Inter-American Development Bank Approves $400 Million USD Loan for Colombia

The Inter-American Development Bank (IDB) approved a $400 million USD loan for Colombia to improve its infrastructure. The loan, which has a 20-year term and an LIBOR-based interest rate, is specifically marked to help encourage private investments in a critical segment of the economy that has held back the nation due to underdevelopment.

The IDB notes that Colombia has only invested 3.2% of its GDP into useful infrastructure over the past decade, a figure that falls well below the bank’s recommended level of between 5% to 7% in the region. “Private participation is a centerpiece in the Colombian government efforts to close the productive and social infrastructure gap and improve the quality of related services,” said the bank in a statement.

“The loan will help adapt and develop the regulatory framework needed to boost up private investment in this area and enhance national and regional institutional capabilities to implement public private partnerships. The funds will also finance investment programs aimed at boosting up infrastructure in sectors that are critical to the country’s growth, by structuring sectorial pilot projects and developing adequate tools and technical standards.”

The IDB provided as least two other large loans last year. It approved a $230 million USD loan to Colombia last December for water, sanitation, and electricity projects in the country’s poorly developed Pacific region. The money was expected to bring potable water to more than 80,000 homes, improve sewage systems for at least 12,000 homes, and provide sustainable electricity, allowing 24-hour reliability, to 20,000 users. With a population of 1.6 million people — about 90% of which are of Afro-Colombian descent — the region trails the rest of the country in income and equity.

A month earlier, in November, the IDB authorized a $500 million USD loan to support financial system reforms. The funds were designed to develop the capital market, expand financial inclusion so that more people and small businesses could get access to banks, and strengthen the regulation, supervision, and transparency of the financial system.

In February, 2016, the bank, through Bancóldex, Colombia’s national development bank, also approved a $9.3 million USD loan to promote private investment in renewable energy generation. Nearly two million Colombians live in the isolated and sparsely population regions of the nation that force them to make due with limited localized power services.

Photo: Inter-American Development Bank / Daniel Drosdoff