Realignment July 2007

July 1st, 2007, marks the beginning of the implementation of the new organizational model of the Inter-American Development Bank approved by the Board of Executive Directors in December, 2006. This new organizational model seeks to enhance the strategic capacity of the Bank in order to better respond to the new demands of the countries in Latin America and the Caribbean and fulfill its mandate in benefit of the region's social and economic progress.

The new organizational model

With a view to improve the IDB's business model, a new organizational structure has been designed that defines three basic roles for the Bank, as a conceptual framework: a corporate core, country services, and institutional support services.

The corporate core function will establish the Bank's vision and corporate strategy, as well as the policies that will form the backdrop for its activities. The country services function encompasses managing Bank-country relationships, both in terms of dialogue, setting strategy, and developing and implementing the program, and of responsibility for improving the operational effectiveness and efficiency of the organization's activities in the countries. Finally, the institutional support services function includes managing the delivery of services to other areas of the organization.

The main objectives of the new organizational structure are to strengthen its strategic capacity, deepen its leadership, increase its flexibility and transparency in decision making, and make monitoring and control functions more efficient.

Achieving these objectives will be a task for all Bank staff led by an executive team headed by its President, the Executive Vice President, and four Vice Presidents: Countries, Sectors and Knowledge; Private Sector and Non-sovereign Guaranteed Operations; and Finance and Administration.

Below is a diagram of the new organizational model. The Board may approve further refinements to the new model up to and beyond that date.

• IDB Group Organizational Structure
• Detailed IDB Organizational Chart

Background:

The realignment has two basic objectives:

• To increase the development effectiveness of Bank activities by means of a greater country focus, deeper sector expertise and improved management based on risk management and attainment of results. This is will enhance the Bank's relevance in the region.
• To increase organizational efficiency through better corporate integration of operations and strengthening of various functions.

Many of the changes that have taken place in the region and in the international climate in recent years require that the Bank review its programs and operations in order to remain relevant and continue to have an impact on the development of its member countries. Some of the most significant factors are:

• Greater access to alternative sources of financing.
• New stakeholders responsible for investment decisions in key sectors that affect sustainable development and social progress in each country.
• The heterogeneous nature of the countries of Latin America and the Caribbean and their development needs.
• Economic and social gaps in the region that create pressure to obtain results more quickly, to increase social cohesion and build popular consensus around sound economic policies.
• The vulnerabilities of the countries in the region, the magnitude of the impacts that can stem from sudden changes in the world economy, and the likelihood that there could be a resurgence of a crisis.

Key to the Bank's future work is the achievement of sufficient institutional flexibility to enable it to meet every country's most pressing development challenges in order to respond more appropriately to situations as they arise, given the heterogeneity of member countries and the diversity of national circumstances confronting them.

The Bank's vision: "The region's partner in development"

At the 2006 Annual Meeting in Belo Horizonte, Brazil, the Governors agreed on a vision for the Bank for the next years as that of an institution that will: (i) promote poverty reduction and reduction in inequality by promoting growth and supporting sustainable development; (ii) foster social cohesion by creating opportunities for the majority; (iii) support private sector development and job creation; and (iv) support regional integration.

Making the vision a reality

Making this vision a reality over the next ten years is one of the greatest challenges the Bank will have faced in its nearly half-century of existence. The IDB must have a greater presence in the region, increase its lending program to finance high-quality technical services and development operations, optimize the allocation of its financial and human resources, and make its interventions more effective in a manner compatible with the magnitude of the development obstacles and challenges the region faces.

The strategic guidelines for Bank activities, which will subsequently be specified in a corporate strategic plan, will be based on: (i) sharpening the country focus; (ii) adjusting the Bank's business model; and (iii) building competencies in strategic areas stemming from the region's needs.

A number of strategic areas have been identified in which the Bank will develop and deepen its knowledge and technical capacity. The strategic areas are:

• Expanding opportunity for the majority of the population in the countries of the region, which includes creating policies, strategies, and programs that expand housing opportunities, access to credit and financial services, basic infrastructure, job opportunities and opportunities for identifying and registering the undocumented population, and for promoting information and communication technologies (ICTs) in the region that improve living conditions and economic and social.
• Implementing effective social policies that allow growth among the poorest in the region and achievement of the Millenium Development Goals (MDGs).
• Supporting development of science and technology and their incorporation into productive processes, to support the productivity gains that are needed.
• Boosting investment in infrastructure to attract additional investment, make the region more competitive, and enhance its physical and energy integration, which will improve regional integration prospects.
• Promoting private sector development and job creation. Implementation of the expansion of the mandate from the Bank's Governors allowing the IDB to provide up to 10 percent of the value of its outstanding commitments to private-sector and non-sovereign guaranteed operations is a key point in the Bank's future agenda.
• Supporting renewable energy and energy efficiency projects. The Sustainable Energy and Climate Change Initiative seeks to expand the use of renewable energy and energy efficiency technologies in the region, increase their access to international carbon finance, and support efforts to adapt to climate change.
• Expanding coverage of water and sanitation services by providing loans and technical assistance to cities and rural communities that have the largest underserved populations.