AfDB and IADB Swap Risk Like Pros: $3.2B Deal Supercharges Global Lending Game

Editorial Summary: In a bold financial maneuver, the African Development Bank (AfDB) and the Inter- American Development Bank (IADB) have renewed a $3.2 billion exposure exchange agreement, showcasing their adeptness at risk management to amplify development lending. This strategic move enables both institutions to optimize their balance sheets, reduce portfolio concentration risks, and unlock greater lending capacity for their member countries. As reported by Accra Street Journal, the renewed pact underscores the banks’ commitment to innovative financial solutions that drive sustainable growth across Africa and Latin America

Detailed News: The African Development Bank Group (AfDB) and the Inter-American Development Bank (IADB) have signed a $3.2 billion Exposure Exchange Agreement, renewing a similar arrangement first established in 2015. The agreement was formalized in Washington, D.C., on the sidelines of the Spring Meetings of the World Bank Group and International Monetary Fund.

This marks the fourth exposure exchange undertaken by the AfDB with peer Multilateral Development Banks (MDBs), as part of ongoing efforts to enhance capital adequacy, financial efficiency, and expand development lending capabilities.

“This transaction underpins the African Development Bank‘s forward-looking approach to capital and risk management. We are pleased to continue our positive longstanding collaboration with Inter-American Development Bank in structuring and executing innovative financial solutions to align with the G20’s call for Multilateral Development Banks to work together as a system in expanding development impact to our member countries,” said Dr. Akinwumi Adesina, President of the African Development Bank.

Exposure exchange agreements allow MDBs to manage their sovereign loan portfolios more flexibly, enabling capital redeployment while maintaining strong financial resilience. The AfDB has used these tools since 2015 to diversify its lending and support strategic investment across Africa.

“This new agreement marks yet another milestone in our strong and fruitful collaboration with the African Development Bank. Thanks to this operation we’re strengthening the financial resilience, creditworthiness, and financing capacity of both of our institutions. A win-win for all, that will benefit the people of Latin America and the Caribbean and Africa,” said Ilan Goldfajn, President of the Inter-American Development Bank.

The transaction builds on earlier agreements between the AfDB and institutions such as the International Bank for Reconstruction and Development and the Asian Development Bank.

Adesina stressed the importance of continued innovation and collaboration in the MDB ecosystem, stating that more such transactions should be pursued due to their proven success and developmental impact.

Last Updated on April 30, 2025 by samboad