MARKETS

July 4, End Of Day

• Argentina
  • S&P MERVAL Index = 2,078,697.04 (YTD = -17.96%)
• Brazil
  • BOVESPA Index = 141,263.56 (YTD = 17.44%)
• Chile
  • S&P IPSA Chile = 4,314.89 (YTD = 19.37%)
• Colombia
  • MSCI COLCAP = 1,686.87 (YTD = 22.27%)
• Mexico
  • IPC Mexico BMV = 57,977.76 (YTD = 17.10%)
• Peru
  • S&P/BVL Peru = 33,042.52 (YTD = 14.09%)

BUSINESS

Significance of Inter-American Development Bank

The Inter-American Development Bank (IDB) plays a pivotal role in Latin America by providing financial and technical support to its 26 borrowing member countries. The 2024 Annual Business Review reveals several key insights into how the IDB functions and its impact in the region. Here's a structured analysis of what the IDB means to Latin America, based on the report:

1. Financing Development at Scale

• $12.3 billion in new sovereign-guaranteed (SG) projects were approved in 2024, covering 20 countries.
• Although this is slightly less than previous years (3% below 2023), it demonstrates the IDB’s steady commitment to supporting Latin America's development agenda.
• The portfolio in execution includes 606 projects totaling $57.5 billion, with 60% still undisbursed, indicating ongoing support and future activity.

2. Strategic Focus Areas

• The majority of projects fall under either ‘Infrastructure & Environment’ or ‘Institutions for Development’. Together, these account for 76% of the active project portfolio.
• Other key sectors include: Energy and climate resilience; transport and urban development; health and education; digitalization and governance reforms

3. Blending Policy and Investment Instruments

• Investment loans accounted for 66% of total approvals.
• Policy-Based Loans made up 30%, helping governments implement economic and institutional reforms.
• Special Development Lending  and guarantees supported macroeconomic stabilization and risk management.

4. Support for Fragile and Vulnerable Countries

• Non-reimbursable support includes technical cooperation ($255M) and investment grants focused mainly on Group C and D countries (e.g., Haiti, Honduras, Paraguay).
• 64% of investment grants target C and D countries, emphasizing climate resilience and energy.

5. Country-Level Impact

Major recipients (by total portfolio value):

• Brazil ($10B) – mostly in infrastructure, MSME support, and governance.
• Argentina ($12.2B) – across fiscal policy, energy, and health.
• Peru, Colombia, Paraguay, and Ecuador also received significant allocations.

CURRENT AFFAIRS

Brazil: The IDB has approved a $2 billion credit line to support Brazil’s fiscal management. The program begins with a $30 million loan to the state of Amazonas and aims to modernize tax systems and processes nationwide.

Latin America: The Inter-American Court of Human Rights issued a non-binding opinion urging Latin American nations to cooperate on ambitious climate action. Requested by Colombia and Chile, the court said states must regulate corporate emissions, pass binding mitigation laws, and prevent greenwashing. This builds on a growing wave of global climate litigation that frames climate inaction as a human rights violation.

Chile: Chile’s congress passed a key law to streamline the permitting process for investment projects, addressing long-standing concerns from the mining and renewable energy sectors. The new legislation is expected to cut permit processing times by 30–70% without lowering regulatory standards. Chile aims to unlock stalled investments, though broader environmental reform efforts remain delayed.

FURTHER READING

Check our recently published insights here.

🚢 The Panama Canal’s Role

• Global Trade Anchor – Handles 5–6% of world trade and 40% of U.S. container traffic;
• Climate Risks – Freshwater shortages are threatening long-term canal operations; $2B in infrastructure investments are underway.
• Neutrality at Stake – Panama walks a tightrope, maintaining canal neutrality amid foreign pressure and security concerns.

📖 Read more here.