The De­vel­op­ment Bank of Latin Amer­i­ca and the Caribbean (CAF) has an­nounced a US$40 bil­lion in­vest­ment over the next five years to fi­nance sus­tain­able growth and strength­en cli­mate ac­tion, with em­pha­sis on a just en­er­gy tran­si­tion, wa­ter se­cu­ri­ty, sus­tain­able mo­bil­i­ty, agri­cul­tur­al pros­per­i­ty and the con­ser­va­tion of key strate­gic ecosys­tems for the plan­et such as the Ama­zon, Patag­o­nia, high-moun­tain wet­lands and man­groves.

A re­lease from CAF yes­ter­day ex­plained that with these fi­nan­cial re­sources, CAF would con­sol­i­date a port­fo­lio that com­bines project fi­nanc­ing, pro­mo­tion of sus­tain­able pub­lic poli­cies, im­pact in­vest­ments, green cred­it lines to fi­nan­cial in­sti­tu­tions, use of in­no­v­a­tive in­stru­ments (such as debt-for-na­ture swaps and sus­tain­abil­i­ty-linked loans), and col­lab­o­ra­tion with sub­na­tion­al gov­ern­ments to en­sure that fi­nanc­ing reach­es all cit­i­zens.

Speak­ing on the move, Ser­gio Díaz-Grana­dos, ex­ec­u­tive-pres­i­dent of CAF said, "This is an un­prece­dent­ed in­vest­ment by a de­vel­op­ment bank in Latin Amer­i­ca and the Caribbean, demon­strat­ing our com­mit­ment to a more sus­tain­able, eq­ui­table, and pros­per­ous re­gion. In 2021, we set the goal of be­com­ing the Green Bank of Latin Amer­i­ca and the Caribbean and pro­ject­ed that at least 40 per cent of ap­provals would be green by 2026. We achieved that goal in 2024. With to­day’s an­nounce­ment, we are in­creas­ing our green fi­nanc­ing tar­get to 50 per cent by 2030."

The re­lease not­ed that CAF’s an­nounce­ment co­in­cides with the EU-CELAC sum­mit in San­ta Mar­ta, Colom­bia, which aims to deep­en Eu­ro­pean co­op­er­a­tion and in­vest­ment in the re­gion.

It ex­plained the EU-CELAC re­la­tion­ship has the po­ten­tial to boost sus­tain­able de­vel­op­ment in both re­gions, with ma­jor in­vest­ment op­por­tu­ni­ties un­der the Glob­al Gate­way ini­tia­tive, adding that Latin Amer­i­ca and the Caribbean, home to 60 per cent of the plan­et’s bio­di­ver­si­ty and gen­er­at­ing 30 per cent of its en­er­gy from re­new­able sources, rep­re­sents a key part­ner for the EU in ad­vanc­ing the green tran­si­tion.

The funds would be di­rect­ed to the fol­low­ing pri­or­i­ty ar­eas:

*Just en­er­gy tran­si­tion

CAL stat­ed that Latin Amer­i­ca and the Caribbean has enor­mous po­ten­tial in re­new­able en­er­gies such as so­lar, wind, nat­ur­al gas, hy­dropow­er, and ge­ot­her­mal. To pro­mote a just tran­si­tion, CAF would fo­cus on de­car­bon­is­ing the elec­tric­i­ty, trans­port, and pro­duc­tive sec­tors while en­sur­ing en­er­gy se­cu­ri­ty and af­ford­abil­i­ty to im­prove com­mu­ni­ty well-be­ing.

CAF would al­lo­cate US$ 10 bil­lion in ap­provals by 2030 to ad­vance a just en­er­gy tran­si­tion.

*Re­silience, strate­gic ecosys­tems, and the agri­cul­tur­al sec­tor

In the face of threats from de­for­esta­tion, min­ing, in­ten­sive agri­cul­ture, and cli­mate change, CAF would pro­mote adap­ta­tion, cli­mate re­silience, and an ecosys­tem-based ap­proach. The strat­e­gy val­ues the rich­ness of ter­res­tri­al and ma­rine-coastal ecosys­tems through con­ser­va­tion and sus­tain­able-use in­ter­ven­tions, the blue econ­o­my, and dis­as­ter-risk man­age­ment, while strength­en­ing re­gen­er­a­tive and sus­tain­able agri­cul­tur­al op­por­tu­ni­ties.

*Re­silient ter­ri­to­ries

CAF’s ac­tions aim to en­hance wa­ter se­cu­ri­ty through ac­cess to safe drink­ing wa­ter, san­i­ta­tion, and the man­age­ment of droughts and floods.

At the same time, it seeks to de­vel­op sus­tain­able ur­ban and mo­bil­i­ty sys­tems and strength­en the cre­ative and tourism economies, pro­mot­ing mod­els of ur­ban re­gen­er­a­tion and in­fra­struc­ture de­vel­op­ment that are in har­mo­ny with na­ture.

*Phys­i­cal and dig­i­tal in­fra­struc­ture

To close the in­fra­struc­ture gap, es­ti­mat­ed at about five per cent of the re­gion’s GDP an­nu­al­ly, CAF pro­motes phys­i­cal con­nec­tiv­i­ty and dig­i­tal trans­for­ma­tion with­in a re­gion­al-in­te­gra­tion frame­work. This in­cludes sus­tain­able trans­port, lo­gis­tics, and en­er­gy in­fra­struc­ture projects along­side dig­i­tal-trans­for­ma­tion ini­tia­tives.

CAF al­so in­tends to mo­bilise third-par­ty fi­nanc­ing sources, such as the is­suance of sus­tain­able bonds and ac­cess to green and cli­mate funds, and to fos­ter part­ner­ships among gov­ern­ments, civ­il so­ci­ety, in­ter­na­tion­al or­gan­i­sa­tions, NGOs, and the pri­vate sec­tor.

A key com­po­nent would be close col­lab­o­ra­tion with sub­na­tion­al and mu­nic­i­pal gov­ern­ments.

CAF is a de­vel­op­ment bank com­mit­ted to sup­port­ing the coun­tries of Latin Amer­i­ca and the Caribbean and im­prov­ing the qual­i­ty of life in the re­gion.