New program will promote integration and growth in South America
SANTIAGO – The Inter-American Development Bank (IDB) presented today “South Connection,” a new regional program co-created by the countries of South America for developing strategic corridors to improve connectivity, strengthen value chains, and modernize institutional frameworks. By connecting currently fragmented markets, the initiative seeks to increase scale, reduce costs, and attract investment.
During the IDB and IDB Invest Annual Meetings, the Bank’s governors and other high-ranking representatives from Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, and Uruguay joined IDB President Ilan Goldfajn to sign a declaration of support for the program, requested by South American countries. In it, they recognized the cross-border nature of shared challenges and requested the IDB’s support to address them jointly through a pragmatic, regional approach.
“South Connection” is based on three pillars:
- Connectivity, improving roads, ports, waterways, electrical and digital networks.
- Regional and global value chains, facilitating trade, developing local production, and improving market integration.
- Regulatory and institutional strengthening, supporting trade agreements, regulatory frameworks, and institutions at all levels.
“South Connection responds to the mandate of our governors and the shared commitment to build a larger, more integrated regional market that is attractive for investment. Through better connectivity, stronger value chains, and modernized institutional frameworks, the program will help South American countries overcome historical barriers and generate new opportunities," said President Goldfajn.
Simone Tebet, Brazil’s minister of planning and budget, said: “South American Integration Routes is an innovative political initiative resulted from a dialogue process involving Brazilian border states, the countries of the region, and the federal government. Now, through the ˈSouth Connectionˈ program, we can further strengthen regional integration and attract greater investments. It is essential to boost the trade in goods and services within South America. With the support of multilateral institutions like the IDB, we have a real opportunity to generate more employment, higher incomes, and new business opportunities.”
“South America faces significant economic challenges, including transportation costs that are 40% higher than in the United States,” said Mario Marcel, Chile’s finance minister. “Prioritizing integration is one of the objectives of this type of meetings, and bi-oceanic corridors are a concrete way to maintain strategic intraregional infrastructure. They also allow us to reduce transportation costs, improve connectivity, and enhance trade flows. Greater economic integration can unify markets, attract investment, and foster innovation, unlocking the full potential for sustainable growth.”
The new IDB program will expand the Integration Routes alliance, born under the Brasilia Agreement that was signed by countries in May 2023 and supported by the IDB, FONPLATA, Brazil’s National Bank for Economic and Social Development (BNDES), and CAF - Development Bank of Latin America and the Caribbean.
Collaboration with FONPLATA to Accelerate Regional Integration
Also, during the Annual Meetings and following these collaboration efforts, the IDB and FONPLATA formalized a cooperation agreement to increase collaboration between the institutions, including exploration of co-financing opportunities for regional projects, such as integration routes within the framework of “South Connection”.
Additionally, both institutions will promote knowledge exchange to develop institutional strategies and risk management. They will also promote innovative financial instruments, such as exposure exchange agreements, to expand financing and strengthen collaboration in key areas.