Exclusive-IDB to boost climate finance support by at least $11 billion

By Simon Jessop, Marc Jones and David Latona

SEVILLE (Reuters) -The Inter-American Development Bank aims to unlock at least $11 billion in fresh climate finance through a series of initiatives to help countries cope with the impacts of global warming that will attract private funds, its president told Reuters.

As many governments cut official development aid, multilateral lenders such as the IDB are being urged to squeeze more from what they have.

From the sidelines of the 4th International Conference on Financing for Development, Ilan Goldfajn said the series of steps taken by the IDB would hopefully yield even more money from the private sector - a key aim of the conference.

"We're not just announcing ideas — we're launching things that the private sector is asking for: credible tools, scalable platforms, and real opportunities to invest with impact and confidence," he said.

The biggest share of new support would come from the launch of a new platform to help countries manage the risk that their currency swings in value, something that has long deterred investors as it makes it harder to predict their returns.

After working on a similar project with Brazil that drew in $8 billion from the private sector, the plan is to expand it to two or more new countries over the next three years and at least double the money mobilised.

Dubbed FX EDGE, the initiative will offer a line of credit that kicks in if a currency falls sharply, thereby helping projects with local currency revenues meet their overseas payment obligations.

The platform would also look to scale up use of long-term currency hedging instruments such as derivatives through local banks and financial institutions, backed by the IDB's credit rating.

In collaboration with the World Bank, the IDB also plans to issue up to $1 billion in so-called Amazonia Bonds, which it launched on a trial basis last year to help curb deforestation of the world's biggest rainforest and support its communities.

The specially supported Amazonia framework is expected to be embraced by countries including Brazil, Colombia, Peru, Bolivia and Ecuador as they try to protect an area that covers more than 6 million square kilometres (2.3 million square miles) and is home to more than 10% of all known animals and plants on Earth.

In another move, the IDB would increase the number of countries able to access a newly enlarged $5 billion emergency relief pot called the Contingent Credit Facility for Natural Disasters, Goldfajn said.

Alongside other top multilateral development banks it will scale up its Climate Resilient Debt Clauses - which give countries the option to suspend loan payments for up to two years when disasters strike. By 2026, the IDB will provide $4.2 billion in total coverage.

In addition, the bank has created the Regional Disaster Risk Transfer Program, which would allow countries to transfer the risks of extreme weather events to the insurance and capital markets, Goldfajn said.

A separate Business Resilience Program, meanwhile, run by IDB Invest would introduce new debt clauses into contracts with private companies to help cushion them from climate risks.

"Each of these is important on its own - but together, they show how development banks can really move the needle by tailoring risk for investors," Goldfajn said.

(Reporting by Simon Jessop and Marc Jones in London and David Latona in Seville, Spain; Editing by Matthew Lewis)