March 2002

COFINANCING

COFINANCING FOR IDB PROJECTS REACHES $629 MILLION IN 2001

International support for social and economic development programs in the region

The Inter-American Development Bank obtained $629 million in cofinancing for social and economic reform as well as for infrastructure projects and emergency relief programs in Latin America and the Caribbean in the year 2001.

Cofinancing is a major instrument to support the Bank's own lending program. In 2001, the IDB projects attracted $591 million from five multilateral sources and $38 million from twelve donor countries. These resources helped finance 22 projects in ten countries and two regional projects.

The cofinancing of projects is considered in the context of a greater emphasis on policy coordination with other institutions. The Bank launched new initiatives to strengthen its ties with cofinanciers such as the European Commission and Germany, with which framework agreements were negotiated.

The IDB had its first official coordination meeting with the Japan International Cooperation Agency (JICA) to discuss areas for future collaboration. In November, the two institutions cosponsored a technical forum on disaster mitigation and prevention.

The Bank also initiated an official dialogue with the United States Agency for International Development (USAID). The Bank invited during 2001 several donor agencies to participate in a seminar on performance ratings and experiences in cofinanced projects. "In cofinancing, added value is not just financial, but should also be reflected at the levels of project preparation, identification of components, implementation and evaluation," said Christophe Guillemin, the IDB Cofinancing Division Chief.

"The selection of projects is made on the basis of broadly-based discussions on policies and strategies with the Bank’s partners," he added. "For example, monitoring project implementation is an area of increasingly recognized relevance, although no common tools exist yet to monitor cofinanced projects in their totality."

The major contributions were the following:

Multilateral Sources

The World Bank cofinanced four projects for a total of $563 million. This included $303 million for a state modernization program of the Province of Cordoba in Argentina, $150 million for a social support program in Colombia, $60 million for poverty reduction and local development in Honduras, and $50 million for rural roads in Peru.

The Organization of Petroleum Exporting Countries (OPEC) Fund contributed soft loans for $6.6 million to a water and sanitation program in Haiti, and $5.0 million for a water and sanitation program in Honduras.

The Nordic Development Fund provided $12.6 million for three projects: an education program and the Upper Rio Lempa project in Honduras, and a forestry project in Nicaragua.

The Global Environment Facility gave a $3.3 million financing for an electrical development program in Costa Rica, the Tejona Wind project.

Bilateral sources

Germany was last year’s leading bilateral source of cofinancing, with a total of $16.8 million to support small and microenterprises in Bolivia, an emergency program in El Salvador, a social investment fund in Nicaragua, and the Upper Rio Lempa project in El Salvador and Guatemala.

Sweden provided $3.9 million for transparency in procurement in Honduras and Nicaragua, the housing census 2001 in Honduras and the program for urban poverty reduction in Central America and the Caribbean (FORTAL).

The United Kingdom (DFID) contributed $8 million to support a poverty reduction strategy in Bolivia, transparency in procurement in Honduras and Nicaragua, and training in the design and management of social policies and programs in Honduras.

USAID provided $5.3 million for two programs for transparency in procurement in Nicaragua and Honduras, and support for the population and housing census 2001 in Honduras.

Other cofinanciers included Austria, Canada, France, Japan, the Netherlands, Norway, Spain, Switzerland and the United Nations Development Programme (UNDP).