CABEI, main promoter of regional integration
There are four challenges: institutional strength, economic and social impact, regional integration and strengthening its financial capacity to transfer it to the beneficiary countries.
Tegucigalpa December 3rd, 2020.- The Central American Bank for Economic Integration (CABEI) highlights its Institutional Strategy for the next 5 years 2020-2024 for the benefit of the partner countries in which it establishes its challenges, strategic axes, objectives and programmed investments for its consolidation and the development of the Central American region.
Its purpose is to support the government's actions in partner countries by financing high-impact regional integration projects at the lowest possible financial cost, which requires effort and commitment to raise the institution's credit rating.
Likewise, it seeks to consolidate the impact on development measurement culture as a fundamental aspect in the decision-making process of the projects to be financed; to increase institutional capacities through innovation, strengthening of the quality of processes and permanent technological adaptation.
Another challenge for CABEI is to achieve greater economic and social impact in its actions, by prioritizing financing areas and achieving greater effectiveness in terms of project formulation, management, and impact.
As well as effectively promoting regional integration by financing initiatives that have an impact on two or more countries. At the same time, it aims to strengthen their financial capacity and to transfer the benefits to the nations. To do so, it will have to increase the financing base and take advantage of temporary market situations to obtain funds with better cost and time conditions to transfer the benefits to the countries.
The Bank has defined five strategic areas, including Sustainable Competitiveness, Regional Integration, Human Development and Social Inclusion, the Cross-cutting Area of Environmental and Social Sustainability, and the Cross-cutting Area of Gender Equity.
Among the strategy's objectives, the plan includes contributing to inclusive economic growth and supporting countries in their economic policies; supporting efforts to reduce extreme poverty and inequality.
In addition, to promote integration beyond the trade area and develop regional capacities that provide the area with better opportunities to compete in world markets.
In order to achieve its objectives, CABEI must achieve a regional vision, seek to position the region before the world by highlighting the nature of its market with similar characteristics and economic potentialities and in doing so, facilitate the international community to understand, measure and decide on its interaction with the region from a broader perspective," said CABEI's Executive President, Dr. Dante Mossi.
On the other hand, to promote initiatives to improve sustainable competitiveness where CABEI will assume the commitment to promote a regional competitiveness agenda, understood as the broad set of economic, social, and institutional elements that promote balanced and inclusive development.
Among the initiatives, CABEI considers energy diversification and modernization of the sector as a regional priority, where it seeks to contribute to improve efficiency and cost reduction.
"The Bank considers that it is necessary to generate spaces to propose an energy strategy that includes the diversification of energy sources to move to a more favorable matrix for the region; this includes the contribution to the sector´s reconversion of the generation, transmission and administration model," said Dr. Mossi.
Development Policy Analysis and Operations
In this five-year plan, CABEI will improve its institutional analysis and diagnosis capabilities, as well as the formulation and design of new financial instruments that can accompany the discussion of public policies relevant to the countries and that contribute to maintaining financial health.
During this five-year period, CABEI intends to deploy the Development Policy Operations Program, whose purpose is to support partner countries in promoting policy actions and development results that contribute to balanced economic growth, poverty reduction, and sustainable development.
The Bank will seek to innovate and improve financing and/or guarantee schemes to provide an adequate range of options to meet different development needs. With respect to the private sector, the business model will continue to include the origination and syndication of structured credits through financial schemes such as Project Finance, A/B loans and parallel loans, among others.
For the strategic period 2020-2024, CABEI seeks to continue promoting innovation and development, facilitating inclusion through entrepreneurship development, Micro, Small and Medium Enterprises, and their incorporation into value chains.
"This leads to the recognition of the need to support investment in research, development and innovation (R+D+I) to promote diversification, industrialization and, therefore, economic growth," said Dr. Mossi.
According to CABEI authorities, the Strategy will advance the implementation of the Extreme Poverty and Social Exclusion Reduction Program, for which it has provided seed capital to attract partners working in the region with the same objective.
For the five-year period 2020-2024, CABEI is planning to move towards a better position in the global credit risk rating and is seeking a competitive rating like that of other multilateral organizations with triple AAA category, which would open up capital markets in better financial conditions.
“CABEI's internationalization process, which is being carried out since 2019, carries with it the opportunity to certify the Institution in global initiatives. This will open new opportunities to the region as it has already done with the green funds initiative".
With regard to resource allocation, the Bank is considering a policy based on the strategies defined by the countries and the priorities established by them, seeking to ensure that these correspond to the Bank's Strategy. "Portfolio diversification is an important element of the Strategy," said Dr. Mossi.
2020-2024 Financial Programming
CABEI's financial programming for this period considers the eighth capital increase - currently underway - that will increase its authorized capital by $2 billion and the capital payment programs of its new partners.
"This will help the portfolio grow at an annual average rate of 8% over the five-year period. At this rate of growth, over the 2020-2024 period, the Bank's credit capacity will be 45% higher than in the previous five-year period."
"Average annual approvals for the five-year period are projected to reach US$3,038.0 million, an increase of almost US$1,000.0 million per year compared to the previous five-year period. Similarly, an average of annual disbursements of US$2,475.0 million and an average net flow of US$723.0 million," concluded CABEI President Dr. Dante Mossi.