Markets Wired

PHOENIX, AZ – Today, U.S. Deputy Secretary of the Treasury Wally Adeyemo participated in a roundtable discussion with Latino community leaders about the Biden-Harris Administration’s efforts to increase economic opportunity in Latino communities. A key part of President Biden’s economic agenda is investing in communities where potential exists, but opportunity has been scarce. Over the past three years, the Treasury Department’s work to prioritize broad-based economic growth has delivered real results. For example: 
 

• Hispanic homeownership rates increased by 2% from 2019 to 2023; 
• Median real earnings for Latino workers increased nearly 4% from the end of 2019 to the end of 2023; 
• Hispanic business ownership has hit an all-time high of 9.8%; and 
• Hispanic family wealth increased by 47% from 2019 to 2022. 

The conversation was hosted by the Raza Development Fund, the largest Latino-focused nonprofit community development financial institution (CDFI) in the U.S. The Raza Development Fund has been a recipient of several awards from the Treasury Department’s Community Development Financial Institutions Fund (CDFI Fund), which invests in financial institutions with a track record of delivering capital to Latino and other underserved communities and businesses. The meeting was held at Valle del Sol, a community health center founded in 1970 to serve the Latino community and underserved populations. Nationwide, through the Emergency Capital Investment Program (ECIP), the Treasury Department has invested $1.6 billion in Latino-owned and Latino-majority shareholder depository institutions. Based on preliminary analysis, the Department projects that investments across the entire ECIP portfolio may increase lending in Latino communities by nearly $58 billion over the next decade. 

  

### 

As Prepared for Delivery 

Thank you. I’m grateful to be here today with U.S. Attorney Restaino, Attorney General Mayes, and Mayor Gallego. You all have not only been leaders in our nationwide fight against drug trafficking, but you have also been excellent partners to the Biden-Harris Administration and the Treasury Department. 

I’m also grateful to be here today with members of the Phoenix DEA Local Enforcement Response Squad and Phoenix Police Department. Working closely with you and others in local law enforcement makes it easier for us to identify and cut off the money these drug dealers are illegally earning.

It is a top priority of the Biden-Harris Administration and of the Treasury Department to stop illicit fentanyl from entering the United States and disrupt the cartels that peddle this deadly drug.

Here in Arizona, more than five people in Arizona die each day from opioid overdoses. In Maricopa County, the majority of all drug-related deaths now involve fentanyl. Since 2015, fentanyl deaths have increased by almost 5,000 percent since. What makes these tragedies all the more heartbreaking—and infuriating—is knowing that criminals trafficking these drugs pursue profits with a callous disregard for American lives. 

President Biden asked Treasury to use all the tools at our disposal to go after the millions of dollars these drug trafficking cartels and networks earn off their illegal activity. In December 2023, our Office of Terrorism and Financial Intelligence and IRS’ Criminal Investigations division launched the Counter-Fentanyl Strike Force to better marshal Treasury’s resources and expertise in a coordinated and streamlined operation to combat the trafficking of illicit fentanyl. 

Our ability to target the financial networks of these traffickers is effective because, in many respects, these deadly cartels operate like any other business. They need access to money. They want to transact in U.S. dollars. And they ultimately want access to the American financial system to launder their drug proceeds. By cutting them out of the U.S. financial system, we can effectively disrupt their ability to profit from drug sales in our country. 

I’m here in Phoenix to announce new sanctions against a major Sinaloa Cartel network comprised of 21 targets responsible for trafficking fentanyl into Arizona and other U.S. states and abusing the U.S. financial system to launder drug proceeds. This action builds on the 65 Sinaloa Cartel targets and 55 CJNG targets Treasury designated in 2023. 

Today’s designations also highlight both the global and local scale of our efforts. In November, President Biden raised the issue of fentanyl directly with Chinese President Xi Jinping. In response, we’ve seen the PRC stepping up enforcement with its domestic industry to limit the flow of precursor chemicals fueling illicit fentanyl. 

In December, Secretary Janet Yellen met with leaders of the Mexican government to further deepen our partnership with them to curb drug trafficking. This includes working with Mexican authorities and financial institutions on both sides of the border on ways we can accelerate cross border information sharing. 

And today, we were able to act thanks to our local partners at the DEA Phoenix Field Division as well as DEA’s Scottsdale Task Force. In addition to the designations, we are also pleased to announce the signing of an updated Memorandum of Understanding with the Arizona U.S. Attorney’s Office for its continued access to and use of Bank Secrecy Act (BSA) data. BSA data plays an integral role in identifying criminal activities—including drug and fentanyl trafficking—and will enable Treasury to continue to work with local law enforcement to root out illicit activity.

Disrupting the financing of fentanyl trafficking is one important step in disrupting the ability of cartels to operate in the United States. As President Biden has said, we also need more resources at the border to interdict traffickers. 

We continue to call on Congress to pass the Administration’s national security supplemental budget request, which included over $200 million to hire 1,000 additional CBP officers to stop illicit fentanyl from entering the United States and $100 million for Homeland Security Investigations to disrupt transnational criminal organizations and drug trafficking. As those in this room continue to take strides in curbing drug trafficking, it is critical that we have the resources we need to put an end to this destructive force in our communities. 

###

Network Operating Multi-Million Dollar Black Market Scheme to Launder Illicit Fentanyl Proceeds

PHOENIX, AZ — Today, Deputy Secretary of the Treasury Wally Adeyemo announced, alongside local leaders and law enforcement in Arizona, that the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned operatives in a Black Market Peso Exchange (BMPE) scheme to launder millions in illicit fentanyl proceeds for the Sinaloa Cartel. OFAC designated 15 Sinaloa Cartel members—several of whom are fugitives—and six Mexico-based businesses pursuant to Executive Order (E.O.) 14059. The Sinaloa Cartel, which is one of the most notorious and pervasive drug trafficking organizations in the world, is responsible for a significant portion of the illicit fentanyl and other deadly drugs trafficked into the United States.

“The Biden Administration will continue to use every tool at our disposal to target the violent drug cartels that profit from deadly fentanyl sales in our country,” said Deputy Secretary of the Treasury Wally Adeyemo. “Using Treasury’s unique authorities to disrupt illicit fentanyl networks, particularly in coordination with our law enforcement partners, are among Secretary Yellen and the Department’s top priorities.”

Deputy Secretary Adeyemo announced the sanctions during a trip to Arizona, where he is meeting with federal, state, and local law enforcement, government officials, and private sector counterparts to reinforce Treasury’s partnerships in the fight against illicit fentanyl. These sanctions supplement efforts by Treasury’s Counter-Fentanyl Strike Force, which leverages Treasury’s unique expertise and capabilities to interdict and disrupt the illicit financial networks upon which the cartels rely.

Today’s sanctions are the result of strong collaboration with the Drug Enforcement Administration’s (DEA) Phoenix Field Division’s DEA Local Enforcement Response Squad, as well as DEA Phoenix’s Scottsdale Task Force. This action was also coordinated closely with the Government of Mexico, including La Unidad de Inteligencia Financiera (UIF), Mexico’s Financial Intelligence Unit.

THE BMPE SCHEME: FENTANYL FOR CELL PHONES

OFAC sanctioned Mexico-based cell phone business, Smart Depot, and several related actors, including brothers, Arturo D’Artagnan Marin Gonzalez (Arturo Marin) and Porthos Marin Gonzalez (Porthos Marin), who are responsible for operating a BMPE scheme for the Sinaloa Cartel. In coordination with Sinaloa Cartel fentanyl suppliers, the Marin brothers brokered fentanyl sales in the United States and used the proceeds of the illicit sales—which were in bulk U.S. dollars—to purchase cell phones from U.S. companies. After the phones were transported to Mexico, they were sold in Smart Depot stores—located in Culiacan, Sinaloa; Mazatlan, Sinaloa; and Cancun, Quintana Roo—for Mexican Pesos. As Smart Depot thrived and expanded, the Sinaloa Cartel traffickers received their illicit proceeds in their national currency.

OFAC sanctioned Smart Depot, Arturo Marin, and Porthos Marin for having provided, or attempted to provide, financial, material, or technological support for, or goods or services in support of, the Sinaloa Cartel.

OPERATORS FOR LOS CHAPITOS

OFAC’s action today also sanctioned fentanyl suppliers, Rolando Verduzco Castro (Rolando Verduzco) and Jesus Manuel Leon Valdez (“El Guero de Las Trancas”) (Jesus Leon), who utilized the BMPE scheme run by the Marin brothers to launder their drug proceeds. In addition to fentanyl, Rolando Verduzco is a supplier of methamphetamine, heroin, and cocaine, and he often works in coordination with Fausto Isidro Meza Flores (“Chapo Isidro”). Jesus Leon, who was previously an enforcer for Joaquin Guzman Loera (“El Chapo”), now operates at the direction of Los Chapitos, a reference to several of El Chapo’s sons who lead a powerful faction of the Sinaloa Cartel. Based in Las Trancas, Tamazula, Durango, Jesus Leon oversees clandestine drug labs, producing both methamphetamine and fentanyl.

Figure 1: On August 4, 2022, DEA Phoenix seized approximately 1,175,000 fentanyl pills supplied by Rolando Verduzco in the Phoenix area. (Source: DEA Phoenix)

Adilene Mayre Robledo Arredondo (Adilene Robledo), who is the sister in-law of Arturo Marin and Porthos Marin, as well as her brother, Ivan Yareth Robledo Arredondo (Ivan Robledo), both sanctioned today, were involved in brokering fentanyl deals and laundering money, as well as recruiting drug traffickers to participate in the BMPE scheme. For example, some of the fentanyl suppliers recruited were Alan Gabriel Nunez Herrera (Alan Nunez)—Adilene Robledo’s former partner—and Jesus Tirado Andrade (Jesus Tirado), a clandestine laboratory operator for Los Chapitos who also smuggles weapons. Alan Nunez and Jesus Tirado, both sanctioned today, participated in the BMPE scheme, as proceeds from their illicit drug sales in the United States were used to purchase cell phones that were ultimately sold by Smart Depot.

OFAC sanctioned Rolando Verduzco, Jesus Leon, Adilene Robledo, Ivan Robledo, Alan Nunez, and Jesus Tirado for having engaged in, or attempted to engage in, activities or transactions that have materially contributed to, or pose a significant risk of materially contributing to, the international proliferation of illicit drugs or their means of production.

Also sanctioned today were four businesses established by Adilene Robledo and Ivan Robledo using illicit drug proceeds and Smart Depot profits. Based in Culiacan, Sinaloa, the businesses include Bufaluss and Dulce Volcan, which are involved in food services, as well as clothing/formalwear retailers, Royal Room Dress and Total Look. OFAC sanctioned Bufaluss and Dulce Volcan for being owned, controlled, or directed by, or having acted or purported to act for or on behalf of, directly or indirectly, Adilene Robledo and Ivan Robledo; and sanctioned Royal Room Dress and Total Look for being owned, controlled, or directed by, or having acted or purported to act for or on behalf of, directly or indirectly, Adilene Robledo. 

In April 2023, a grand jury in the U.S. District Court for the Southern District of New York returned an indictment charging numerous Sinaloa Cartel members, including Alan Nunez and Jesus Tirado, with a variety of drug trafficking, money laundering, and weapons-related charges. To date, Alan Nunez and Jesus Tirado are fugitives. Through its Narcotics Rewards Program, the U.S. Department of State offers rewards of up to $1 million for information leading to the arrests and/or convictions of Alan Nunez and Jesus Tirado.

OPERATORS FOR EL MAYO

In addition to Los Chapitos, the Marin brothers also used the BMPE scheme to launder drug proceeds for Sinaloa Cartel members who report to Ismael Zambada Garcia (“El Mayo”), El Chapo’s former partner.

For example, Jesus Norberto Larranaga Herrera (“El 30”) (Jesus Larranaga), based in Culiacan and the surrounding municipalities—such as Pueblos Unidos and Tacuichamona—participated in the BMPE scheme. Jesus Larranaga works for his father in-law, Victor Lizarraga Martinez (“El 20”) (Victor Lizarraga), a former police officer turned high-level operator for El Mayo. Karla Gabriela Lizarraga Sanchez (Karla Lizarraga)—the spouse of Jesus Larranaga and daughter of Victor Lizarraga—is also involved in drug trafficking and bulk cash smuggling. In Pueblos Unidos, brothers, Alexis Vergara Meza (“Wini”) (Alexis Vergara) and Edy Vergara Meza (“Carter”) (Edy Vergara), are fentanyl suppliers working alongside Jesus Larranaga.

As suppliers of methamphetamine and fentanyl, among other drugs, Jesus Larranaga, Victor Lizarraga, Karla Lizarraga, Alexis Vergara, and Edy Vergara—all sanctioned today—coordinate drug distribution throughout the United States, launder money, and smuggle bulk cash. Jesus Larranaga also uses illicit drug proceeds to purchase weapons in the United States, which are smuggled across the border to Mexico via couriers.

OFAC sanctioned Jesus Larranaga, Victor Lizarraga, Karla Lizarraga, Alexis Vergara, and Edy Vergara for having engaged in, or attempted to engage in, activities or transactions that have materially contributed to, or pose a significant risk of materially contributing to, the international proliferation of illicit drugs or their means of production.

A SONORA-BASED SCHEME

Also sanctioned today were Jorge Alejandro Garcia Velazco (Jorge Garcia), a San Luis Rio Colorado, Sonora-based associate of the Marin brothers, as well as his spouse, Mayra Gisel Gonzalez Cordero (Mayra Gonzalez), and his cell phone business, Celulandia Taller & Store SLRC (Celulandia). Similar to the Marin brothers, Jorge Garcia operates a BMPE scheme to launder drug proceeds for the Sinaloa Cartel. Assisted by Mayra Gonzalez, Jorge Garcia’s scheme involves Celulandia, which has two locations in San Luis Rio Colorado.

OFAC sanctioned Jorge Garcia for having provided, or attempted to provide, financial, material, or technological support for, or goods or services in support of, the Sinaloa Cartel; and sanctioned Celulandia for being owned, controlled, or directed by, or having acted or purported to act for or on behalf of, directly or indirectly, Jorge Garcia. Furthermore, OFAC sanctioned Mayra Gonzalez for being owned, controlled, or directed by, or having acted or purported to act for or on behalf of, directly or indirectly, Celulandia.

Figure 2: On August 19, 2022, DEA Phoenix seized approximately 630,000 fentanyl pills and 41 kilograms of fentanyl powder supplied by Jesus Leon in the Phoenix area. Among other markings, the fentanyl packaging was stamped with “Chapiza,” a reference to Los Chapitos. (Source: DEA Phoenix)

SANCTIONS IMPLICATIONS

As a result of today’s action, all property and interests in property of the designated persons that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked. Unless authorized by a general or specific license issued by OFAC, or exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons. U.S. persons may face civil or criminal penalties for violations of E.O. 14059.

Today’s action is part of a whole-of-government effort to counter the global threat posed by the trafficking of illicit drugs into the United States that is causing over 110,000 deaths of Americans annually, as well as countless more non-fatal overdoses and poisonings. OFAC, in coordination with its U.S. government partners and foreign counterparts, and in support of President Biden’s Unity Agenda, will continue to hold accountable those individuals and businesses involved in the manufacturing and sale of illicit drugs.

The power and integrity of OFAC sanctions derive not only from OFAC’s ability to designate and add persons to the Specially Designated Nationals and Blocked Persons List (SDN List), but also from its willingness to remove persons from the SDN List consistent with the law. The ultimate goal of sanctions is not to punish, but to bring about a positive change in behavior. For information concerning the process for seeking removal from an OFAC list, including the SDN List, please refer to OFAC’s Frequently Asked Question 897 here. For detailed information on the process to submit a request for removal from an OFAC sanctions list, please click here.

View more information on the individuals and entities designated today.

View the chart on the individuals and entities designated today.

###

WASHINGTON – Today the U.S. Treasury Department and Internal Revenue Service (IRS) released guidance that provides additional information about the bonus under the Inflation Reduction Act for clean energy projects and facilities located in communities that have historically powered our nation. This bonus is equipping energy communities to harness the economic benefits of the clean energy boom by creating good clean energy jobs and lowering energy costs. 

“President Biden’s Inflation Reduction Act is driving investments in new clean power to communities that have been at the forefront of energy production, helping to create jobs and lower utility bills,” said U.S. Deputy Secretary of the Treasury Wally Adeyemo. “Today’s guidance provides clarity to companies planning investments and should help those investments move forward.” 

Developers can receive a bonus of up to 10 percentage points on top of the Investment Tax Credit (ITC) and an increase of 10% for the Production Tax Credit (PTC). The energy community bonus for the ITC and PTC is available to developers locating projects in historical energy communities. Under the Inflation Reduction Act, there are three ways an area can qualify as an energy community:

• Coal closures:  A census tract or directly adjoining census tract where a coal mine closed after 1999 or a coal-fired electric generating unit was retired after 2009 qualifies as an energy community. 
• Statistical Areas: The bonus is also available to areas that have significant employment or local tax revenues from fossil fuels and higher than average unemployment. To qualify for the bonus, a metropolitan statistical area (MSA) or non-metropolitan statistical area (non-MSA) must have or have recently had at least 0.17 percent direct employment, or at least 25 percent local tax revenues related to the extraction, processing, transport, or storage of coal, oil, or natural gas, as well as an unemployment rate at or above the national average unemployment rate for the previous year. 
• Brownfields: Brownfield sites, which are properties contaminated by hazardous materials or other pollutants, also qualify as energy communities.   

Treasury and the IRS issued initial guidance on the bonus for energy communities in April 2023, and today’s guidance addresses several issues raised by stakeholders. The Notice adds two additional North American Industry Classification System (NAICS) codes, 2212 (Natural Gas Distribution) and 23712 (Oil and Gas Pipeline and Related Structures Construction), to the definition of “fossil fuel employment” for purposes of determining eligibility under the Statistical Area Category. The Notice includes appendices listing additional MSAs and non-MSAs that qualify as energy communities for 2023 after including the two additional NAICS codes. It also lists those that would potentially qualify for future years, depending on local unemployment rates, because they meet the historic fossil fuel employment levels after including the two additional NAICS codes.

Today’s guidance also permits offshore wind facilities to attribute their nameplate capacity to additional property—namely, to supervisory control and data acquisition system (SCADA) equipment that are owned by the owner of the offshore wind project and are located in eligible ports. This change reflects the fact that onshore SCADA equipment at ports is critical to offshore wind projects and that offshore wind projects make significant investments and create jobs at these ports over the duration of the projects, which is the goal of the energy communities bonus. In addition, the guidance clarifies that where a project has multiple points of interconnection, under this guidance, those projects may now look to any land-based power conditioning equipment up to those points of interconnection for purposes of determining energy community status.

The IRS is also posting additional frequently asked questions clarifying brownfields eligibility.

###

As Prepared for Delivery

Chairman Womack, Ranking Member Hoyer, and Members of the Subcommittee: Thank you for the invitation to testify.

Over the past three years, the Treasury Department has helped drive a historic economic recovery, including through our implementation of the American Rescue Plan. We are now playing a leading role in advancing President Biden’s medium- and long-term economic agenda, including through our implementation of the Inflation Reduction Act. Today, our economy is growing, the labor market is historically strong, and inflation has declined substantially. Companies have announced $650 billion in clean energy and manufacturing investments since the start of the Administration.

We’ve also been focused on taking necessary action beyond our borders to advance our economic priorities and national security, including continuing to respond to Russia’s invasion of Ukraine as part of a strong global coalition. Our coalition recently imposed additional Russia-related sanctions. Here at home, the Senate passed a bipartisan national security supplemental package that provides critical support for our allies including Ukraine and is vital to our national security. I urge the House of Representatives to send it to the President’s desk. Treasury also continues to closely monitor the conflict in the Middle East and use all the tools at our disposal to counter the financing of Hamas, other Iranian proxies, and their facilitators; stabilize the West Bank; and help humanitarian aid reach Palestinians in Gaza.

Securing funding for fiscal year 2024 is crucial to achieving these and other priorities, including to support a fair tax system, promote access to capital in disadvantaged communities, and combat terrorism and financial crimes. Let me now briefly highlight several key requests included in the President’s Fiscal Year 2025 Budget.

First, the Budget requests $12.3 billion in discretionary resources for the IRS. Decades of underfunding the IRS had done a disservice to American taxpayers and undermined our country’s economic strength. Now, funding from the IRA and discretionary appropriations have driven unprecedented improvements in customer service, technology, and enforcement to ensure that wealthy taxpayers pay their fair share and help reduce the deficit. We need to continue IRA investments and maintain base funding to sustain this momentum. The Budget also requests $325 million for the Community Development Financial Institutions Fund, which is key to our efforts to increase fairness and grow our economy through support for historically underserved and low-income communities. 

Second, the Budget requests funds to allow Treasury to address emerging threats, such as $312 million for Treasury’s Departmental Offices, including to support promoting investment security in sensitive technologies and the stability of the financial system. Treasury is also requesting $150 million to enhance cybersecurity to protect and defend sensitive agency systems and information.

Third, advancing our work abroad requires $231 million for the Office of Terrorism and Financial Intelligence, which provides critical financial intelligence and sanctions-related economic analysis, including to support sanctions related to Hamas, Iran, and Russia. We’ve also requested $216 million for the Financial Crimes Enforcement Network. This will allow us to build on the significant milestone of launching the beneficial ownership reporting system while taking other actions to protect the financial system and combat illicit finance.

All of Treasury’s work is enabled by my dedicated and skilled colleagues, who should be equipped with the tools and resources they need to advance key priorities on behalf of the American people. 

I am happy to now take your questions.

###

On behalf of Treasury Secretary Janet Yellen, I would like to thank the Government and people of the Dominican Republic for generously hosting the 2024 Inter-American Development Bank (IDB) Group Annual Meetings of the Boards of Governors. I would like to recognize President Ilan Goldfajn, Executive Vice President Jordan Schwartz, Chief Executive Officer of IDB Invest James Scriven, and Chief Executive Officer of IDB Lab Irene Arias Hofman for their vision and energetic leadership of the institution so that, as a unified Group, it can continue to be an engine for growth, innovation, and progress across Latin America and the Caribbean. I also wish to thank Finance Minister Héctor Alexander and his team for their leadership in preparing for this meeting. We congratulate Finance Minister José Manuel “Jochi” Vicente for his election as Chair of these Annual Meetings, and thank him in advance for the work with Governors over the year to come. I would also like to recognize and note our appreciation for the staff of the IDB Group for their commitment and tireless work to support the aspirations of the people of Latin America and the Caribbean.

Regional Economic and Political Developments

Decisive actions by many independent central banks in the region were vital to taming high inflation that reemerged after the pandemic. Macro vulnerabilities, with some obvious exceptions, are contained.

Yet the region’s long-standing growth challenges – modest investment, declining demographic dividend, and an absence of productivity growth – stand in the way of the region emerging fully from the pandemic’s shadow. We have learned that sustainable macroeconomic policies are necessary but not sufficient inputs to inclusive and equitable growth.

Crime and violence have been a scourge for many countries in the region –and their inhabitants – for many years, and these threats are spreading. We need a better analytic framework for understanding the impact of weak citizen security on investment, consumption, and employment, and we need a fresh way of thinking about how development agencies should respond.

Similarly, persistent gender inequality and gender-based violence holds back women from achieving their full potential. New approaches are needed to allow women and minorities, including indigenous groups, to access the opportunities the region presents.

The end result of the lack of opportunity for many in the region is revealed by historically high migration to the United States, often through routes that are dangerous and undignified. This is unsustainable.

Fortunately, buoyant U.S. growth, friend-shoring opportunities, and the accelerating development of supply chains related to the new energy economy can provide new opportunities. Secretary Yellen was in Mexico in December to discuss these issues with Finance Minister Ramirez de la O. The Secretary was also just in Chile, where she had excellent discussions with

Minister Marcel. And she discussed these issues with Brazilian Finance Minister Haddad during his chairmanship of the São Paulo meetings of the G20.

An Innovative and Impactful IDB Invest

When we convened in Panama City last year, Governors mandated a proposal for the next phase of IDB Invest. This year, we are pleased to welcome IDB Invest’s detailed New Vision and Business Model, as well as the proposal for a $3.5 billion capital increase for IDB Invest. The New Vision and Business Model, or IDB Invest 2.0, represents an innovative and ambitious approach to mobilizing the higher levels of private sector investment that are critical for the region while also making more efficient and effective use of IDB Invest resources. Armed with greater capacity to support local currency financing and provide more equity, IDB Invest will help generate over $100 billion of long-term financing to the region over a 10-year period, with over 50 percent of that amount achieved through mobilization. With IDB Invest 2.0 projected to reach 2.5 million mid and small-sized enterprises, as well as support for 9.5 million jobs, the capital increase will deliver sustainable and inclusive long-term job creation and growth that will bolster hemispheric prosperity. This new approach is yet one more example of the IDB Group’s capacity for innovation.

At the Summit of the Americas, President Biden championed the IDB Invest capital increase, and the United States believes this agreement on a $3.5 billion capital increase represents a tremendous success for IDB Invest and the people of Latin America and the Caribbean. In partnership and through enhanced connectivity across the rest of the IDB Group, IDB Invest will evolve to become even more effective and impactful.

Inter-American Development Bank Group Institutional Strategy

Last year, Governors also mandated IDB Group Management to develop a new Institutional Strategy that strengthens coordination across the arms of the IDB Group and proposes concrete Group-wide reforms to improve development impact and efficiency. Governors also directed Management to embed reforms outlined in the Washington Resolution into the Institutional Strategy, namely to: undertake further reforms to improve development effectiveness; assess options for balance sheet optimization; address the needs of fragile and conflict-affected states and regions; reduce poverty and inequality; develop a strategy to address the unique needs of the Caribbean; review lending instruments and allocations; and better address the region’s needs in areas such as climate, labor markets, social protection, and health and education.

A strong private sector requires a strong and enabling public sector. That is why the United States is so pleased that the new Institutional Strategy presents a concrete plan to improve development effectiveness, address the region’s vulnerabilities, combat climate change, and foster meaningful economic and social progress. In particular, we recognize the serious effort to reform policy-based loans to make them more impactful. We support President Goldfajn and his team’s work to reform this instrument so that it can more effectively advance policy reforms that enable economic development. The Institutional Strategy also emphasizes leveraging Group- wide synergies to support private sector-led growth, such as by improving the business legal and regulatory environment, and funding upstream work in regulatory areas that will facilitate commercial financing. By infusing the principles and practices of transparency, accountability, and partnership with civil society across the Institutional Strategy, the IDB Group will deliver increased benefits for the lives and livelihoods of the region’s people.

The IDB Group and Evolution of Multilateral Development Banks (MDBs)

Secretary Yellen has spearheaded an effort for MDBs to evolve and more effectively address transboundary challenges – such as climate change, pandemics and fragility and conflict – that are critical to protecting and enhancing delivery on poverty reduction and the Sustainable Development Goals. The IDB Group Institutional Strategy captures the core tenets of the MDB evolution agenda, including updating and reforming the Group’s incentive structures, operational approach, and financial capacity. Plans to review the country classification framework to better reflect country vulnerability and effectively deploy concessionality will optimize lending incentives, while a revised strategy to incentivize staff to work in situations of fragility, conflict, crime and violence will increase development impact. The new business model of IDB Invest embodies the cross-cutting priority of private capital mobilization embedded in the MDB evolution agenda. Others in the broader multilateral development bank system are watching and will be eager to learn from IDB Invest’s implementation of this model. We encourage Management to go even further in its efforts to implement the G20 MDB capital adequacy framework review recommendations. We look forward to working with Management and other shareholders in seeing these reforms fully implemented.

Our gathering here on the island of Hispaniola highlights the IDB Group’s commitment to the Caribbean. There is more that the Group can do to address the needs of small, vulnerable and low-lying states in the Caribbean, as well as populations affected by conflict, crime and violence (“FCCV situations”) – such as across the border in Haiti. We welcome that the Institutional Strategy incorporates a One Caribbean Strategy, as well as a framework for supporting populations in FCCV situations, and look forward to seeing Management’s implementation of these frameworks alongside the Institutional Strategy.

We also recognize IDB Lab’s commitment to seeding projects in small and vulnerable states, and look forward to seeing greater levels of support for innovation and entrepreneurship in those countries through the Lab’s replenishment.

The IDB Group, Regional Supply Chains and Nearshoring

The United States supplied almost 40 percent of the record $224.5 billion in foreign direct investment (FDI) that Latin America and the Caribbean received in 2022, and importantly intra- regional FDI is also increasing significantly. Through partnership with the region and the IDB Group, including the IDB Invest capital increase, we will bolster this trend. The IDB Group hosted the successful Americas Partnership for Economic Prosperity (APEP) Responsible Investment Forum this past November in Washington. We look forward to the Group continuing to play a crucial role in nurturing hemispheric prosperity during the coming year, including by fostering competitive, resilient, inclusive, and sustainable investment throughout the region. We appreciate that the IDB Group is assisting with competitiveness assessments of priority supply chains including medical supplies, semiconductors, and clean energy, to inform nearshoring in the Western Hemisphere. We also applaud Management’s initiative in launching the “BID for the Americas” program, which aims to create opportunities for trade and investment in the region, and procurement opportunities for projects financed by the Group. We likewise welcome the IDB Group’s efforts to develop a Bidder Center, an online portal that provides greater knowledge resources and digital tools to promote project opportunities.

Our Commitment to Latin America and the Caribbean

The people of the United States and of the Latin America and the Caribbean region are inextricably linked, bound not just by geography but also shared values and aspirations to be prosperous, democratic, and secure. Strong partnerships with Latin America and the Caribbean are a key priority of the Biden-Harris Administration, and we aim to strengthen bonds with the region through the Americas Partnership for Economic Prosperity (APEP) and our Partnership to Address the Climate Crisis 2030 (PACC 2030). Led by Vice President Harris, PACC 2030 has been working to strengthen development finance and enhance green infrastructure so that our Caribbean partners will be better positioned to address the challenges of climate change and take advantage of the opportunities of the green economy.

The United States stands firmly by the IDB Group, as one of our most important partners in the region. The IDB Invest capital increase – which President Biden championed at the Summit of the Americas in 2022 – represents a tremendous success for the entire IDB Group and the people of Latin America and the Caribbean. We are deeply committed to continuing and growing our partnership with the IDB Group and fellow shareholders to accelerate strong, sustainable, and inclusive economic growth undergirded by commitments to democracy, equality, transparency, anti-corruption, and the rule of law throughout our common region.

###

Deputy Secretary Adeyemo to highlight Biden-Harris economic agenda, the free IRS Direct File pilot, and efforts to combat fentanyl

WASHINGTON – On Thursday, March 21, and Friday, March 22, Deputy Secretary of the Treasury Wally Adeyemo will travel to Dallas, Texas and Phoenix, Arizona for a series of events focused on increasing economic opportunity in communities across the United States. On March 21, in Dallas, the Deputy Secretary will participate in the International Leadership Summit and highlight the free IRS Direct File pilot program, which is now open to taxpayers in Texas and 11 other states. He will then travel to Phoenix, Arizona, where on Friday, March 22, he will make a major announcement on new actions the Biden-Harris Administration is taking to stem the flow of illicit fentanyl and meet with Latino community leaders to discuss how President Biden’s Investing in America agenda is increasing access to federal assistance in Latino and other underserved communities.

Thursday, March 21^th (CT)

At 8:00 AM CT, Deputy Secretary Adeyemo will participate in a fireside conversation with Bishop T.D. Jakes and community and faith-based partners at the International Leadership Conference. During the conversation, Deputy Secretary Adeyemo will highlight how the Biden-Harris Administration’s policies have driven a historic economic recovery and landmark legislation including the Bipartisan Infrastructure Law, Inflation Reduction Act, and CHIPS and Science Act are creating good-paying jobs, lowering costs, and expanding economic opportunity. The meeting is open to pre-credentialed media.

Following the fireside conversation, Deputy Secretary Adeyemo will participate in a roundtable with faith leaders facilitated by Chairman T.D. Jakes to learn about the challenges and opportunities in local communities and discuss how to ensure federal programs reach communities in need. This event is closed press.

At 2:00 PM CT, Deputy Secretary Adeyemo, community leaders, and a Texan who has filed their taxes for free using the IRS’ new Direct File tool will deliver remarks at the Martin Luther King Jr. Community Center. Deputy Secretary Adeyemo will provide an update on significant interest from Texans in using Direct File. An estimated 3.8 million taxpayers in Texas, and 19 million taxpayers across the 12 pilot states are potentially eligible to file their taxes for free directly with the IRS this Filing Season. The remarks are open press. Media interested in covering this event should RSVP to [email protected]. 

Friday, March 22^nd (MST)

At 9:00 AM, Deputy Secretary Adeyemo will announce at the IRS-Criminal Investigations Phoenix office major new actions that the Treasury Department is taking to combat the flow of fentanyl into Arizona and the United States. This effort comes as part of Treasury’s Counter Fentanyl Strike Force and the Biden-Harris Administration strategy to combat the illicit fentanyl trade that claims the lives of thousands of Americans each year. He will speak alongside U.S. Attorney for the District of Arizona Gary Restaino, Arizona Attorney General Kris Mayes, and Phoenix Mayor Kate Gallego. Media interested in covering this event should RSVP to [email protected].

Following the press conference, at 9:30 AM at the same location, Deputy Secretary Adeyemo will participate in a roundtable hosted by the Financial Crimes Enforcement Network (FinCEN) on countering fentanyl. This roundtable will bring together Treasury officials, local elected leadership, law enforcement professionals, and the private sector to share information and best practices, and follows several similar recent fentanyl-related FinCEN Exchanges. Opening remarks from Deputy Secretary Adeyemo will be open to the press; the remainder of the meeting is closed press.

At 12:00 PM, Deputy Secretary Adeyemo will participate in a roundtable discussion hosted by the Raza Development Fund with Latino community leaders to discuss the Biden-Harris Administration’s efforts to increase economic opportunity in Latino communities. Raza Development Fund has been a recipient of several awards from the Treasury Department’s Community Development Financial Institutions Fund (CDFI Fund), which invests in financial institutions with a track record of delivering capital to Latino and other underserved communities and businesses. Through the Emergency Capital Investment Program (ECIP), the Treasury Department has invested $1.6 billion in Latino-owned and Latino-majority shareholder depository institutions. Based on preliminary analysis, the Department projects that investments across the entire ECIP portfolio may increase lending in Latino communities by nearly $58 billion over the next decade. This event is closed press.

###