Member countries of the Inter-American Development Bank have given final approval to the Inter-American Investment Corp., an affiliate that will specialize in investing in the private sector of Latin American countries.
Through a variety of direct and indirect investments, the new agency will help finance private development, particularly of small- and medium-size enterprises, the Washington-based IADB said.
The IADB said these businesses, which "generate a high level of employment and contribute importantly to the gross domestic product of the Latin American and Caribbean countries," have been "handicapped by their generally limited access to long-term financing."
"Commercial and investment banks in Latin America do not have adequate resources to finance risk capital and long-term debt," the bank said.
The agency will receive 25 percent of its initial capital investment, or $50 million, from the United States, which has supported efforts by international finance institutions to provide a boost to the private sector of developing countries, such as the World Bank's International Finance Corp.
Approval of the agreement came as four member countries -- Bahamas, Paraguay, Chile and Honduras -- ratified the new agency's charter on the eve of the IADB's recent annual meeting in San Jose, Costa Rica.
Their action brought the number of the countries ratifying the charter to 22 and the number of shares subscribed to more than the requisite two thirds of the total.
Antonia Ortiz Mena, president of the IADB, is expected soon to call the first meeting of the board of governors of the new entity to elect a board of directors and officially commence the operations of the corporation. To date, of the 34 countries that have agreed to become members in the agency, 22 have ratified its charter, accounting for 67 percent of the total shares invested in the agency.