The Inter-American Development Bank (IDB) and the Central Bank of Brazil have signed a groundbreaking agreement to provide up to $3.4 billion in foreign-exchange (FX) hedging to mobilize private investment for sustainable development, beginning with Brazil’s Eco Invest Program. The agreement establishes a dedicated FX Hedging Conduit under International Swaps and Derivatives Association (ISDA) standards, enabling the IDB to supply long-dated derivatives through the Central Bank, which are then channeled to Eco Invest beneficiaries via local banks. By mitigating currency risk, this mechanism unlocks long-term private capital for sectors including renewable energy, the bioeconomy, resilient infrastructure, and sustainable land use.
The Central Bank of Brazil facilitates the connection between the IDB and domestic financial institutions, allowing international hedging instruments to reach local private-sector investors at reduced cost. The structure not only lowers currency risk for investors but also protects the balance sheets of both the IDB and the Central Bank from FX exposure. This collaboration is designed to be scalable and replicable, with the FX EDGE initiative aiming to expand to other countries in Latin America and the Caribbean by 2030, building on the Eco Invest model.
IDB Group President Ilan Goldfajn highlighted the agreement as a critical component of Eco Invest, demonstrating how central banks and multilateral development banks can work together to overcome market barriers and catalyze private investment for sustainable development. The FX Hedging Conduit complements Eco Invest’s existing structure, which includes blended financing, liquidity tools, a project preparation facility, and a transparent allocation platform, completing a comprehensive approach to mobilizing capital.
Since its launch, Eco Invest, led by the Brazilian government with support from the IDB and the United Kingdom, has mobilized over 75 billion reais ($13.2 billion), including $8 billion from foreign investors. The program, now spanning four public auctions, recently announced a new phase at COP30 in Belém focusing on scaling the bioeconomy and ecotourism infrastructure in the Amazon region. Aligned with Brazil’s Ecological Transformation Plan, Eco Invest channels investments into priority areas such as renewable energy, sustainable forest management, resilient infrastructure, and the bioeconomy.
This partnership illustrates how multilateral development banks and central banks can remove investment barriers, manage financial risk, and mobilize private capital to support national development priorities. At COP30, the IDB Group is showcasing over 80 events to present innovative solutions that close financing gaps for resilient development across Latin America and the Caribbean, emphasizing measurable impact and partnerships between the public and private sectors.
The IDB, a member of the IDB Group, has been working since 1959 to improve lives across Latin America and the Caribbean, offering financing, technical expertise, and knowledge to promote sustainable and inclusive development in 26 countries.
