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Statement at the 57th Annual Meeting of the IDB and the 31st Annual Meeting of the IIC

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Statement by Manabu Sakai,State Minister of Finance,Ministry of Finance,Government of Japan
At the Fifty-seventh Annual Meeting of the Inter-American Development Bank and the Thirty-first Annual Meeting of the Inter-American Investment Corporation
Nassau, the Bahamas, April 9, 2016

1.Introduction

   Mr. Chairperson, Mr. President, distinguished Governors, ladies and gentlemen,

   On behalf of the Government of Japan, I am honored to deliver a message at the 57th Annual Meeting of the Inter-American Development Bank (IDB) and the 31st Annual Meeting of the Inter-American Investment Corporation (IIC). I would also like to express our sincere gratitude to the Government of the Bahamas for hosting the meetings and to the people of Nassau for their warm hospitality.

   The year 2016 is a commemorative year for Japan, which celebrates the 40th anniversary of its membership in the IDB. At this milestone annual meeting, it is my pleasure to present Japanese views primary on the collaboration between the IDB and Japan in the economic development of Latin America and Caribbean (LAC) region and the role that Japan expects the IDB to play.


2.Collaboration between the IDB and Japan in the Economic Development of the LAC Region

   When it comes to infrastructure investment, both quantity and quality matter. It is therefore critical to enhance not only quantity but also quality of infrastructure investment to achieve sustainable growth and inclusive development. Japan, among others, promotes high quality infrastructure investments, which give due consideration to such matters as lifecycle cost, safety, resilience against natural disasters, environmental and social impact, and transfer of know-how. In our effort to globally disseminate "the Partnership for Quality Infrastructure," which was announced by Prime Minister Abe in 2015, Japan places a high priority in strengthening its partnership particularly with the IDB that covers the LAC region, which is growing fast with substantial potential further growth.

   In this respect, taking advantage of Japan’s advanced knowledge in the fields of energy conservation and renewable energy, Japan and the IDB, in 2012, jointly launched “the Co-financing for Renewable Energy and Energy Efficiency (CORE)” framework for co-financing by the IDB and JICA for the Central America and Caribbean region. As of today, Yen loans totaling US$800 million were already provided to three countries. Based on the success of the CORE, I am very pleased to announce that Japan and the IDB signed an agreement to expand the targeted regions, sectors, and amount of the CORE here in Nassau on April 9, 2016: (1) we expanded the targeted regions from the Central America and Caribbean region to all the developing countries in Latin America; (2) we broadened the targeted sectors to include areas that contribute to energy conservation and renewable energy; and (3) we increased the targeted amount of Yen loans from US$1 billion by fiscal year 2016 to US$3 billion by fiscal year 2020.

   Moreover, in order to support closer collaboration in developing loan projects under the CORE between the IDB and JICA, Japan established “the Japan Quality Infrastructure Initiative (JQI)” under the Japan Trust Fund at the IDB and decided to make contributions amounting to US$5 million annually to support the preparations for project development. We expect that Japan’s advanced environmental technology will be further utilized to promote measures to address climate change in the LAC region under the CORE.

   In the LAC region, it has become a critical challenge to strengthen assistance for the people who have been left out from the benefits of development and to enhance the capacity in designing and implementing governments’ policies. Japan has been supporting the IDB’s technical cooperation in these areas through the Japan Trust Fund for many years and will continue to support such efforts in the future.


3.Challenges for and the Role of the IDB

     Amid the global economic instability and the economic slowdown in the LAC region, the IDB, the premier regional development institution, must meet the region’s financing needs to mitigate the impact of the slowdown. At the same time, the IDB must remain competitive by maintaining its high credit rating. Japan welcomes and appreciates the progress made so far to strengthen the IDB’s financial foundation, such as the successful implementation of exchanges of loan exposures with the African Development Bank and the World Bank, and also the extensive discussion to merge the Fund for Special Operations with the Ordinary Capital of the IDB. Japan expects the IDB makes further efforts to solidify its financial foundation.

   The private sector will be the main driving force of future economic development of the LAC region, where there are many middle-income countries compared with other regions. In this respect, Japan expects that a higher development impact will be achieved by the IIC, which was reorganized this year through the integration of knowledge and knowhow to support private sector assistance within the IDB group.

   As for the IDB’s Multilateral Investment Fund (MIF) that supports micro and small businesses, Japan holds in high regard MIF’s assistance programs that organically combine a set of tools including investments, loans and technical cooperation, its relatively high level of risk tolerance, and its significant role as an innovative laboratory. Japan also believes that the MIF should maintain its functional autonomy to continue to provide its unique assistance programs. Japan therefore supports the current proposal to further discuss the future of the MIF without any prejudice to the integration of the MIF into the IIC and reach a conclusion at the next annual meeting in Paraguay.

   With a purpose to enable the MIF to provide further innovative finance to the LAC region, Japan has also decided that the JICA will commission a survey on an innovative finance scheme that strengthen small and medium-size enterprises in Japan.


4.Conclusion

   Japan encourages the IDB group, under President Moreno’s strong leadership, to make further contributions to the development of the LAC region, which is suffering economic downturn amid the global recession.

   Thank you for your kind attention.  

 

(End)