Asian trust funds
Trust funds are critical to the effectiveness of IDB programs for sustainable and equitable development in the Latin America and Caribbean(LAC) region. The Eighth General Increase in the Resources of the IDB and the Institutional Strategy note that a key role of Bank technical assistance "is to increase a country's capacity to absorb Bank lending to achieve long-term development objectives. Technical assistance and its proper sequencing is an integral part of the programming process." Trust funds are a considerable source of financing for Bank technical assistance.
The Bank holds funds in trust from 18 non-borrowing member countries for various purposes: consultant trust funds to take advantage of international technical expertise, programmatic trust funds to hone skills or methodology in a particular program area, and partnerships between the Bank and development institutions to deliver development assistance jointly. During 2000-2004, trust funds contributed approximately US$145 million in grant financing for technical cooperation with LAC countries.
The Japan Special Fund (JSF) was established in 1988 to finance untied, nonreimbursable technical cooperation in all IDB borrowing member countries. The JSF is the largest trust fund at the Bank, and it supports the preparation and implementation of IDB projects, as well as stand-alone projects, which are in line with the Bank's Country Strategy Papers. Eligible sectors are health, education, nutrition, water and sanitation, social development, the environment, natural disasters prevention and civil society.
Japanese Trust Fund for Consultancy Services (JCF)
In 1995, the Japanese government set up at the IDB the Japanese Trust Fund for Consultancy Services (JCF). It provides non-reimbursable resources for technical services by Japanese consultants to prepare and implement Bank-supported projects in all sectors and in all Bank borrowing member countries. Its resources are semi-tied, requiring a minimum of 50 percent funding for Japanese consultants. Projects supported by the Fund have used Japanese expertise in environmental conservation, natural disaster prevention and mitigation, infrastructure, health, business and finance.
JSF Poverty Reduction Program (JPO)
In 2001, the Japanese government set aside US$30 million from the Japan Special Fund to establish the Poverty Reduction Program (JPO). The JPO provides financial support for technical cooperation projects to aid the poverty alleviation efforts of borrowing member countries. In September 2004, the JPO introduced a new financing scheme to support poor and vulnerable groups, in order to effectively address the need for poverty alleviation. The scheme has two components: the Community-Based Program (CBP) and the Loan Enhancement Program (LEP).
Even before their official entry to the IDB, the Korean government provided two trust funds, which are Korean Trust Fund for Technical Cooperation to the Republic of Colombia and Korean Trust Fund for Technical Cooperation (for Central America) . After their entry, the Korean government committed three new trust funds in the IDB and IIC as follows.
Korean Poverty Reduction Fund (KPR)
In July 2005, the government of the Republic of Korea established the Korea Poverty Reduction Fund (KPR) with the initial contribution of US$50 million. The KPR aims to support poverty reduction and social development activities, including disaster prevention and some post-disaster technical assistance, intended to benefit the most vulnerable and economically disadvantaged groups, with an emphasis on the less developed countries and relatively less developed regions within LAC countries.
Knowledge Partnership Korea Fund for Technology and Innovation (KPK)
In July 2005 the government of the Republic of Korea established the Knowledge Partnership Korea Fund for Technology and Innovation (KPK) with the initial contribution of US$50 million. The purpose of this fund is to promote project preparation and implementation in the area of technology and scientific innovation. This facility would support the development of technological capacity, institutional strengthening, competitiveness and the adoption of new production technologies in LAC countries.
Korea-IIC SME Development Fund
The government of the Republic of Korea also established the Korea-IIC SME Development Fund in the Inter-American Investment Corporation (IIC) of the IDB group for small and medium enterprise development.
The People’s Republic of China joined IDB in 2009 with US$350 million contributions. Some of the contributions are used to establish 2 funds in IDB and IIC as follows:
Institutional Capacity Strengthening Thematic Fund (ICSF)
In 2009, the Bank approved the allocation of US$75 million donated by The People’s Republic of China for the creation of the Institutional Capacity Strengthening Thematic Fund. The purpose of this Fund is to generate knowledge on innovative practices for institutional capacity building in the public sector; to enable the Bank to provide better support to countries designing and implementing institutional reform strategies; to facilitate knowledge sharing and public-private partnerships across the region; and to strengthen the design and implementation of Bank operations.
China-IIC SME Equity Investment Trust Fund
The government of the People’s Republic of China contributed US$75 million to establish the China-IIC SME Equity Investment Trust Fund, which is administered by Inter-American Investment Corporation (IIC), member of the IDB group, to invest in equity and quasi-equity instruments in SMEs in the IIC’s twenty-six regional member countries. The total size of the fund is US$150 million, since the contribution of the People´s Republic of China has been matched by the IIC with US$ 75 million of its own funds.
Besides these trust funds, the government of the People’s Republic of China contributed US$75 million to the Multilateral Investment Fund that focuses on microenterprise and small business development. MIF will use some of the Chinese contributions to launch the “Access Lab Initiative," which will focus on Access, Impact and on Knowledge and Dissemination.