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  HOME | Latin America (Click here for more)

Investment Demand Remains Robust in Latin America, According to European Bank

PANAMA – Investment demand in Latin America “remains sufficiently robust” despite the economic recession gripping the region, which is now more equipped to cope with unfavorable macroeconomic conditions than it was three decades ago, according to the European Investment Bank (EIB).

This is the perspective of EIB’s vice-president Roman Escolano, who told EFE during an interview in Panama that the institution is keen to invest in the region despite the ongoing recession.

The International Monetary Fund (IMF) has predicted Latin America will continue to contract in 2016, with the economy shrinking 0.3 percent mostly due to the poor economic data in Brazil.

It will be the first time since the 1980s that Latin America will experience two consecutive years of economic decline.

Although the economic context is now “more complicated than it was a few years ago and the large cycle of raw materials seems to have ended,” different interests are increasing and the region is well-equipped to handle the situation, according to the EIB vice-president.

“In many Latin American countries, we are seeing that there is a demand for investment, especially in infrastructure, public transportation and renewable energy – sometimes even exceeding the bank’s capacity to meet rising demands,” said Escalano.

Evidence of the surge in demand is the bank’s recent decision to open its first Latin American offices in Panama, where they will launch operations in the second quarter of 2016.

“The bank has a growing number of activities and operations here, but until now we did not have any offices in the region,” noted Escolano.

The bank has chosen to open first in Panama due to its “strategic location” linking Central America to Latin America and because it is the bank’s second largest loan recipient after Brazil, said the executive.

“We have the best support from the government of Panama to open the office here, and as I understand, it was pleasant news for them, so we believe it will happen in the next few months,” he said.

In Panama, the bank has participated in seven projects, including the expansion of the Panama Canal and the construction of the second Interoceanic Highway, with loans until now totaling 820 million dollars.

The EIB invests on average 660 million dollars for development projects in Latin America, many of which have already been implemented by governments or the private sector.

Brazil, “for its own size and the importance of its economy” accounts for 40% of the institution’s activities in the region, followed by Panama.

The EIB, whose shareholders are European Union member states, was established in 1958 and started investing in the continent in 1993.

Since then, it has participated in projects in 13 countries in the region, spending roughly 7.3 billion dollars.

“We do not work according to country quotas, there is no fixed or predetermined volume of activity for countries, but we decide to invest based on good projects,” said the vice-president of the institution.

In general, the EIB finances large infrastructure projects, such as construction of subways in Lima and Quito, private initiatives for small to medium sized enterprises (SMEs) and activities to combat climate change.

“The bank has committed 35% of its funds to activities to combat climate change outside of the EU,” Escolano said.

 

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