this context, local weather finance roundtables lately convened in Barbados, Jamaica, and Costa Rica, introduced collectively authorities, improvement companions, and personal buyers. These initiatives helped discover options to the international locations’ local weather finance wants and supply quicker and broader entry to financing and capability improvement.
“Our enhanced partnership with the IMF is a really vital step in the direction of higher supporting our member international locations sort out local weather change extra successfully and seizing the alternatives that the inexperienced transition can supply and foster sustainable development. We see a number of synergies between the work of each establishments, and I stay up for amplifying our affect because of this nearer collaboration,” stated Ilan Goldfajn, President of the Inter-American Improvement Financial institution.
“We’re dedicated to enhancing our collaboration with IDB to ship tangible outcomes for individuals, companies and establishments all through Latin America and the Caribbean. We do that by leveraging our respective experience to sort out challenges posed by local weather change,” stated IMF Managing Director Kristalina Georgieva.
Demonstrated Success
This new stage within the partnership between the 2 establishments builds on an extended historical past of profitable collaboration, together with most lately in Paraguay, Jamaica, Barbados, and Costa Rica, within the context of the IMF’s RST.
- Paraguay. The IDB’s and the IMF’s joint work contains public monetary administration, income administration and mobilization, and governance. The collaboration was lately broadened to incorporate local weather initiatives underneath the Resilience and Sustainability Facility (RSF) association and the Coverage Coordination Instrument (PCI). The IDB is actively supporting the implementation of RSF reform measures reminiscent of the event of a inexperienced taxonomy, the enlargement of the nation’s clear vitality matrix, and waste administration. The IDB’s assist to Paraguay’s Ypacaraí Lake’s sanitation venture enhances the RSF reform matrix and creates efficiency incentives for higher water/wastewater administration utilizing IDB CLIMA, the IDB’s results-based monetary device that incentivizes quicker progress on adaptation and mitigation. As well as, the IDB is contributing to the implementation of reforms underneath the PCI to reinforce public monetary administration, together with on public funding.
- Jamaica. The partnership between the IDB and the IMF performed a crucial function in designing and implementing reforms underneath the RSF association to include local weather adaptation and mitigation components in fiscal administration, in addition to to launch initiatives aiming at greening the monetary sector. The IDB offered in depth and well timed capability improvement for a number of areas within the authorities’ reform agenda, which included the inclusion of local weather necessities in public-private partnerships coverage frameworks, the definition of a technique to conduct local weather affect assessments in public funding, the introduction of funding tasks choice standards (together with local weather change components), the event of an electrical automobile coverage, new pointers for vitality effectivity in public buildings, and the institution of a framework for green-bond issuance.
- Barbados. Collaboration between the IDB and the IMF has performed a crucial function within the profitable design and implementation of the present RSF association. The IDB has supported the enhancement of the general public monetary administration framework by integrating local weather components into the Procurement Act. This contains designing and approving pointers for a inexperienced procurement framework, creating customary procurement contracts that incorporate local weather change necessities, and implementing inexperienced price range tagging to tell policymakers and the general public in regards to the amount and use of on-budget local weather finance. Moreover, the IDB has coordinated the design and execution of progressive monetary devices, such because the 2022 Debt-for-Nature conversion.
- Costa Rica. Collaboration between the IDB and the IMF facilitated the profitable completion of the RSF association in June 2024. The IMF, by means of its convening energy and experience in macro coverage, contributed to prioritizing and sequencing of reform measures, whereas the standard and granularity of the design in addition to the implementation of reform measures benefitted from energetic inputs from improvement companions, notably the IDB. Specifically, the IDB supported the Ministry of Finance and Ministry of Planning (MIDEPLAN) in assembly a number of of the RSF coverage commitments by means of technical help, in key areas just like the design of a brand new price range classification system that may permit for the estimation and analysis of climate-related expenditures, and the event of instruments and pointers to prioritize capital tasks together with a spread of clime change standards. As well as, the Costa Rican authorities are strengthening the authorized and regulatory framework for public-private partnerships with assist of IDB, which is a crucial step towards the institution of a Venture Preparation Facility that may unlock non-public sector financing for local weather investments.
Trying forward, IDB and IMF workers will proceed to associate within the design and implementation of insurance policies and applications to assist the structural transformation the international locations within the area want to achieve their strategic local weather targets. This may embody exploring choices to advance inexperienced fiscal insurance policies and improve financing options for local weather resilience investments by means of a mix of various monetary instruments.
The workers of IDB and IMF are additionally working carefully along with the World Financial institution to assist the formidable local weather reform agenda of different member international locations.
