Inter-American Development Bank (IDB)

Organizational profile: Through financial and technical support for countries working to reduce poverty and inequality, the Inter-American Development Bank (IDB) helps improve health and education, and advance infrastructure. Their aim is to achieve development in a sustainable, climate-friendly way. The Bank’s current focus areas include three development challenges – social inclusion and equality, productivity and innovation, and economic integration – and three cross-cutting issues – gender equality and diversity, climate change and environmental sustainability; and institutional capacity and the rule of law.

The Inter-American Development Bank (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 mitigate 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.

Within the Environmental, Rural Development, and Disaster Risk Management Division, IDB seeks to promote integrated management of forest ecosystem with other land uses such as agriculture and urban development to minimize the loss of ecosystem services provided by remaining forest cover, such as buffer zones around agricultural areas to minimize soil erosion and promote green spaces in urban areas.

Through the Canadian Climate Fund, the IDB seeks to catalyze greater private investment in climate change mitigation and adaptation projects in Latin America and the Caribbean by providing concessional financings to projects that do not benefit from a sovereign guarantee, paying special attention, where possible, to the poorest and most vulnerable countries. The main areas of focus are renewable energy generation and storage, energy efficiency, sustainable transportation, greenhouse gas emission reduction and abatement projects, including forestry, agriculture and land-use changes, as well as other projects supporting the adaptation to climate change vulnerabilities. The funds have a cross-cutting focus on the empowerment of women and girls.

Financing Instrument: Loans, Grants, Technical Assistance, Guarantees

Project scale: Recent forest-related projects have ranged from US$10,000 in technical cooperation to approximately US$162,500,000 for a loan operation.

Applicable geographical regions/country groups: The IDB is the leading source of development financing for Latin America and the Caribbean.

Recipient categories: Governments

Eligibility Criteria: 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.

Application guidelines: 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.