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IDB Invest, the private sector arm of the Inter-American Development Bank, has made a new deal to free up $500 million in lending — by offloading risk to investors.
Also in today’s edition: We look at climate-vulnerable countries juggling debt and climate goals, and highlight the shortfall in WHO funding.
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IDB Invest’s new deal not only makes a huge amount of money available to lend but — the bank hopes — could provide proof of concept for a new form of multilateral development bank lending.
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Here’s how it works: IDB Invest took $1 billion of its investments, aka a tenth of its portfolio, and pooled them together into a financial vehicle with different levels, or tranches, that would appeal to different types of investors. The riskiest part of the deal still falls on IDBInvest, which has put in $30 million in “first-loss” money, but the entire deal means it can now leverage $500 million in new lending.
This kind of deal is hardly new for the private sector, but it’s one of the first such attempts in the world of MDBs.
“This particular transaction had two main objectives: To crowd in international investors [and] number two, proof of concept for our new business model,” Rachel Robboy, IDB Invest’s chief risk officer, who put the deal together, tells Devex Senior Reporter Adva Saldinger.
Earlier this year, IDB Invest shareholders approved a new business model called “originate to share,” in which it seeks out and structures investments, then looks for private investors to get in on the project as well. They’re hopeful this and potential future deals in the same vein will allow the sector to make its resources go further — and help private investors get more comfortable working with MDBs.
Read: IDB Invest brings in investors, unlocks $500M through new transaction
Many climate-vulnerable countries are juggling debt and climate goals — and right now, debt is winning. The world’s lowest-income nations paid out $59 billion in debt servicing last year, but only received $28 billion in climate funding, according to the latest analysis from the International Institute for Environment and Development. Countries such as Jamaica and Mozambique are feeling the squeeze, spending far more on debt than on critical climate resilience projects.
Adding to the pain, much of the climate finance they receive comes as loans, piling on more debt instead of lightening the load, Devex contributor Chloé Farand writes. Between 2008 and 2022, Africa’s debt levels have soared by 240%, with half the continent now spending more on debt payments than public health. Former Kenyan Central Bank Governor Patrick Njoroge is ringing alarm bells for debt relief to keep development and climate goals afloat.
As global summits approach, leaders from places such as Barbados are rallying for creative solutions — think debt-for-climate swaps and emergency relief clauses. With the G20 summit and COP29 U.N. climate conference around the corner, hopes are high for a unified effort to help climate-vulnerable nations secure sustainable financing.
Read: Poor countries' debt repayments are twice what they get in climate finance
+ We look at 10 of the countries most seriously affected by climate change and identify what funding they receive and from where. Download your copy of The state of global climate financing report.
For generations, Haripur village in Maharashtra, India, relied on “peve” or underground pits to store turmeric — a method that once turned nearby Sangli into a turmeric trading hotspot. These pits could keep turmeric fresh for a decade, with over 5,000 pits at the system’s peak, each holding up to 25,000 kilograms.
But today, floods and climate change have sadly turned this sustainable storage system into just a fond memory.
Haripur’s last big flood in 2019 wiped out what remained of the pits, Devex contributing reporter Sanket Jain writes. Now, with climate disasters on the rise and rebuilding costs sky-high, the once-thriving turmeric pits are overgrown. As farmers shift to hardier (and thirstier) crops such as sugarcane, traditional storage methods — from African granaries to cooling zeer pots — are at risk globally.
But experts are hopeful that blending traditional know-how with modern solutions could bring resilient storage back. In Kenya and Ghana, climate-proof storage bags and facilities are helping farmers cut losses, while GIS mapping shows promise in making traditional methods more climate-friendly.
Haripur’s turmeric pits may be history, but they’re leaving us a vital lesson: Old wisdom plus new tech might just be the recipe for sustainable food storage in an unpredictable climate.
Read: Climate change threatens traditional food storage systems — and ways of life
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In 2023, Latin America and the Caribbean, or LAC, reached a chunky $7 trillion gross domestic product — almost 50% higher than pre-pandemic. But the wealth gap between people is still a mountain: The richest 10% earn 12 times more than the poorest, three times the global average.
My colleague Miguel Antonio Tamonan digs into how Development Assistance Committee aid is distributed across LAC, revealing top donors, sectors, and key players.
In 2022, DAC members gave LAC $9.8 billion in official development assistance. Colombia, Brazil, and Peru topped the recipient list, with Grenada receiving the least at $2.3 million. The U.S. led with $2.8 billion in aid, followed by Germany and France. The priority sectors were emergency response, government and civil society, and health.
Read: Who’s funding development projects in Latin America and the Caribbean? (Pro)
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At the World Health Summit in Berlin earlier this month, governments, philanthropies, and companies banded together to pledge nearly $700 million to WHO’s first investment round for its 2025–2028 plan. Leading the charge, Germany put up $260 million, with Norway and France backing them up as key co-hosts. WHO Director-General Tedros Adhanom Ghebreyesus hailed the pledges as a “huge step” toward the organization’s $11.1 billion goal to boost vaccines, strengthen health systems, and save millions of lives.
Despite the generous pledges from the U.S. and Norway, WHO still has a ways to go to meet its budget target, Devex contributor Andrew Green writes. This funding round marks WHO’s shift to a more stable funding model, and they’re not alone in rallying support — vaccine alliance Gavi and the Global Fund to Fight AIDS, Tuberculosis and Malaria are also making their case as resources tighten. With all eyes on health, humanitarian, and climate needs, private sector help will be more crucial than ever to keep global health moving forward.
Read: WHO raises nearly $700M, but global health funding worries persist
Militants attacked a health center used in an anti-polio campaign in northwestern Pakistan, resulting in the deaths of two police officers and three assailants. [AP]
Pharmaceutical and agricultural giants are pushing back against a proposed tax on profits from products made using genetic data from nature. [Financial Times]
WFP has issued a stark warning about an imminent famine risk in Gaza, urging swift action to address severe restrictions on aid flows. [Reuters]
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