IDB finances in the public and private sector.
Each project the IDB Finances passes through a series of stages:
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. The PP is first evaluated at the Eligibility Review Meeting ERM, which determines the eligibility of the operation, its strategy for development, and validates its timeline and resource requirements. Following approval of the PP by the ERM, the Proposal for Operations Development POD is drafted. The POD specifies the activities, resources and a timetable that are necessary to prepare and supervise the project. The POD also includes the Development Effectiveness Matrix (DEM), Monitoring and Evaluation Plan (M&E), and the Economic Rate of Return (ERR). The POD is evaluated to determine if the institution s resources will be properly used. The POD undergoes further examination in the Quality and Risk Review (QRR). Further adjustments are made if needed, and then a Draft Loan Proposal (DLP) is prepared for the Operations Policy Committee (OPC) for approval. Once the OPC approves the DLP, the project team may proceed to distribute the document for Board consideration and approval.
Project Profile (PP)
Proposal for Development Operations (POD) / Draft Loan Proposal (DLP), includes:
Development Effectiveness Matrix (DEM)
Monitoring and Evaluation Plan (M & E)
Economic Rate of Return (ERR)
As a part of its private sector mandate, the IDB may provide financing to larger entities such as commercial banks and institutional investors. Through its Structured and Corporate Finance Department (SCF) and the Multidonor IDB Trust Fund to Benefit Underserved Markets of the Opportunities for the Majority Initiative (OM), the IDB partners with the private sector on projects to contribute to the development of its borrowing member countries. The project begins with the creation of a Project Profile (PP), which provides premliminary basic information on the project. The PP for Non Sovereign Guaranteed (NSG) operations also includes an Environmental and Social Strategy (ESS). The PP is then reviewed for eligibility, and if approved continues to due diligence, which is performed by the office of the Vice President for Private Sector and Non-Sovereign Guaranteed Operations (VPP). These efforts culminate in a Draft Loan or Guarantee Proposal (DLGP), which undergoes further examination in the Quality and Risk Review (QRR). The QRR considers the project structure as negotiated with the client; due diligence findings, in matters related to technical, legal, environmental, social and other aspects; and the potential development impact. Following the QRR, the DLGP is submitted to the Operations Policy Committee (OPC) for review. Once OPC has completed its review, the finalized Loan or Guarantee Proposal (LGP) is then submitted to the Board. Also following approval by the OPC, a Project Abstract (PA) is developed to be released to the public.
Once the Board approves the project, the loan contract can be signed by the borrowing member country.
Loan Proposal (LP)
Once the Board approves the Loan Guarantee or Proposal (LGP), the loan contract can be signed by the Bank and the borrower. A Pre-closing Memorandum is also developed to delineate the final terms and conditions of the agreement.
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