The Crossroads Fund

The Crossroads Fund was created to promote regional economic integration and investment in infrastructure to accelerate economic growth. By improving cross-border infrastructure and economic integration, Central American countries can: (i) reduce production costs, improving export competitiveness and lowering the cost of goods for local consumers; (ii) encourage businesses to scale by expanding into neighboring markets, reducing dependence on remittance flows and goods and services exports to North America; and (iii) improve regional security through domestic job creation.

High transport and logistics costs have prevented Central America from fully benefiting from the growth potential of two decades of existing economic integration with its neighbors and the United States through trade liberalization.

The United States, Canada, and Mexico established the targeted Crossroads Fund to provide innovative new financing instruments and technical assistance to catalyze public investment into strategic infrastructure projects. The seed investment by Crossroads will lead to a meaningful reduction in transport and logistics costs and are expected to generate higher formal sector employment, more trade and foreign direct investment, and reduce inequality and violence through spreading opportunity to remote populations.

THE CROSSROADS FUND:

· The Crossroads Fund is a new multilateral fund established to incentivize infrastructure integration in Central America. President Obama announced the creation of the Fund and a one-time U.S. pledge of $5 million, which Congress has funded, during his March 2011 trip to El Salvador. The Fund has received $22 million in commitments, exceeding its $20 million target. The Fund has received commitments from the United States ($5 million), Canada ($10 million), Mexico ($3 million), Spain ($2 million), and Colombia ($2 million).

· The Fund is a limited, targeted, intervention to create long-term economic growth by attacking key barriers to faster, more efficient, and more secure regional transport and logistics networks. This effort will improve price competitiveness of Central American exports to the United States, allowing the region to take advantage of its geographical advantage and creating more stable and secure jobs in the region.

· The Fund will be housed at the Inter-American Development Bank.

· This Fund will incentivize cross-border project lending by funding technical assistance alongside traditional lending, provided by the IDB, for infrastructure projects. Donors, working with the IDB, will select inpidual projects from IDB’s regional infrastructure pipeline.

Additional information