JICA, IDB expands co-financing arrangement to $3 billion
Through a new agreement with the Inter-American Development Bank (IDB), the Japan International Cooperation Agency (JICA) will invest a total of $3 billion in Latin America and the Caribbean to support renewable energy and energy efficiency projects, as well as quality infrastructure projects related to energy savings.
The new IDB-JICA agreement expands on the Co-financing for Renewable Energy and Energy Efficiency (CORE) program, which was created in 2012 to support energy investments to mitigate climate change impacts in Central America and the Caribbean.
The new agreement will increase the target amount of JICA’s highly concessional loan window from US$1 billion to US$3 billion, and will extend the term of the program until April 2021. This will also broaden CORE’s geographical reach, enabling partners to fund projects in all low-and middle- income IDB borrowing member countries, as well as more vulnerable Caribbean economies not previously covered by the program.
An innovative aspect of this arrangement is the Japanese government’s creation of the Japan Quality Infrastructure Initiative (JQI), the IDB’s first built-in grant mechanism for a co-financing arrangement. Additionally, its prioritization of infrastructure furthers the Japanese government’s aim to promote quality infrastructure in Latin America and the Caribbean as a way of improving energy efficiency, safety, and sustainability.
The agreement was signed by IDB President Luis Alberto Moreno and JICA’s Vice President Hidetoshi Irigakiduring the IDB’s 2016 Annual Meeting in Nassau, Bahamas. The signing took place in the presence of Mr. Manabu Sakai, State Minister of Finance of Japan.
“Japan has been a valuable partner as we have worked hard to put sustainability at the front and center of our operations,” said IDB President Luis Alberto Moreno. “Latin America and the Caribbean have enormous energy and infrastructure needs and we believe the program will help ensure that these investments have an even greater positive impact.”
JICA Vice President Mr. Hidetoshi Origami stressed, “With the second expansion of the CORE program, JICA is pleased to say that it has become the IDB’s largest co-financing partner. JICA will continue to work with the IDB on challenges in Latin America and the Caribbean, mainly in the fields of renewable energy and energy efficiency, now under the Japanese government’s initiative to globally promote quality infrastructure.”
Established in 2012 with an initial target amount of $300 million and later expanded to $1 billion in 2014, the CORE mechanism has proven an effective approach to promoting renewable energy and energy efficiency in Central America and the Caribbean. To date, the program has channeled approximately $800 million of JICA’s highly concessional resources, which are leveraged by IDB loans, to the LAC region.
This financing will move the LAC region forward in its efforts to meet the goals set by COP21 as well as by the United Nations’ Sustainable Energy for All (SE4All) initiative which aims to double energy efficiency and renewable energy use in the region by 2030.