By Andrea Shalal
WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen on Friday said the United States will work closely with the Inter-American Development Bank (IDB) to better integrate supply chains in Latin America and the Caribbean as Washington works to counter China’s growing influence.
Yellen, who hosted a breakfast for leaders from the Americas Partnership for Economic Prosperity before a White House summit, said Treasury strongly supported efforts by IDB President Ilan Goldfajn to reform the regional development bank’s private sector arm, IDB Invest, and backed a capital increase for it.
“My team at Treasury is working closely with President (Ilan) Goldfajn and IDB Group shareholders to define the policy reforms and financial scenarios that would enable a significant capital increase for IDB Invest,” she said.
The U.S., the IDB’s largest shareholder, has said it will work closely with the bank to provide low-cost financing for projects in Latin America and the Caribbean and support greater knowledge sharing and training as part of a broader effort to boost investment in priority sectors and increase the region’s competitiveness.
Yellen told an IDB conference on Thursday that additional capital would help increase IDB Invest’s impact and ability to better mobilize private capital to the region, as APEP partners work to shift supply chains away from China and expand “nearshoring” options closer to home.
“An IDB Invest armed with more risk capital, a refreshed business model, new incentives, and new financial products will be even more effective at promoting private sector-led, inclusive, and sustainable economic growth and development,” she told conference attendees.
Yellen also said on Thursday that the “originate-to-share” approach adopted by IDB Invest CEO James Scriven was pioneering a new way for multilateral development banks (MDBs) to leverage private sector capital, an innovation being closely watched by others.
Treasury’s push for reforms is part of a broader effort to free up more financing for developing countries facing some $3 trillion in annual costs to mitigate and adapt to climate change.
The IDB in September also launched an initiative dubbed “BID for the Americas” to encourage more U.S. companies to bid for the $13 billion in projects financed by the development bank across Latin America and the Caribbean region.
The move by IDB follows efforts by China to increase its influence in Latin America, through increased direct lending to Latin American governments and boosting trade ties to resource-rich South American countries. A Reuters analysis shows that outside of Mexico, China has overtaken the U.S. as the region’s largest trading partner.
(Reporting by Andrea Shalal; editing by Christina Fincher and Paul Simao)