Inter-American Development Bank (IDB)
Through financial and technical support for countries working to reduce poverty and inequality, the Inter-American Development Bank (IDB or IADB) helps improve health and education, and advance infrastructure with the aim of to achieving development in a sustainable, climate-friendly way. With a history dating back to 1959, today IDB is the leading source of development financing for Latin America and the Caribbean.
The Bank provides loans, grants, and technical assistance; and conducts extensive research around three priority areas: social inclusion and equality, productivity and innovation, and economic integration. In doing so, it addresses the cross-cutting issues of gender equality and diversity; climate change and environmental sustainability; and institutional capacity and the rule of law.
The Bank supports measures to reduce emissions from deforestation and forest degradation by reducing open access to natural forests; fostering sustainable rural development; promoting economic activities to foster forest protection and conservation and research, impact evaluations and capacity building to improve understanding of policies that seek to reduce emissions from deforestation.
The IDB currently has three lending categories based on the development purpose, eligibility, and disbursement requirements of the loan, as well as the criteria for determining the size of the loan amounts and the financial terms. Each lending category includes different types of lending instruments and approaches:
- Investment lending to IDB borrowing member countries finance goods, works, and services to promote social and economic development. This category includes specific instruments to support IDB borrowing member countries in the event of a natural disaster.
- Policy-based lending provides the Bank’s borrowing member countries with flexible, liquid (fungible) funding to support policy reforms and/or institutional changes in a particular sector or subsector. The country and the IDB discuss and agree upon those reforms or changes.
- Special development lending supports borrowing countries during a macroeconomic crisis and mitigates the effects on the countries’ economic and social progress.
In addition to the three lending categories the IDB can guarantee loans made by private financial sources in public sector projects.
Building on the progress made by the Amazon Initiative, the Amazon Regional Program: Amazonia Forever aims to scale up impact through a holistic, territorial approach that accelerates financing, shared knowledge, and regional coordination. As an umbrella program, it includes initiatives and resources impacting the Amazon and invites all relevant stakeholders to join efforts.
Financing Instrument: Loans, Grants, Technical Assistance, Guarantees
Project scale: Recent forest-related projects have received between US$100,000 and US$70 million in finance.
Applicable geographical regions/country groups: Latin America and the Caribbean
Recipient categories: Governments
Bank-financed projects shall:
- Contribute effectively to the economic and social development of the regional member countries.
- Be consistent with the principles set forth in the Agreement Establishing the Bank with regard to the use of Bank resources.
- Be technically, economically, and environmentally sound, financially secure, and take place in an adequate legal and institutional framework.
- Help to maintain the Bank's reputation as a financial agency in the international markets.
The IDB provides financing to the public sector through sovereign guaranteed loans. The Bank periodically defines and revises its country strategies through a structured and continuous dialogue with the borrowing member country. The country and the Bank jointly identify initiatives to be incorporated to the Bank’s active pipeline. These initiatives are identified through several important tasks: diagnostic studies, objective formulation, analysis of alternatives, and selection of the financial instrument. The results of these tasks are developed into a Project Profile (PP). The PP provides basic information on the project, including its justification and objectives, the technical aspects and its relevant sector background, the proposed environmental and social safeguards, a fiduciary evaluation, the projected funding amounts, and a preliminary agenda for the project’s execution.
From the time a project is conceived and throughout its different stages (identification, preparation, analysis, negotiation, approval, and execution), the Bank examines the need for the project and its feasibility though technical, socioeconomic, financial, legal, and environmental analysis and ex ante evaluations; it examines the institutional capacity of the borrower and/or executing agency to attain the desired goals; it establishes the necessary actions and defines the policy measures required to process the operation; it arranges for a final agreement on the project with the country and submits it to the Bank's authorities for approval; and it oversees project execution and administers the operation.
For more detailed information, see https://www.iadb.org/en/how-projects-are-made/how-projects-are-made
Last updated: 7 September 2023