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Buenos Aires, Argentina, August 16, 2018- IFC, a member of the World Bank Group, will provide Itaú Argentina $50 million to expand financing of small and medium enterprises (SMEs), and sustainable energy projects, which will be certified under the Green Loan Principles. Seventy percent of the funding will go to green initiatives, expecting annual savings in greenhouse gas emissions by more than 35,000 tons of CO2-the equivalent to taking off the road almost 7,000 cars each year.
The Green Loan Principles, devised by the London-based Loan Market Association, will increase transparency in the market by ensuring that borrowers apply the funding to green projects and conduct evaluation and reporting following international standards. KPMG, a global consultancy, will be responsible of certifying the green projects financed by Itaú Argentina. This is the first time a bank will implement the principles in Latin America & the Caribbean.
"Itaú Argentina values IFC's partnership in supporting our efforts to expand green financial solutions in the country," said Cesar Blaquier, CEO of Itaú Argentina. "The fact that we are the pioneer bank in Latin America in adopting the Green Loan Principles, should allow us to ensure providing our customers and our partner with high quality of sustainable energy loans."
Argentina is moving to reduce greenhouse gas emissions and diversify its energy matrix. The government has committed to cut emissions by 15 percent by 2030 and is requiring that 20 percent of the matrix be comprised of renewables by 2025.
"In a context of limited public resources, the private sector is fundamental to grow Argentina's energy capacity," said David Tinel, IFC Regional Manager for the Southern Cone. "With Itaú Argentina, we share the strategic goal of helping unleash the power of the private sector to tackle energy and climate challenges."
The other 30 percent of the financial package will support SMEs. According to the World Bank Group, smaller businesses create 8 out of 10 new formal jobs in emerging markets. However, in Argentina, 7 out of 10 smaller firms have constraints to access credit.
Itaú Argentina has been an IFC client since 2008 when it joined the Global Trade Finance Program (GTFP), which facilitates trade flows through guarantees and includes a network of more than 70 banks in Latin America. Currently, Itaú Argentina has a credit line of up to $60 million under the GTFP. Additionally, the Itaú Group and IFC have a long-standing relationship spanning over 30 years, with active projects in Argentina, Brazil, Chile, Colombia, and Paraguay.
In Argentina, IFC has committed approximately $1.7 billion to sustainable private sector projects over the past 18 months, becoming a major international source of financing to the country's private sector during this period. IFC's strategy in Argentina focuses on financing projects with significant development impact that spurs economic growth, innovation and job creation. Priority sectors include agribusiness, infrastructure, renewable energy, manufacturing, and financial intermediaries to reach SMEs. Through its advisory programs, IFC works with governments and companies to help establish the conditions that will attract the most private capital, enabling the private sector to grow and create jobs.