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Development bank funds border infrastructure to aid U.S.–Mexico trade

On the record: A conversation with Calixto Mateos
Calixto Mateos was the managing director of the North American Development Bank (NADBank) from 2019 to 2023. The binational financing institution, established under terms of the North American Free Trade Agreement in 1994, funds infrastructure and environmental projects across the U.S.–Mexico border region. Mateos discusses his work at the NADBank and its role enhancing trade.
Q. What is NADBank’s mission?

NADBank was created with a vision to provide financing to support the development and implementation of environmental infrastructure projects. Also, to provide technical and other assistance for projects that help preserve, protect and enhance the environment of the border region in order to advance the well-being of the people of the United States and Mexico.

It was created almost 30 years ago, and it was the first “green bank,” although that term didn't exist back then.

Q. Why should people pay attention to NADbank?

First, because NADBank is a green bank, focused on sustainable projects seeking to advance the well-being of a well-defined area of operation—the U.S.–Mexico border region. NADBank is also a policy instrument for the binational relationship of both countries.

Q. How long were you NADBank’s managing director? What did you do before you came to NADBank?

I was the managing director for one term, four years. Previously, I was deputy managing director, and before that, I was director of risk management. Before the NADBank, I worked at the Mexican central bank (Banco de México) for almost 26 years. My last position there was director of institutional liaisons.

Q. How many people work at the NADBank? How is it governed?

NADBank has a very efficient operation. It has a staff of more than 100 people and operates out of two locations, San Antonio, where its headquarters are, and Ciudad Juarez, Chihuahua, where the Mexico office is located.

NADBank’s board approves a budget that is consistent with the revenue the institution can generate. As of 2023, 20 percent of its retained earnings were allocated to NADBank’s Environmental Investment and Capacity Facility, which provides resources for its grant programs.

The bank is owned equally by the governments of the U.S. and Mexico; the board comprises representatives of the U.S. Secretary of the Treasury, the Secretary of State and the head of the Environmental Protection Agency plus two other independent positions and their counterparts in Mexico. This board elects the managing director and the deputy managing director, positions that have to alternate between representatives of the U.S. and Mexico.

Q. During your tenure as managing director of NAD bank, what was NADBank’s greatest accomplishment? Your biggest disappointment?

I'm very proud of what we did. We positioned NADBank as a green institution, dedicated to addressing economic, social and environmental challenges along the Mexico–U.S. border. In terms of institutional development, we strengthened NADBank's role in supporting bilateral relations, reaffirmed through the USMCA [NAFTA’s successor treaty, the United States–Mexico–Canada Agreement in 2020] and in high-level meetings.

We elevated our internal practices to align with international standards and positioned NADBank as a leader in climate project finance and issued green bonds, receiving recognition from the Green Finance Advisory Council and the Climate Bond Initiative for [our] commitment and quality reporting.

We pioneered sustainable funding at the state and municipal level. We launched the Skills for Sustainability program to teach technical skills, addressing the talent gap in terms of water infrastructure along the border region.

Calixto Mateos
          

At the end of my tenure, NADBank emerged as a green institution with a strong operational foundation, excellent financial position and a global [credit] rating of AA.

Regarding disappointments, I think we still need to be more preemptive taking action before the border region’s needs become a problem. But I think the structure that I left will allow the NADBank to be more preemptive in the future.

Q. Does NADBank think nearshoring will bring faster growth in Mexico–U.S. trade? How is NADBank preparing for it?

Nearshoring [relocating production closer to the customer] is a great opportunity for Mexico to use its geographic location and ongoing economic integration with the U.S. Yet for it to materialize, you need to react and take advantage of such an opportunity as fast as possible.

NADBank’s board expanded the type of projects eligible for financing specifically to allow development of green production and distribution. For example, nearshoring projects for the production of solar panels, wind-farm blades or wind-farm generators could qualify for NADBank funding.

Q. NADBank was created 30 years ago. Do we still need NADBank?

Yes, NADBank is still needed. The biggest demand 30 years ago was to create the first green bank. It has been providing financing for environmental projects for almost 30 years. NADBank has accumulated expertise that no other international development institution has, and that is why it is so relevant now.

Additionally, the binational and border nature of the bank is extremely relevant in the region, which seeks to be the motor of the [economic] integration and growth for both countries. But the border region still lacks the optimal infrastructure and requires environmentally sustainable projects to address water and electricity needs.

Q. What determines which projects are funded? How does the U.S. benefit from NADBank projects? What have been some of its biggest projects?

The board is the ultimate authority over the bank, and it approves the financing for projects. The staff provides all the technical analyses and groundwork.

Regarding some of our biggest projects, we were the first to fund renewable energy projects along the U.S.–Mexico border. Nowadays, it is common to hear about wind and solar farms. But 20 years ago, few people but us were funding such projects, particularly in the border region. Initially, there were small projects, but currently we have several $100 million projects going on, such as a solar farm in the state of Sonora, Mexico.

Currently, the bank is looking into a project related to the storage of electricity and letting other institutions take care of the generation projects. Existing energy generation projects allow the bank to have a constant stream of revenue that helps fund operations and new projects.

The views expressed are those of the speaker and should not be attributed to the Federal Reserve Bank of Dallas or the Federal Reserve System.

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