The Inter-American Development Bank (IDB) approved a $350 million loan to boost sustainable and resilient growth in Argentina. The approval by the Board marks a significant financial milestone in support of Argentina's climate action plans as well as a major step in the fight against climate change.

The loan includes policies that will strengthen the government and allow it to plan, finance and implement actions reducing emissions in the most sensitive sectors, such as energy and agriculture. It also promotes policies fostering the circular economy and creating favorable conditions for sustainable finance. The operation’s added value lies in its ability to introduce a longer-term vision, mainstream the climate agenda to all ministries, and promote policies in the most sensitive sectors.

Climate policies include presenting a revised version of the Nationally Determined Contribution setting a more ambitious emissions reduction goal, formalizing the long-term decarbonization strategy to reach carbon neutrality by 2050, and supporting the first National Mitigation and Adaptation Plan, which must be internalized by all provinces by 2024. It also includes policies institutionalizing climate change in the country's budget planning tools, a major stride towards implementing the Paris Agreement's transparency and reporting commitment.

On the energy side, the loan promotes key measures such as the approval of Argentina's first medium- and long-term "Energy Transition Plan", which aims to steer the energy sector towards decarbonization while boosting the use of renewable sources. It also includes the first Energy Efficiency Bill and the Hydrogen Bill. The former has the potential to reduce demand for imported fossil fuels, which is beneficial both for the fight against climate change globally and for the reduction of the country's fiscal deficit. The second project seeks to promote the use of hydrogen, a clean resource that can help reduce emissions in sectors such as industry and heavy transport.

The program also includes actions for the protection of biodiversity, such as the National Forest Management Plan with Integrated Livestock to balance agriculture and forest protection; the Cultivated Forest Act, the first law to limit the promotion of the forestry industry outside native forests. Lastly, it also boosts Argentina's protected areas by 7%, incorporating 1.2 million hectares of National Parks.

With this IDB loan, Argentina takes an important step toward a sustainable and resilient future, strengthening its commitment to climate action and laying the foundation for greener and more equitable economic growth.

Financing for the current operation will be sourced from the Bank's Ordinary Capital and will be disbursed in a single tranche in 2023. The loan has a 20-year repayment term, a 1-year disbursement period, a grace period of 5.5 years, and an interest rate based on SOFR.