The Donald Trump Administration is moving to cease financing the Inter-American Development Bank (IDB) investment fund, but Guyana has nothing to lose, as the Japanese Government has filled the gap with a whopping US million investment, and there have been increased contributions by Central and Latin American countries.
Finance Minister Winston Jordan
Finance Minister Winston Jordan, explaining last Friday that the US Government pulling out at this time does not necessarily mean that the fund has altogether dried up, said this does not “affect or contaminate” the main fund of the IDB.
According to the Finance Minister, there are MIFs 1, 2 and 3. Currently the IDB is in the 3rd MIF. However, the US has indicated that it will not be contributing to this part of the fund, as it is looking to concentrate on itself at this time.
“So they said they could not contribute to this cycle of the MIF. It does not mean that they have disappeared. They are in MIF 1 and 2, but they do not have resources for this cycle. It does not mean that the fund has died,” Jordan told journalists.
He explained that when he was in Paraguay last week, he was informed that the fund is completely subscribed. “Thanks to Japan, which came in with filling the gap of over $80 million that was left by (the) US, and also increased contribution by Central and Latin American countries. So the fund is completely subscribed. It has nothing to do with the substantial funding of the IDB itself”, he assured.
The United States has, for years, been the largest contributor to the Multilateral International Fund (MIF), a small part of the IDB that has been initiated by former US President George H.W. Bush, and which gave support to the development of microfinance and the provision of technical assistance to small projects aimed at providing economic opportunities to the poor.
The Multilateral Investment Fund of the IDB Group is the leading provider of technical assistance for the private sector in Latin America and the Caribbean. The MIF, or FOMIN, as the fund is known in Spanish, is also one of the region’s biggest investors in microfinance and venture capital funds for small businesses. Projects to be financed should increase access to finance, markets, and capabilities and basic services.
The MIF works with local, mostly private, partners to help fund and execute projects. It provides grants, loans, guarantees, equity and quasi-equity; as well as advisory services to business associations, non-governmental organisations, foundations, public sector agencies and financial institutions; and, in some cases, private sector firms — to support projects that benefit the poor: their businesses, their farms, and their households throughout the 26 Latin American and Caribbean borrowing member countries of the IDB Group. The MIF does not directly finance micro and small enterprises.
Financing and/or technical cooperation is also provided through its Social Entrepreneurship Programme, which focuses on pilot initiatives with a business approach — to increase financing and market access to marginalised rural communities, and improve access to basic services.
Most of the MIF financing takes the form of grants, which can reach up to $2 million per project. The MIF also offers long-term loans of up to $1 million and equity investments that can reach up to $5 million.
