Draft Inter-American Investment Corporation (Further Payments to Capital Stock) (Amendment) Order 2026

I beg to move, That the Committee has considered the draft Inter-American Investment Corporation (Further Payments to Capital Stock) (Amendment) Order 2026. It is a pleasure to serve under your chairmanship, Dr Murrison. The draft order was laid before the House on 16 June. It will permit the UK Government to make financial contributions to the Inter-American Investment Corporation, up to the stated values. Allow me briefly to take the Committee through the background and purpose of the draft order. The draft order permits the UK Government to make further payments to the Inter-American Investment Corporation, also known as IDB Invest, which is the private sector arm of the Inter-American Development Bank Group, also known as the IDB. The IDB is the largest source of development finance for Latin America and the Caribbean, with the group’s overall financing reaching about $35 billion in 2025 alone. The IDB is a trusted UK partner and is instrumental to the achievement of regional objectives on sustainable development, action on climate change, biodiversity protection and pandemic and disaster preparedness. The G20 has called on multilateral development banks to adopt new business models to stretch balance sheets, increase lending and take on more risk to support smaller businesses. In response, IDB Invest has committed to implementing a new business model. IDB Invest will shift to an originate-to-share approach to transfer its investments to the private sector, recycling funds and enabling greater impact through increased scale. IDB Invest’s innovative approach to development is why, together with other shareholders, the UK agreed to a $3.5 billion capitalisation package, to allow IDB Invest to more than double the support it provides the region from about $8 billion to more than $20 billion annually. The UK is a strong proponent of this new model, and of the leadership and innovation showcased by IDB Invest. In 2025, the UK authorised an increase in its shareholding in the corporation from 0.22% to 1.5%, subject to shares being available, for a total value of up to $106 million. When the IDB Invest share subscription period closed in March 2026, more shares became available than initially anticipated. This presents the UK with a strategic opportunity to further increase our shareholding in IDB Invest beyond the level previously authorised. By investing an additional $25 million, the UK can deepen its influence with the institution and strengthen its overall position. Let me highlight a few outcomes that IDB Invest has committed to delivering by 2030 through its new business model and capital increase. It will finance 2.5 million micro, small and medium-sized enterprises, which will in turn support 9.5 million jobs. It will directly support more than 300,000 women in gaining access to finance, jobs, training and entrepreneurship opportunities. It will support 1.6 million of the region’s poor and vulnerable people in gaining access to services, opportunities and resources. It will improve access to agricultural services and investments for 44,000 farmers. It will dedicate at least 60% of its investments to climate and green finance. It will reduce 3.9 million tonnes of CO2 emissions and generate 1,400 MW from renewable resources for new clean energy projects. In addition, IDB Invest will continue to share lessons learned on the implementation of its business model with other development finance institutions to encourage more investment into the private sector globally. This represents excellent value for money. For every £1 that the UK invests, £5 of development-related assets are generated, taking us a step closer to achieving the region’s sustainable development goals. IDB Invest is instrumental in achieving UK objectives in Latin America and the Caribbean, and it is among our closest and most important development partners. The financial contributions covered by this draft order will support the UK’s development and foreign policy objectives in Latin America and the Caribbean, promoting private sector development and sustainable economic growth. I commend the draft order to the Committee.

It is a pleasure to serve under your chairmanship, Dr Murrison. Let me start by welcoming the new Minister to her position. The Inter-American Development Bank Group is an important source of development finance across Latin America and the Caribbean, and its private sector arm has an important role to play in mobilising investment and supporting private sector-led growth. The draft order, however, authorises a further $25 million of UK taxpayers’ money, taking the UK’s total investment in the Inter-American Investment Corporation to approximately $131 million. It would increase the UK’s shareholding from 0.22% to 1.83%. For the benefit of the Committee, can the Minister confirm to which financial year this relates? Given the pressures on the aid budget, it is right that Parliament seeks clarity about what additional influence and outcomes the investment will secure. My first question is about the decision to provide this additional funding. Can the Minister set out precisely what the additional $25 million will be used for and whether any conditions have been attached to it? What assessment has the Foreign, Commonwealth and Development Office made of the additional development impact this investment will deliver compared with alternative uses of that funding? Secondly, what has the UK sought to achieve through the corporation’s new strategy and capital increase? The Government say the increased shareholding will strengthen UK influence and representation at board level. It would be helpful to understand more about that. Can the Minister set out what priorities the UK has pressed for, how far those priorities have been reflected in the corporation’s plans and how the Government intend to use that greater influence? The corporation is implementing a substantial programme of reform, including its new originate-to-share model, which is intended to mobilise significantly greater levels of private capital. We welcome the efforts by multilateral development banks to use their balance sheets more effectively and to crowd in private investment, rather than continually relying on additional taxpayer funding. Can the Minister update the Committee on the progress of those reforms? In particular, what improvements do the Government still believe are required on efficiency, accountability and value for money? What assurances have they received that the increase in the corporation’s capital will genuinely leverage additional private finance, rather than simply expanding the institution itself? Finally, there must be clear accountability for results. The explanatory memorandum refers to a new impact framework and institutional scorecard alongside FCDO annual reviews. What specific measures will the Government use to judge whether that additional investment has been successful, and how will Parliament be able to scrutinise those results? If the corporation falls short of its targets, what mechanisms does the UK have to press for change? His Majesty’s official Opposition recognise the importance of mobilising private investment to support growth and development in Latin America and the Caribbean, but additional contributions to multilateral institutions must demonstrate clear value for money, measurable outcomes and alignment with the UK’s strategic interests. We will oppose this delegated legislation today, but the Government must provide clear answers to the questions I have raised, and they must justify and explain further the reason for this contribution. I look forward to the Minister’s response.

I am grateful to the right hon. Lady for her comments and reflections. Starting with her question about financial years, the new capital paid in will be spread across seven years, starting in 2025-26. She also asked about the conditions attached to it, and I will reflect on those when I talk about the particular areas we have pressed for prioritisation. I should say, as I did in my opening, that this institution has already innovated in response to pressure and reflections from the G20. We were delighted to have had that influence at the outset. We have pressed for a new focus on climate, on supporting Caribbean small island developing states, including the overseas territories, and on vulnerable populations. The right hon. Lady asked for any reflections on the development impacts that we anticipate. I reflected on those in my opening remarks, and I will not repeat them now. On increasing and securing the UK’s influence, we have secured greater board representation for the UK, which is always something we seek to do. IDB Invest is a unique institution at the forefront of private sector investment in Latin America and the Caribbean. IDB Invest aims to dedicate 60% of its investments to climate and green finance, and it is also supporting micro, small and medium-sized enterprises, empowering women, expanding access to essential services and driving innovation. Through its new originate-to-share business model, IDB Invest is scaling up its impact, mobilising capital at unprecedented levels and helping to deliver sustainable growth across the region. I hope and trust that the Committee will support this order. Question put and agreed to.