RIYADH, Saudi Arabia, CMC—Ignacio Coronazole Hughes, a senior official of the Latin American and Caribbean Development Bank (CAF), says the bank intends to play a greater role in the socio-economic development of the Caribbean and is moving to expand its presence in the region.
CAF is a development bank owned by 19 countries, including 17 in Latin America and the Caribbean, Spain, and Portugal, as well as 13 private banks in the region.
Its headquarters are in Venezuela, and it has offices in Buenos Aires, La Paz, Brasilia, Bogota, Quito, Madrid, Mexico D.F., Panama City, Asuncion, Lima, Montevideo, and Port of Spain.
CAF’s Resource Mobilization and Global Alliance manager, Ignacio Corlazzoli Hughes, told the Caribbean Media Corporation (CMC) that CAF recently changed its name to include Latin America and the Caribbean Development Bank.
“We just did that in April when three countries from the Caribbean joined the bank. So now we have six countries. We had Trinidad and Tobago, who joined us 30 years ago, along with Jamaica.
“We had Barbados who joined later on, and a couple of months ago, we had The Bahamas, Dominica, and Grenada who just joined the bank,” he said, noting that CAF’s president, Sergio Díaz-Granados, an attorney from Colombia, who has this comprehensive Caribbean perspective. Watch video
“And while we are expanding the bank’s mandate to become the region’s blue and green development bank, we are also expanding our geographic scope. And President Diaz-Granados is planning to transform CAF into the bank that has the most active member countries, and we are expanding and reaching out to many more Caribbean countries,” said Corlazzoli Hughes, who is here attending the 50th anniversary of the Saudi Fund for Development (SFD).
We hope that very shortly, by the following year, we will become the bank with the most countries in the region.
Corlazzoli Hughes believes that while CAF is unlike other banks in the region, with a significant majority of its capital coming from within the region, he is aware of the challenges and opportunities for developmental finance in the Caribbean region.
“… we don’t have a difference between borrowing and non-borrowing member countries. So, 95 percent of the capital is from the region. We have Portugal and Spain with five percent, but we are a bank that can allow borrowing to every member country. That’s very important.
“So within our structure, the way our board is conceived, our board of ministers, we don’t have a sitting board, unlike other banks. How we think about it is that we are very close to our clients.”
He said, given the CAF president’s mandate that the financial institution be an infrastructure bank moving towards the blue and green bank of the region, “we are actively working on climate change.
“In that sense, we are mandated to … make 30 percent of our approvals in climate change operations. We have to transform our modality, the way we think, the way we approve, operate, and work, precisely to have a bigger, better, and stronger impact on climate change operations in the Caribbean.
“For example, we just finance …the new Bank for Development in Jamaica, the blue and green one. We are actively involved in the Bridgetown Agenda that Prime Minister Mia Mottley of Barbados leads.
“We are seeking what we do, for example, in Trinidad and Tobago in a more sustainable way, on an infrastructure project. We are actively now working in Trinidad thanks to other partners, such as the European Commission…but we are always thinking about the impact and the sustainable impact these have on the citizens.
“What we want to do is to improve their lives, and in this way, trying to be much closer to the Caribbean citizens,” Corlazzoli Hughes said, explaining the efforts towards moving to a blue and green bank.
“So the way we want to work on the blue and green bank…for example, in the Caribbean, you have up to 10 percent of the worldwide coral reef, if I am not mistaken, much of which, unfortunately, is bleaching.
“We are going to be working more on those nature-based solutions, working with the ocean, the blue economy,” Corlazzoli Hughes told CMC.
“We committed a few years ago back …to increase our financing for the blue economy. At the same time, we are working on climate change issues. On climate change discussions, we want to become the region’s voice, the financial voice of the region, especially the Caribbean region.”
Corlazzoli Hughes said to protect CAF is to become a bridge between Latin America and the Caribbean.
“These two regions, while in the same geography, have been working back to back, unfortunately, over the last few years, and we want to position CAF as that bridge where we can reproduce lessons learned from one region to the other and to try to work on a more integrated way.
“Because, as you might know, when you have a hurricane that impacts, it doesn’t affect one country. It impacts the entire Caribbean. It impacts the whole region. It does not limit itself to English, Spanish, or French countries. It goes throughout the area, hitting Venezuela, Colombia, Mexico, the US, and the Caribbean.
“So what we are trying to do at CAF is to start to work on a bigger scheme and not limit ourselves to our borrowing countries or our member countries, but try to see the Caribbean, per se, as the whole basin. I think that’s what President Diaz-Granados is trying to aim for the Caribbean,” Corlazzoli Hughes told CMC.
He acknowledged that the Caribbean faces an uphill task in getting the international community to respond to climate change mitigation, adaptation, and rebuilding after natural hazards.
“I would like to start by praising what the Caribbean countries have done macro-wise over the last ten years. As we all know, Caribbean economies are highly indebted,” he said, noting that even though the region has reached pre-pandemic percentage, the rate of debt per gross domestic product (GDP) “was, I believe, before the pandemic was around 75 percent.
“It went up way up during the pandemic for public vestment and aneurysm revenues. And now we are back to 77 percent, primarily because of Guyana’s growth. I mean, unbelievable growth. And on what Jamaica has been doing on this stringent and praiseable measure…
“Those are two countries. However, we must recognize that the Caribbean has better managed its debt. Of course, when increasing their revenues and strengthening some fiscal institutions, that’s one.
Corlazzoli Hughes said that debt gives countries “a minimal fiscal space to what you can do,” noting that “in the Caribbean, I would say two out of 10 most worldwide countries have
We have been the most severely affected by many climate change disasters, such as Haiti and the Bahamas; every time a hurricane hits you, a considerable percentage of your GDP is back in question.
“So there’s only so much countries can do. Why? Because the International Monetary Fund (IMF) and others limit your spending …your public spending.
“So we are working together. For example, we have been listening to the Bridgetown agenda and trying to work on new financial instruments for the region.
Many countries have been working in the Caribbean on insurance schemes for the region.
“CAF is building and is being part of the solution. We were recently approved to use SDRs (Special Drawing Rights) at the IMF. For example, Those resources could be used for climate change schemes in the Caribbean.
“CAF is available for you. We are trying to find new financial schemes with new financial partners. For example, precisely SFD. SFD provides grants,” Corlazzoli Hughes told CMC.
“Why are these grants so important? First, they have a limited amount, but these grants are significant because when you add them to your loans, you reduce the debt.
“I mean not only the amount of debt, but you reduce the rate of the debt, and that’s important for the country. Most importantly, it also allows you to bring innovative financial instruments,” he added.
“For example, you have a significant problem with the sargassum in the region. That’s going to impact the tourism. Sargassum is not a limited country perspective. There needs to be a response from country to country. It has to be considered as a regional problem, as a regional issue.
“What can we do on a regional level for the sargassum? So, I know you have a conference in October for the entire Caribbean, sponsored by the European Commission. We are going to be actively involved in that one.
“This is the kind of innovative instruments we are trying to do for the Caribbean,” Corlazzoli Hughes told CMC.
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