U.S. backs out of Latam development fund

The United States, historically a major backer of multilateral lending institutions, will not renew its contribution to a Inter-American Development Bank fund that supports pilot development projects, the head of the Washington-based organization said last week. IDB President Luis Alberto Moreno reportedly linked the U.S. decision to a policy shift since Republican President Donald Trump took office in January. The IDB provides loans to governments and businesses to finance projects ranging from large-scale infrastructure to small businesses. Founded in 1959, it says it is the leading source of development financing for Latin America, lending $11.3 billion and $13.8 billion in 2015 and 2014, respectively.

The Multilateral Investment Fund, or MIF, created in 1993, was instrumental in the development of microfinance and provides technical assistance to small projects aimed at providing economic opportunity to the poor.

It was a brainchild of former U.S. President George H.W. Bush, and the United States has historically been its largest donor, the IDB said in a statement.

IDB member countries pledge to renew the fund’s coffers every several years. The IDB governors in October agreed to provide an additional $300 million to keep the fund running from 2019 to 2023. Suriname reportedly has close ties with the IDB. The IDB finances several projects in Suriname including the upgrading of the energy sector. IDB’s Suriname program began in 2016 and will end in 2020. Suriname has reportedly received $168.7 million in loans from the IDB. $63 million will be invested in Suriname’s energy sector and $40 million in the lumber sector. Reports indicate that 176 programs were successfully carried out with the support of the IDB.