LAV Magazin 2021

The pandemic has hit Latin Amer- ica particularly hard, both in the health sector and economically. As a long-standing partner in the region, we stand ready to increase our sup- port in times of need. The EIB was there before the COVID-19 crisis hit, it was there during the crisis, and it will be there after the crisis to min- imize the consequences of the pan- demic and support a strong recovery in Latin America and the Caribbean. Currently, the Bank is focusing on direct support to governments and public entities to tackle immediate healthneeds. Only in September, our board of governors agreed on a $100 million loan to finance the purchase of COVID-19-vaccines for distri- bution in Argentina. This comes on top of our €600 million support for COVAX, which also benefits several countries in Latin America and the Caribbean. For us, it is clear: in times like these, we must show solidarity: with 8% of the world’s population, the region represents one-third of global deaths and is now facing the biggest eco- nomic recession in history. The Eu- ropean Union and its Bank cannot – and will not – close their eyes in the light of such hardship. A sad byproduct of the pandemic is the increase in unemployment across the region as well as the surge in poverty levels. Growth rates in many countries had already been falling for some time before the pandemic hit, as the golden decade of the raw mate- rial boom had ended 2013, and many people, who had reached middle class living standards, have slipped back into poverty. The increasing depen- dence on public social programs has created leeway to populist govern- ments. Worsened framework condi- tions also make it difficult for insti- tutions like the EIB, to get projects up and running as quickly as we want. Still, the region remains one with the tightest networks of institution- al relationships we have. The EU is the third-largest trading partner and the leading investor in Latin Amer- ica, with a direct investment stock worth almost €800 billion at the end of 2018. Few people know: the invest- ment of European Union’s companies in Latin America is bigger than what we have in China, India, Japan and Russia. Altogether, not one by one. The EIB started investing in Lat- in America in 1993. Since then, the EU bank has supported almost 140 projects in Latin America, with to- tal financing of around €10.4 billion spread across 14 countries. In the Ca- ribbean, the EIB has been granting almost €2 billion in financing for 220 operations since 1978. Our bond with the region is long and lasting. Our commitment is based on our shared history –a dramatic history – lan- guage and values. To support economic recovery from the COVID-19-recession, we will focus on projects with the aim to develop economic and social infra- structure, to mitigate climate change and support economies in adapting to global warming. The EIB is among the largest financiers of suburban networks in Latin American capital cities, including the modernization of the metro in Buenos Aires and the construction of Quito’s first suburban railway line and Bogota`s first metro line. Support for SME finance is and will re- main another EIB core policy priority in the region. We are supporting SMEs in Latin America mainly through regional development banks, and to a lesser degree through private commercial banks. We are currently building up a pipeline of projects to support the economic recovery. This also includes microfinance support for COVID-19 impacted companies. Generally, the EIB supports public and private sector investment proj- ects in Latin America and the Carib- bean via: Lending: medium and long-term loans granted on attractive terms, and other financing products such as guarantees, loan substitutes or eq- uity. Grants: the EIB partners with the European Commission to offer grants from the Latin America In- vestment Facility and Caribbean In- vestment Facility. Advising: EIB experts support project development and assists public authorities to improve access to finance and facilitate investment. The fight against climate change takes an ever more important role in everything we do. This also ap- plies to our work in Latin America and the Caribbean. It is the defining challenge of our time. During my 30 years in public life, I have seen world changing events – such as the fall of the Berlin Wall. It feels to me like we are going through another one of these seismic shifts. Millions of young people all around the world are protesting – first in the streets, now online – against political and business leaders that are too slow to react to the climate challenge. Their protest has started to change majorities in our demo- cratic institutions. The democratic institutions are reacting – with the recent climate announcements on both sides of the Atlantic being just one example. It really is about time! The Paris accord has set us on the right track, but we are moving for- ward far too slowly. We must act immediately and swiftly if we want to ensure a sustainable transition to a “net-zero” emissions economy. If we wait too long, we risk having to enact an abrupt transition, which would also be disruptive for finan- cial markets. Or worse, we may be unable to tran- sition altogether and face existential consequences for the human race and many forms of life on our plan- et. The IPCC clearly indicated the years to 2030 as our last window of opportunity to avert catastrophic cli- mate change. This is also true for the protection of biodiversity and ecosys- tems. Investment over the next 10-15 years will need to change the face of our economies and our societies. At the EU Bank, we stand ready to embark on a new journey as we fi- nalise the EIB’s increased ambition to 2030 for climate action and environ- mental sustainability, which builds around three commitments. Firstly, we will increase our own fi- nancing. Last year, nearly 40% of our new commitments worldwide were dedicated to such goals. I want us to be much bolder and aim for 50% for climate action and environmental sustainability by 2025. Secondly, we commit to making a real difference in growing sustain- able finance from billions to trillions. By working with our public and pri- vate partners, we aim to help unlock more than €1 trillion of investment by 2030. This will include a marked increase in support for climate adap- tation and resilience. Thirdly, we have aligned our direct lending activities with the principles and goals of the Paris agreement since the end of 2020. As an important first step, we have phased out energy proj- ects that depend solely on fossil fuels – the first Multilateral Development Bank to do so. Our ambition to help turn the tide in the fight against climate change ex- tents to our activities in Latin Amer- ica. Examples include the support of solar, wind, hydro- and geothermal power projects and stable grids that prevent energy losses. This is good for the climate – but also for the economy. The EIB supported invest- ments in wind farms in the Brazilian states of Paraíba, Bahia and Piauí by the Spanish energy company Iberdro- la alone is expected to create 2,300 jobs. We have financed energy projects also with the European utilities En- gie, Enel and EDPR. Latin America and the Caribbean are rich in natural resources, biodiversity and vital ecosystems. Natural disas- ters have repeatedly caused devastat- ing effects on lives, livelihoods and economies. It is a worrying sign that climate change is already happening. Adaptation to the impacts of global warming, therefore, is paramount. We supports communities in becom- ing more resilient to natural hazards, but clearly more needs to be done. To that end, we recently financed a water project in the Canton of Por- toviejo in Ecuador, where a $60 mil- lion EIB loan will help to finance the construction and rehabilitation of water supply, wastewater and storm water networks in urban and rural ar- eas in Manabí. The investments will enable Portoaguas, the utility that serves the canton, to provide 90,000 inhabitants with safe drinking water, and around 22,500 with wastewater services. I am hopeful for the future. We can accomplish a lot if we work together. Taking an example from the health sector, our recent support for the world’s leading vaccine developer BioNTech demonstrates that tak- ing risks with the right partners can bring huge rewards. We are setting out on a difficult jour- ney to save the planet, while also lift- ing economies, creating jobs and sup- porting a fair and green transition. I know Latin Americans care about these causes too. We are inspired to have you as partners on this mission. Dr. Werner Hoyer President of the European Investment Bank PhD (economics) from Cologne Universi- ty, where he also start- ed his career in various positions. 24 years Member of the German Bundestag. During this period, he held the position of Minister of State at the Foreign Office on two separate occasions. Several other posi- tions, including that of Whip and FDP Security Policy Spokesman, Dep- uty Chairman of the German-American Par- liamentary Friendship Group, FDP Secretary General and President of the European Liberal Democratic Reform Party (ELDR). Upon appointment by the EU Member States, Dr Hoyer com- menced his first term as EIB President in January 2012. His mandate was renewed for a second term, which commenced on 1 January 2018. The EIB stands ready to support a sustainable recovery in Latin America The region is suffering severely from the pandemic. The EIB has mobilized support to governments and public entities to tackle health needs and will do its part to foster a sustainable economic recovery 18 19 Europäische Investitionsbank – EIB