Sweden signs USD 250 million guarantee to save Amazon region
Published
Through the Swedish International Development Cooperation Agency (Sida), Sweden is now issuing a record guarantee of USD 250 million to the Inter-American Development Bank (IDB). Seven countries in the Amazon region will be able to borrow up to USD 460 million for sustainable investments. The agreement was signed in connection with the IDB’s Annual Meeting on 8 March in the Dominican Republic.
This guarantee has a term of 22 years and expands the IDB’s lending scope by approximately USD 460 million in the areas of sustainable and resilient landscapes, sustainable forestry and conservation, and bioeconomy in the Amazon region.
An important climate regulator
The Amazon region has the world’s largest contiguous rainforest and an enormous biodiversity. It works as an important climate regulator that affects weather patterns at local, regional and global level.
The region is home to several hundred different groups of indigenous people. Sustainable development is key to living conditions and livelihood opportunities for the 35 million people who live in the area. The Amazon region is currently being affected by unsustainable agricultural practices, illegal mining, forest fires and large-scale logging. The region also has the world’s highest level of threats and violence against environmental activists.
Sida’s largest-ever guarantee
Sida can issue guarantees to encourage banks and other investors to invest in small businesses. Businesses and entrepreneurs get easier access to capital, and the financing helps them grow.
Guarantees function as insurance for those who lend money. If the borrower is not able to repay their debt, the lender can nevertheless get some of their money back. Sida’s guarantees have the possibility to cover both loans to major infrastructure projects and small loans from local banks.
The guarantees have a catalytic effect – every dollar invested in a development project is multiplied and helps the project have a positive impact and reach more people and locations, improving living conditions.
This guarantee to the IDB for the Amazon region is the largest that Sida has provided to date.
Resource mobilisation for sustainable projects
This guarantee enables investments in sustainable projects that are not currently prioritised by countries within the framework of their ordinary loans from the IDB.
The investments made under the guarantee will help preserve ecosystems and strengthen the bioeconomy. They will also promote climate adaptation, sustainable forestry and circular solutions for water supply.
Inter-American Development Bank (IDB)
- For 60 years, the IDB has funded development projects in Latin America and the Caribbean.
- By funding investments of societal importance, the IDB aims to accelerate the economic, social and ecological development of borrowing member countries.
- Thanks to its member countries’ backing, development banks are able to borrow cheaply on the private capital market and then loan the money to development projects at a low cost. The money that the bank earns from lending is used for expert support and technical advice to make the projects effective and sustainable.
- Sweden is one of 22 non-regional members of the IDB.
- Sweden is a member of its Board of Governors and has the right to vote.
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