This work is prepared to learn more about the IDB, Inter-American Development Bank, one of the most important financial institutions in Latin America and the Caribbean, this being a great help to the progress of the countries included in its interests. Taking into account problems such as poverty, violence, the environment, education, business development, and financial loans to different entities.
During the development of the work and with the help of various sources of information, we will touch on every one of the aspects that make up such an important Bank, from its beginning work to the present.
- Know the importance of the Inter-American Development Bank.
- Identify the main functions and operations of the IDB.
- Determine the incidences for the world of the existence of such a large bank.
- Know which are the different departments and the organizational structure of the IDB.
- 1. WHAT IS THE IDB?
- 1.1 Shareholders
- 1.2 Mission
- 1.3 Mandates
- 2. MEMBER COUNTRIES
- 2.1 Borrowing countries
- 2.2 Non-borrowing countries
- 3. HISTORY
- 4 WHAT DOES THE IDB DO?
- 4.1 Operations
- 4.2 Programs
- 4.3 Debt relief
- 4.4 Research and Knowledge
- 5. HOW DOES THE BIB OPERATE?
- 5.1 Policies
- 5.2 Strategies
- 5.3 Financial resources
- 5.3.1 Ordinary Capital (OC)
- 5.4 Project Financing
- 6. IDB STRUCTURE
- 6.1 Organization chart
- 6.2 Governors
- 6.3 Executive Board
- 6.4 Management
- 6.5 Departments
- 6.6 Personnel
1. WHAT IS THE IDB?
An initiative long awaited by Latin American countries, the Inter-American Development Bank was created in 1959 as a development institution with new mandates and tools for the time. After long preparations by Latin American countries. Its loan and technical cooperation programs for economic and social development projects went beyond mere financing, as was customary at the time.
The IDB’s programs and instruments were so effective that the institution became a model for the creation of all other multilateral development institutions at the regional and subregional levels. Currently, the IDB is the largest of all the regional development banks in the world and constitutes the main source of multilateral financing for economic, social, and institutional development projects, and those of trade and regional integration, in Latin America and the Caribbean.
The Inter-American Development Bank (IDB) is an international financial institution created in 1959 to help accelerate economic and social progress in Latin America and the Caribbean. Its headquarters are in Washington, DC, and it has offices in every country in the region, and in Tokyo and Paris. At the beginning of the year 2000, the accumulated total of loans and technical cooperation operations that the Bank had granted exceeded 104,000 million dollars. Within the IDB Group are also the Inter-American Investment Corporation and the Multilateral Investment Fund.
The owners of the IDB are the member countries. They delegate the government of the Bank to the Board of Governors, which constitutes the highest authority of the IDB. The Board of Governors, in turn, delegates that authority to the Executive Board.
1.1.1 Voting power
The voting power of the member countries depends on the amount of resources that they subscribe to the ordinary capital of the institution. The Constitutive Agreement of the Bank guarantees the categorization of majority shareholders to the borrowing countries as a bloc.
Currently, the composition of the voting power is as follows: The 26 member countries of Latin America and the Caribbean have 50.02 percent of the vote; the United States, 30 percent; Canada, 4 percent; the 16 European member countries, Israel and the Republic of Korea, 11 percent and Japan, 5 percent.
1.1.2 Capital subscriptions
The US$101 billion in ordinary capital resources cover most of the loans made by the Bank. Of that amount, approximately 4.3 percent is contributed directly by member countries. The remaining 95.7 percent is made up of callable capital, guaranteed by the governments of the member countries. This capital supports, together with the preferred creditor category granted to the Bank by its member countries, the bonds issued in the international financial markets.
The Fund for Special Operations (FSO) has US$10,000 million in contribution quotas paid by the Bank’s member countries. The weakest economies in the region, Bolivia, Guyana, Haiti, Honduras, and Nicaragua, can make use of concessional resources from the FSO. In addition, FSO resources may be allocated to assist the Caribbean Development Bank in financing projects in countries that are not members of the IDB.
In the IDB’s constitutive agreement, the delegates of the founding countries defined the Bank’s mission as “contributing to accelerating the process of economic and social development, individual and collective, of the developing regional member countries”.
Even though that mission was determined nearly half a century ago, the Bank continues to strive to fulfill that mandate, adapting the approach and modalities of its activities and operations according to the needs and requirements of its member countries in the region.
The main objectives of the Bank are to reduce poverty, promote social equity, and achieve sustainable economic growth. To achieve these objectives, the Bank focuses its efforts on four priority areas of action:
- Promote competitiveness, through support for policies and programs that promote the development potential of a country in an open global economy.
- Modernize the State, strengthening the efficiency and transparency of public institutions
- Invest in social programs that expand opportunities for the poor.
- Promote regional integration by forging links between countries so that they develop larger markets for their goods and services.
Founded in 1959, the IDB has become the main resource mobilization catalyst for Latin America and the Caribbean. The Bank grants loans and technical assistance to its 26 member countries in the region, with capital provided by the countries themselves and resources obtained through the issuance of bonds in the international capital markets.
The main functions of the Bank are the following:
- Use funds from financial markets, its own capital, and other resources to finance development projects in its member countries.
- Complement private investments when private capital is not available on reasonable terms and conditions.
- Grant technical assistance to prepare, finance, and implement development projects.
The constitutive agreement by which the IDB was founded and the Board of Governors have entrusted the Bank with several mandates that regulate the activities and operations of the institution.
The main mandate stipulated in the agreement is to support the economic and social development of borrowing member countries, individually and collectively.
In the eighth general increase in resources (also called the eighth replenishment), the Board of Governors determined that the Bank should prioritize poverty reduction and social equity, sustainable economic growth, modernization of the State, and regional integration.
The institutional strategy makes recommendations on how to link these mandates to the annual budget and work plan of the institution. This link serves as a bridge between the long-term commitments and the short-term decisions assumed by the Bank.
The Bank’s activities are guided by seven strategies, two of which seek to achieve the objectives established in the eighth replenishment and the institutional strategy: sustainable economic growth and poverty reduction and the promotion of social equity. The institutional strategy also identifies four areas that are competitively advantageous for the Bank: social development, modernization of the State, competitiveness, and regional integration. There is a seventh strategy, the environmental strategy, which encompasses several of the above areas.
To complement these seven strategies, the IDB gives priority to programs and activities that support the following themes: policy reform, women, civil society, microenterprise, emergencies, culture, youth, indigenous peoples, infrastructure, information technology, and reality. labor.
1.3.1 Articles of Agreement
The Constitutive Agreement of the Inter-American Development Bank entered into force on December 30, 1959, and has been modified on several occasions. The last modifications were those that entered into force on July 31, 1995, related to the Eighth General Increase of the Bank’s Resources.
Its Constitutive Agreement establishes that the main functions of the institution are to allocate its own capital, the resources it obtains in the financial markets and other available funds to finance the development of its borrowing member countries; complement private investment when private capital is not available on reasonable terms and conditions, and provide technical assistance for the preparation, financing, and execution of development programs.
The Bank’s operations span the entire spectrum of economic and social development. In the past, the Bank has emphasized production sectors, such as agriculture and industry; the physical infrastructure sectors, such as energy and transportation, and the social sectors, including public and environmental health, education, and urban development. Currently, funding priorities include social equity and poverty reduction, modernization and integration, and the environment.
To carry out its loan and technical cooperation operations, the Bank relies on its ordinary capital, which includes subscribed capital, reserves, and funds raised through loans, plus funds under management, which are special contributions from its member countries. The Bank also has a Fund for Special Operations that provides loans on concessional terms for projects in less economically developed countries. The Bank obtains funds from the capital markets of Latin America and the Caribbean, the United States, Europe, and Japan. Its debt has been rated AAA by the major rating services in the United States.
2. MEMBER COUNTRIES
The IDB was created in 1959 as an association between 19 Latin American countries and the United States. The original member countries of the IDB are Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, the Dominican Republic, Uruguay, Venezuela, and the United States.
The number of member countries increased with the entry of Trinidad and Tobago in 1967, soon joined by Barbados and Jamaica in 1969, Canada in 1972, Guyana in 1976, the Bahamas (1977), and Suriname in 1980. Between 1976 and 1986, 18 non-regional member countries joined the Bank, including 16 European countries, Israel and Japan. Belize joined in 1992 and, after the breakup of Yugoslavia, Croatia and Slovenia joined in 1993. The remaining republics, former members of Yugoslavia, chose not to apply to join the Bank, except Serbia-Montenegro, which still maintains the option of joining the IDB. The Republic of Korea became a member country in 2004.
Cuba signed but did not ratify the Bank’s constitutive agreement, the statutes that gave rise to the institution, and therefore is not a member of it.
The Bank currently has 46 member countries, of which 26 are borrowing members in the region. The voting power of each country is based on its subscriptions to the ordinary capital (OC) of the institution.
Any country interested in joining the IDB as a regional member must be a member of the Organization of American States (OAS). Countries wishing to be admitted as non-regional members must be members of the International Monetary Fund. In both cases, another of the basic requirements consists of the subscription of ordinary capital shares and the contribution to the fund for special operations.
2.1 Borrowing countries
The IDB has 26 borrowing member countries, all of them in Latin America and the Caribbean. Borrowing members have 50.02 percent of the voting power on the institution’s board of directors.
The Bank groups its borrowing members according to two categories: in groups from A to D, according to the maximum percentage of financing for a project that the institution grants, and in groups I and II according to the distribution of the loans granted.
Groups A to D: percentage of financing
The IDB finances up to a percentage of the total costs of a project, and that percentage is in inverse proportion to the size of the country’s economy. The borrower finances the rest of the costs of the operation.
The maximum percentage of financing granted by the IDB for a project is as follows:
Group A (Argentina, Brazil, Mexico, and Venezuela): 60 percent
Group B (Chile, Colombia, and Peru): 70 percent
Group C (Bahamas, Barbados, Costa Rica, Jamaica, Panama, Suriname, Trinidad and Tobago, and Uruguay): 80 percent
Group D (Belize, Bolivia, Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Haiti, Honduras, Nicaragua, and Paraguay): 90 percent.
If 50 percent or more of the project’s net benefits are channeled to low-income groups, ten percentage points may be added to Bank financing, with a maximum ceiling of 90 percent without exception.
Groups I and II: distribution of loans
To supervise the distribution of the financing of its projects, the IDB began in 1999 to use a second classification, which divides the countries into Groups I and II, according to their GDP per. capita of 1997.
The Bank channels 35 percent of the volume of its loans to the countries of Group II, those of lower income, which includes Belize, Bolivia, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Guyana, Haiti, Honduras, Jamaica, Nicaragua, Panama, Paraguay, Peru, and the Dominican Republic and Suriname.
The remaining 65 percent is channeled to Group I countries: Argentina, Bahamas, Barbados, Brazil, Chile, Mexico, Trinidad and Tobago, Uruguay, and Venezuela.
The Bank is mandated to allocate 50 percent or more of its operations and 40 percent or more of its resources to programs that promote social equity and target the poor.
2.2 Non-borrowing countries
The development of the region increases trade and multiplies investment opportunities for all IDB member countries. Being a non-borrowing member of the Bank means a substantial advantage for a country’s resources, and the possibility of better channeling its development assistance concerns, since through the IDB it can reach a greater number of beneficiary countries than with bilateral programs.
In addition, non-borrowing member countries benefit from the procurement and contracting processes, since only companies from member countries can procure goods and services for IDB-financed projects. Furthermore, the Bank only hires citizens of its member countries.
Twenty-one of the 47 member countries of the IDB are non-borrowers, which means that they can provide financial support, either in the form of paid-in capital or in terms of capital subscriptions, and have voting representation in the Board of Governors of the IDB. Bank, according to its capital subscriptions. IDB non-borrowing member countries include the United States, Canada, Japan, Israel, the Republic of Korea, and 16 countries in Europe: Germany, Austria, Belgium, Croatia, Denmark, Slovenia, Spain, Finland, France, the Netherlands, Italy, Norway, Portugal, United Kingdom, Sweden, and Switzerland.
The origin of the IDB goes back to the efforts initiated during the First Inter-American Conference in 1890 to create a development institution that would deal with some of the problems that Latin America and the Caribbean faced at that time.
In 1958, the then President of Brazil, Juscelino Kubitschek, presented a proposal to create a regional development institution that was well-received in the hemisphere. A short time later, the Organization of American States (OAS) drafted the constitutive agreement of the Inter-American Development Bank; Founded in 1959, the IDB is the oldest and largest regional development institution in the world. The Bank was the first regional organization with its own support policies and instruments for economic and social development. In this way, it became a model for the creation of regional development banks in other parts of the world.
The IDB has been a pioneer in supporting social programs in the region through the development of economic, social, educational, and health institutions. It also leads regional integration efforts and was a pioneer in providing direct support to the private sector, especially micro-enterprises.
In its forty years of existence, the Bank has contributed to the transformation of Latin America and the Caribbean. Even though much remains to be done, the region shows significant improvements in socioeconomic indicators such as literacy, nutrition, and life expectancy.
The Constitutive Agreement of the IDB entered into force in December of that same year (1959). By mid-1997, the IDB was owned by its 47 member countries. These are divided into regional and extra-regional members, since, after its founding, different states from Europe, the Middle East, and Asia joined the IDB, although the countries of Latin America and the Caribbean retained their status as majority members. Created in the context of integration and development in Latin America, like other organizations that were born a few months apart, the most directly responsible for its creation was the Economic Commission for Latin America and the Caribbean (ECLAC). Also at the initiative of ECLAC, the Latin American Free Trade Association (LAFTA) and the Central American Common Market (CACM) were established in 1960.
In 1979, the IDB decided to concentrate its resources in the poorest regions of Latin America, but despite this, almost a fifth of the loans corresponded to Brazil, followed by Mexico, Argentina, and Colombia.
The presidency of the IDB, the Bank’s highest authority, has been occupied throughout its history by the Chilean Felipe Herrera (1960-1970), the Mexican Antonio Ortiz Mena (1970-1988), and the Uruguayan Enrique Vicente Iglesias (1988).
4 WHAT DOES THE IDB DO?
The IDB contributes to the socioeconomic development of Latin America and the Caribbean through its loan operations, leadership of regional initiatives, research and knowledge dissemination activities, institutes, and programs.
The Bank helps its borrowing member countries to formulate development policies and provides technical assistance and financing to encourage sustainable economic growth, strengthen competitiveness, promote social equity and combat poverty, modernize the State, and promote free trade and Regional integration.
From its creation in 1959 through the end of 2004, the Bank has approved more than $135 billion in loans and guarantees to finance projects that required a total investment of $307 billion and has provided $1.74 billion in grants and concessional financing for programs of technical cooperation.
The entities that can receive loans from the Bank are municipal, state, provincial and national governments, autonomous public institutions, civil society organizations, and private companies.
IDB operations include investment loans, policy loans, loans to the private sector, the Social Entrepreneurship Program, emergency loans, guarantees, technical cooperation, financing for project preparation, and grants. In addition, the Bank grants financing for foreign trade operations through its private sector department and financing for investments through the Multilateral Investment Fund and the Inter-American Investment Corporation.
Detailed information on IDB-financed operations is available at the Public Information Center and can also be obtained through the status of approved loans.
The Bank seeks that its loan operations directly benefit low-income sectors. The Social Entrepreneurship Program (formerly known as the Small Projects Program) provides small loans to micro-entrepreneurs and small agricultural producers and, since 1990, has extended this support to the informal sector. In recent years, the Bank has financed policy loans and debt reduction programs. In 1995 it began granting direct loans to the private sector without a government guarantee.
Each type of Bank operation has its own eligibility requirements for those who wish to receive financing.
The Inter-American Development Bank (IDB) provides financing for programs that support its efforts to foster the socio-economic development of Latin America and the Caribbean. The theme of these programs varies. Some aim to reduce poverty, while others support productive activities such as agriculture or small businesses.
The Bank also finances specific programs to help women, children and youth, and ethnic minority groups.
4.3 Debt relief
The Inter-American Development Bank (IDB) has committed to providing US$1.9 billion in nominal terms for external debt relief, which is equivalent to US$1.1 billion in present value terms for debt relief for Bolivia, Honduras, Guyana, and Nicaragua, by the provisions of the Initiative for Heavily Indebted Poor Countries (IHIPC).
In 1997, the disbursement of US$155 million and US$49 million (in current value terms) was authorized to alleviate the external debt in Bolivia and Guyana, respectively. The Bank ratified its commitment to this initiative in February 1999 and added Honduras and Nicaragua to this initiative.
In June 1999, at the G-7 Summit in Cologne, Germany, the initiative was expanded so that the relief of the external debt of the countries within this initiative would be broader, more efficient, and faster, thus increasing the prospects for debt relief and consolidation of the relationship between debt relief and poverty reduction.
Under the Enhanced Debt Relief Initiative (IHIPC), the Bank will provide US$896 million in present value for debt relief, in addition to the US$204 million allocated under the original initiative. The present value of the amount to be allocated for this purpose and distributed among the four beneficiary countries are divided as follows: Bolivia will receive US$307 million; Guyana, $65 million; Honduras, US$133 million and Nicaragua, US 391 million.
The Bank will finance the costs of this program through its internal resources, which will be supplemented by contributions from member countries, including borrowers and non-borrowers.
4.4 Research and Knowledge
In addition to undertaking lending and financing activities, the Inter-American Development Bank (IDB) carries out research and dissemination of knowledge on issues related to development, tasks that serve as a basis for discussion of the policies to be implemented. These products (internally referred to as nonfinancial products or NFPs) include studies, monographs, notes, books, reports, publications, newsletters, training programs, conferences, and seminars in support of the organization’s mission and objectives. The Bank departments most focused on this activity are the Research Department (RD), the Sustainable Development Department (SDD), and the Integration and Regional Programs Department (IRPD).
These products are divided into three functional groups:
- Strategy and politics. They contribute to both regional and institutional programming and help define strategies, policies, and operational directives. Products include macroeconomic instruments, policy and strategy documents, and reports for corporate planning.
- Analysis and evaluation. Evaluation activities allow the Bank to review and analyze the projects it finances, development objectives, strategies, policies, corporate programs, and budgetary performance of its annual plans and objectives. This information is extremely useful for shareholders to keep informed of the Bank’s performance and to provide management with lessons learned.
- Creation and dissemination of knowledge. This category includes products that inform and advise authorities in Latin America and the Caribbean, provide data that will serve as a basis for analysis in future reports, determine future resources that will be made available to borrowers, provide training for officials of the executing agencies in the social area and disseminate technical knowledge.
Networks of research centers
The Bank also supports the creation and dissemination of knowledge through networks of research centers, several of which are coordinated by the research department. These networks promote a high-level debate between the academic community, the IDB, and the authorities regarding the different policies.
5. HOW DOES THE BIB OPERATE?
The Bank’s operations conform to policies that govern all its activities and sectoral policies that serve as guidelines for certain activities. The Bank also has a procurement policy and a policy on the availability of information.
The IDB lending program is governed by strategies, including institutional strategies and sector strategies.
The Bank’s financial resources come from member countries, loans obtained in the financial markets, funds under management that the institution has, and loan repayments. The IDB uses these resources to finance loans, grants, guarantees, and investments that support development projects in Latin America and the Caribbean.
Although the IDB’s objective is not to make a profit, the institution is governed by financial principles similar to those of private banks. It receives interest on the loans it grants as part of its administration and asset management activities, and uses cash management strategies to invest funds that do not require immediate liquidity to make disbursements.
The IDB accepts the comments and opinions that the public formulates on strategies and policies proposed in the framework of the consultation and participation program that the Bank organizes periodically. Likewise, the institution promotes programs to encourage project beneficiaries to participate more actively in their preparation and implementation. Additionally, it has established an information availability policy that governs access to information about its operating activities.
The IDB has numerous committees and mechanisms to ensure that its projects and management are subject to appropriate supervision and audit processes. Likewise, the Bank evaluates its activities to systematically estimate the results of the activities it finances and related processes. Finally, the IDB has established initiatives, systems, and organizational mechanisms to quantify the development effectiveness of the projects it finances and its operations and practices.
The IDB’s operating policies are divided into two for purposes of dissemination on the Bank’s website: policies that are common to all financing activities, and sector policies with specific guidelines on the different sectors of activity.
The Bank’s procurement policy regulates the rules and procedures for bidding for contracts for goods and services for projects financed by the Bank. The institution also has an information disclosure policy that governs access to information about its operational activities.
The IDB loan program also follows a series of strategies and broader proposals that seek to make the mandates of the Board of Governors operational for the institution.
The third instrument that the Bank uses to prepare and implement its projects is that of good practices: case studies and other documents that incorporate lessons learned from a variety of sources, including the Bank’s own projects.
The IDB has a series of strategies to increase the effectiveness in the achievement of its institutional mandates. It has established the renewal of the commitment to development: report of the working group for the formulation of the institutional strategy of the IDB, and strategies to achieve its two fundamental objectives: sustainable economic growth and poverty reduction together with the promotion of Social Equity. Likewise, it has formulated strategies for each of its priority areas: social development, modernization of the State, competitiveness, regional integration, and the environment. The Bank also has strategies on issues that span several other areas and for each of the countries and sectors in which it operates.
In 2003, the Bank approved seven new sectoral strategies related to competitiveness, the environment, modernization of the State, poverty reduction, regional integration, social development, and sustainable growth.
All the documentation on the Bank’s strategies includes analysis and diagnosis of recent developments and of the main problems that arise in each sector; lessons learned from previous Bank policies, strategies, and activities; the main actions that the Bank will take to achieve the main objectives; implementation guidelines and indicators to monitor and quantify the results obtained.
The strategy documentation on this page has been welcomed by the Board of Executive Directors.
5.3 Financial resources
The financial resources of the IDB come from the member countries, the money that the institution obtains from the issuance of bonds in the financial markets, the trust funds that it manages, and co-financing operations.
The IDB’s financial resources include Ordinary Capital (OC), the Fund for Special Operations (FSO), the Intermediate Financing Facility (IFF), and more than 50 trust funds that have been established by individual countries or groups of countries.
Although most of the loans granted by the IDB are financed with ordinary capital resources, member countries have disbursed only a small part of it. Most of the ordinary capital has only been subscribed by member countries but does not constitute their paid-in capital. These undisbursed resources are called callable capital and the IDB uses them to constitute guarantees when issuing bonds in the international capital markets.
5.3.1 Ordinary Capital (OC)
The Bank’s ordinary capital amounts to about US$101 billion. These resources include callable capital and paid-in capital, as well as reserves and funds borrowed from international markets.
- Capital of member countries
Just 4.3 percent of the IDB’s $101 billion in ordinary capital has been paid up. The remaining 95.7 percent is callable capital. These callable resources, together with the preferential creditor rating that borrowing member countries have conferred on the institution, serve to guarantee IDB bond issues in international financial markets.
In recent years the annual value of the Bank’s bond issuance program has varied between US$8 billion and US$10 billion. This program finances approximately 90 percent of the ordinary capital disbursements. The Bank’s credit rating is AAA, the highest conferred by the market.
Although IDB resources are prudently managed and there have never been any loan losses, callable capital ultimately guarantees the debt instruments the Bank issues. To date, the institution has never had to resort to callable capital to pay off debts.
The Bank also has its own reserves that come mainly from debt repayments made by borrowers and from income generated by investments. In 2002, loan repayments reached US$4.375 million.
5.3.2 Fund for special operations (FSO)
The FSO has US$10 billion in contributions disbursed by all member countries. The use of FSO concessional resources is limited to the weakest economies in the region: Bolivia, Guyana, Haiti, Honduras, and Nicaragua. The resources of the FSO can also be allocated to the Caribbean Development Bank, to support the financing of programs in member countries of that institution that are not members of the IDB.
The IDB will be able to approve, on average, US$400 million per year from the FSO between 2003 and 2008, to allocate to projects and other operations. Virtually all FSO loans are denominated in US dollars. In the case of FSO loans, which have 40-year maturities with a 10-year grace period, the interest rate is, on average, less than 2 percent per year.
FSO funds may also be used to finance reimbursable or contingent repayment technical cooperation programs (the beneficiary repays the financing only if an additional source of funds is obtained for the project).
The Board of Executive Directors approved for the period 2002-2003 a new methodology to qualify the countries eligible to receive financing from the FSO, which is not based solely on the particular characteristics of the population of each country or on the per capita income. capita, rather it takes into account the performance of the portfolio and the evaluations of the different policy frameworks and the administration both at the institutional and economic levels. Funds will be allocated during 2004-2005 for the five countries eligible to receive FSO financing according to this formula. The allocation of funds for the previous period is also available.
5.3.3 Intermediate Financing Facility (IFF)
The Bank uses this mechanism to reduce interest rates on certain OC loans to the following group of low-income countries: Ecuador, El Salvador, Dominican Republic, Guatemala, Jamaica, Paraguay, and Suriname. Eligibility for IFF assistance and non-reimbursable technical cooperation in convertible currency between the countries of Groups C and D is based on GDP per. capita. Up to and including 2008, the total value of the FFI’s annual program is subject to an annual cap of US$250 million.
As noted above for the FSO, funds will be allocated to the seven countries eligible to receive IFF funds based on a formula that includes yield as well as population and per-income ratios. Captain. The allocation of funds for the previous period is also available.
5.3.4 Funds in Administration
The IDB manages more than 50 trust funds and other funds under management, most of which were created by individual countries and groups of countries.
In addition to the traditional technical cooperation programs, in certain cases, the Bank offers other financing modalities using the trust funds it manages, according to the characteristics of the fund in question. For example, some funds under management finance loans to purchase shares and make direct equity investments.
The main member countries contributing to these funds are Japan, Spain, the Republic of Korea, Italy, the Netherlands, Sweden, Norway, Canada, France, Denmark, and the United Kingdom. Trust funds finance technical cooperation operations at both the national and regional levels: five funds support the Bank’s social entrepreneurship program. Although any legally constituted body, both public and private, can request resources from the IDB trust funds, the support of some of them is limited to specific geographic areas and sectors. The size of individual operations that these funds can finance is also subject to several limits.
5.3.5 Japan Special Fund
The Bank’s largest technical cooperation fund, the Japan Special Fund (JSF), was established in 1988 to finance nonreimbursable technical cooperation projects in all IDB borrowing member countries. Resources from this fund are used to support project preparation, including feasibility studies and other studies. The resources of this fund can also be used for independent projects.
The Bank promotes and participates in bilateral, multilateral, and other co-financing agreements, in favor of the public and private projects it supports. Its main partners in multilateral co-financing are the World Bank, the International Finance Corporation, and the Andean Development Corporation.
Co-financing helps finance large-scale projects and mobilize international support and grant funds for priority projects and programs. Co-financing can replace, in whole or in part, counterpart funds from the borrowing country when the borrowing country’s capacity is constrained by fiscal constraints.
5.4 Project Financing
The IDB Group finances development programs in Latin America and the Caribbean through loans, grants, guarantees, and investments.
Loans, grants, and guarantees finance public and private investment projects, policy reform, initiatives to support member countries during financial crises or disasters, and national and regional technical cooperation operations.
Most of the Bank’s technical cooperation projects and programs are financed with loans at market rates or with concessional resources and have standard terms and conditions.
The institution grants a limited number of donations, mainly to micro-enterprises.
The Bank also provides private loan guarantees that help borrowing countries access international capital markets.
Eligibility to obtain financing depends on the type of project, the financing instrument, and the fund to be used.
The IDB also invests in projects in the small business sector through the Multilateral Investment Fund(MIF), an independent fund managed by the Bank. The Inter-American Investment Corporation (IAIC), an entity that is part of the IDB Group, also invests in small and medium-sized enterprises, directly or through equity funds.
6. IDB STRUCTURE
The IDB’s highest authority is the Board of Governors, which delegates supervision of Bank operations to the Board of Executive Directors. The day-to-day work of the IDB is carried out by a management team.
The Board of Governors of the IDB, the highest authority in the Bank, is entrusted with the responsibility of governing the institution. Each member country appoints a governor whose voting power is proportional to the capital that the country subscribes to the Bank.
The Board of Governors delegates many of its responsibilities to the Executive Board, the entity in charge of supervising the daily activities of the institution. Executive directors perform their functions at the IDB headquarters in Washington, DC, and are appointed for three-year terms.
The Board of Governors elects the President of the IDB for a five-year term. He directs the daily activities of the organization.
The Executive Board elects the Executive Vice President (EVP), who is in charge of the operational departments. Reporting directly to the EVP, the Vice President of Finance and Administration (VPFA) oversees the operations of the departments that provide planning and support services.
The highest authority of each Bank department is its manager, who is seconded by a deputy manager and several division heads. The list of Principal Officials and Supervisors also includes heads of office and heads of section.
6.1 Organization chart
The highest authority of the IDB is the Board of Governors. Each member country appoints a governor, whose voting power is directly proportional to the capital that the country subscribes to the institution. Governors are generally finance ministers, central bank presidents, or senior civil servants.
The Board of Governors holds an annual meeting in March or April of each year to analyze the Bank’s operations and activities and make substantive decisions regarding future policies. Likewise, the governors hold extraordinary meetings to discuss urgent or key issues for the Bank.
Although IDB governors are ultimately responsible for overseeing the institution’s activities and administration, in practice many of these functions are delegated to the Board of Executive Directors.
6.3 Executive Board
The Board of Governors of the IDB is made up of representatives of the 47 shareholder member countries of the organization and is the highest authority in the bank’s organizational structure. At the IDB headquarters, the Board of Governors is represented by the 14 members of the Board of Executive Directors.
The Board of Executive Directors supervises the Bank’s operations daily. The Governors elect or appoint the Executive Directors for a term of three years. The Executive Board also includes 14 alternates, who assume full responsibility in the absence of the holders.
The Executive Board establishes the institution’s policies, approves projects, determines the interest rates to be charged for loans, authorizes loans to be made in the capital markets, and approves the institution’s administrative budget.
The agendas and minutes of the meetings of the Board of Executive Directors, as well as its annual work program and its quarterly updates, are documents in the public domain.
The Executive Board has six committees that review, discuss, and approve project documents, strategies and policies, reports, and other documents. The president of each committee produces Reports of the Presidents of the Committees, documents that are in the public domain and that account for the topics analyzed and the decisions made.
The rules for the Board of Executive Directors of the IDB and the Code of Ethics for the members of the Board regulate the work of said entity.
The IDB President, elected by the Board of Governors to serve a five-year term, oversees the Bank’s day-to-day operations. The President chairs the meetings of the Executive Board but has no vote unless it is necessary to settle a tie.
The Executive Vice President (EVP) is appointed by the Executive Board on the recommendation of the President. He is in charge of the Bank’s operational departments.
Traditionally, the President of the IDB is always a citizen of a Latin American member country, while the Executive Vice President is American.
The Vice President of Finance and Administration (VPFA), who reports to the Executive Vice President, oversees the departments that provide planning and support services.
The Bank’s departments are headed by a manager, an assistant manager, and several division heads. Principal officers and supervisors also include office and section heads.
Office of the President (OP)
The IDB President is responsible for the day-to-day activities of the institution and coordinates its operations and administration. He chairs the meetings of the Executive Board and makes proposals for the Bank’s general policies, which are then considered by the Board.
Office of the Executive Vice President (OEVP)
Oversees IDB operations and collaborates with the Coordination, Programming, and Audit and Evaluation Committees to review Bank programs and operations. The executive vice president chairs the IDB lending committee and the administration’s budget and programming committee and also oversees and coordinates management self-assessment, and the activities and tasks of the development effectiveness and risk assessment offices of the IDB. private sector.
Office of the Vice President for Finance and Administration (OVPFA)
He supervises Finance issues, and institutional and administrative planning of the Bank and assists in managing results, through the evaluation of operational processes, organizations, and change management. In addition, it performs functions established by the President, the Executive Vice President, and the Executive Board.
Office of Evaluation and Oversight (OEO)
It carries out evaluation activities and supervises related processes within the Bank. The inter-American round table on evaluation and management for results is sponsored by EVP.
It offers support to all the governing bodies of management and the Board of Executive Directors of the IDB, the Multilateral Investment Fund (MIF), and the Inter-American Investment Corporation (IAIC). In addition to protocol, translation, and interpretation services, logistical support for meetings and conferences to be held at headquarters, and document distribution, the Secretariat coordinates and provides administrative support to the Independent Investigation Mechanism and the institution during the Annual Assembly.
Office of the Auditor General (OAG)
AUG independently and objectively provides assurance and consulting services designed to add value and improve the Bank’s operations. It helps the Bank meet its objectives by providing a systematic and disciplined approach to assess and improve the effectiveness of risk management, control, and governance processes. Provide objective analyses, evaluations, recommendations, and pertinent comments concerning the activities reviewed.
Institutional Integrity Office (IIO)
The Office of Institutional Integrity is the central unit responsible for promoting institutional integrity in the Bank. IIO does its job through education and training, as well as detection, investigation, and prevention of fraud, waste, abuse, and misconduct. The IIO is responsible for receiving and investigating reports of corruption or fraudulent activity or unethical behavior in operations financed by the Bank or by its staff.
Office of External Relations (OER)
It is responsible for the institution’s communication strategy and for providing information to the public. Maintains and regulates the Bank’s website; prepares publications, documentation, and information on IDB activities and programs. Likewise, it organizes business seminars and cultural activities, promotes strategic communication, and fosters the formation and strengthening of the institution’s links with public entities of the member countries, civil society organizations, the media, the private sector, local governments, youth organizations, schools, and the general public. The IDB bookstore, the Public Information Center, the BID América magazine, the BID América television program, the BID-DC Solidarity Program,
Office in Europe (OE)
It maintains contacts with the main players in the areas of the economy, trade, education, civil society, and the press in Israel and the 16 countries of the European community. This office fosters cooperation ties and relations between the Bank and the member institutions of the European Union and with other international organizations based in Europe.
Office in Japan (OJPN)
It carries out promotional and information activities, to expand knowledge about the Bank’s activities and objectives in Japan and East Asia. This office supports the exchange of knowledge, experiences, and best practices between Latin America, the Caribbean, and East Asia, resource mobilization, and investment and trade promotion activities between Japan and the Bank’s member countries in Latin America. and the Caribbean.
Multilateral Investment Fund (MIF)
It grants and loans and makes investments to accelerate the development of the private sector and improve the conditions for investments in Latin America and the Caribbean.
Regional Operations Department 1 (ROD)
Prepares operations and supervises the portfolio of projects in the southern zone of Latin America: Argentina, Bolivia, Brazil, Chile, Paraguay, and Uruguay. The department organizes seminars and events and produces socio-economic studies that serve as a reference for operational activities. It also supports the Regional Infrastructure Integration Initiative in South America, and contributes to knowledge dissemination and research activities, while also producing some of the Bank’s intellectual products.
Regional Operations Department 2 (ROD2)
The Regional Department of Operations 2 (ROD2) is in charge of IDB operations in Mexico and nine countries in Central America and the Caribbean: Belize, Costa Rica, El Salvador, Guatemala, Haiti, Honduras, Nicaragua, Panama, and the Dominican Republic. It also supports the Puebla-Panama Plan Initiative; coordinates national concertation efforts through the leadership of various consultative groups, helps prepare and implement research and knowledge dissemination activities, and produces some of the Bank’s intellectual products. The Subdepartment of Financial Services (SFS), an integral part of this department, offers support services to effectively mobilize resources, both financial and technical,
Regional Operations Department 3 (ROD3)
Prepares operations and oversees the portfolio of projects in the countries in northern South America (Colombia, Ecuador, Guyana, Peru, Suriname, and Venezuela) and the English-speaking Caribbean: Bahamas, Barbados, Jamaica, and Trinidad and Tobago. The department supports the Initiative for the Integration of Regional Infrastructure in South America, contributes to knowledge dissemination and research activities, and produces some of the Bank’s intellectual products.
Finance Department (FD)
It is responsible for the policies, planning, mobilization, and administration of the Bank’s capital resources. Its mission is to safeguard the institution’s assets, making it possible for the IDB to be a low-cost intermediary between the capital markets and borrowing member countries. Its main objectives are: to carry out effective operations, from the point of view of costs, in the capital markets; establish a dynamic financial policy and offer timely financial programming and risk management; ensure that all financial obligations are met and all credits are repaid; prepare accurate and timely financial statements; and supervise internal controls in the processing of financial transactions.
Legal Department (LD)
Legally advises management, the Board of Executive Directors, and the Board of Governors regarding the daily activities of the Bank. The law library is sponsored by the Legal Department.
Department of Development Effectiveness and Strategic Planning (DDESP)
The Department of Development Effectiveness and Strategic Planning is responsible for ensuring development effectiveness by proposing a concrete, integrated, and systemic approach to improve quality and control; it also provides operational support to the Regional Operations Departments in the areas of portfolio management analysis, procurement, project financial management, and fiduciary risk assessment; and is responsible for the formulation of proposals to guide the strategic plans, the coordination of the entire institutional policy formulation at the level of the entire Bank and the supervision of the operational program.
Integration and Regional Programs Department (IRPD)
It supports the efforts of member countries to achieve integration, trade, and other issues of relevance to the region. The department also coordinates technical cooperation programs in the customs, infrastructure, border development, and tax policy sectors, among others. IRPD is run by two prestigious IDB institutes: the Institute for the Integration of Latin America and the Caribbean (ILAC) and the Inter-American Institute for Social Development (IAISD). IRPD also includes the Japan Program and the Felipe Herrera Library.
Private Sector Department (PSD)
It grants direct loans and guarantees for private sector infrastructure projects and the development of internal capital markets in Latin America and the Caribbean.
Sustainable Development Department (SDD)
It supports the objectives of the IDB through technical advice to project teams and qualitative analysis of operations. Develops sector strategies, policies, and guidelines to reinforce the design of loans and the management of the Bank’s portfolio. In addition, SDS creates and disseminates knowledge and information that can then be incorporated into future loans from the institution. This department also participates in the formulation and design of technical cooperation operations at the regional level, and operations at the national level in support of microenterprises, and small and medium-sized enterprises. The Inter-American Initiative on Social Capital, Ethics, and Development also has the sponsorship of SDS.
Research Department (RD)
It prepares innovative studies and conducts comparative research on the most relevant development issues for Latin America and the Caribbean. RD generates a wide range of products and services derived from its research and disseminates its studies to government authorities and the academic community.
Budget and Institutional Procurement Department (BIPD)
The Department of Budget and Institutional Procurement is the coordination center for the measurement of institutional performance. It is in charge of supporting the Bank’s departments in the formulation and execution of the budget, as well as guaranteeing maximum transparency and efficiency in the institutional procurement system.
Department of General Services and Information Technology (DGSIT)
Maintains and consolidates the physical assets of the Bank; develops and maintains the institution’s computer systems and all related infrastructure; analyzes new trends and technological applications for their possible implementation in the Bank. It also makes recommendations on the Bank’s organizational structure, staffing, and business and operating procedures. In addition, he is in charge of the institution’s acquisitions.
Human Resources Department (HRD)
He is responsible for managing the Bank’s human capital. Her activities include the formulation of personnel policies and regulations; planning and hiring both administrative and professional staff; management of individual consultants and consulting companies; salaries and benefits, personnel files; the development and training of personnel, as well as internal complaint mechanisms.
The officials who work at the Inter-American Development Bank (IDB) are citizens of the 47 member countries of the institution. Currently, 72 percent of the Bank’s staff come from its borrowing member countries, and the remaining 28 percent are from the United States, Canada, Japan, Israel, and Europe.
At the end of 2002, except for the members of the Board of Executive Directors and the Office of Evaluation and Oversight, the total number of officials whose salaries were financed by the administrative budget reached 1,912, of whom 1,396 were professionals and 516 were administrative. Of this total, 543 staff work in the IDB offices in Latin America and the Caribbean, France, and Japan. The number of women holding professional roles at that time totaled 516, which is equivalent to 37 percent of professional positions at the Bank.
Most professionals employed by the IDB perform functions in one of the following areas: social development, economics, finance, natural resources, or infrastructure.
Thinking about the current situation, and not only the one we are experiencing throughout the world, but also at the macro level, that is, throughout the world, and considering the different socioeconomic and social variables in terms of poverty, violence, issues related to the agricultural sector, health, education, industry, physical infrastructure sectors such as energy and transportation, and urban development, business creation problems, and their influence on the environment. We must recognize that the Inter-American Development Bank plays a very important role and is very useful in attacking and supporting these variables that in one way or another affect the countries of Latin America and the Caribbean.
This is how the Inter-American Development Bank becomes, or better in other words, an institution for international development cooperation, which implies the transfer of resources (public and private) with some concessional. It is a development aid through the transfer of resources that constitutes an important instrument for the promotion of external relations and support for development. Through technical cooperation programs and projects where experiences and technical knowledge are shared.
Thus, international cooperation has constituted for developing countries in recent decades, a resource to which governments, civil society, and non-governmental organizations have resorted with growing expectations of filling gaps, usually financial and human, that have been difficult. attend with own resources.
In the case of a country like Colombia, which is developing, the cooperation of another institution such as the IDB is of great importance and has a determining role in the goal of reducing poverty.
This is why the Inter-American Development Bank develops a set of activities that seek to promote fairer and more balanced progress in Latin America and the Caribbean, thus building safer and more peaceful countries.
- The Inter-American Development Bank is the largest, most important, and oldest regional development institution that was created to contribute to the progress of Latin America and the Caribbean.
- The Inter-American Development Bank is the main source of multilateral financing for economic, social, and institutional development programs and projects in Latin America.
- IDB loans and training programs also benefit micro and small businesses without access to conventional credit programs.
- The bank finances a growing number of projects aimed at protecting the environment.
- IDB projects help the region compete in the global economy.
- Technical cooperation operations make it possible to strengthen the institutional capacity of the countries.
- A growing number of bank loans help protect and restore Latin America’s cultural heritage.
- IDB loans should be made in shorter periods and according to the needs of the countries, since in many cases these are delayed and the countries that request these resources will not be able to meet these needs.
- The bank needs the cooperation of the different countries that have a great development, to further consolidate its activities and operations.