The Inter-American Development Bank announced today the approval of a flexible lending instruments package to expand its portfolio of financing and operating mechanisms and respond more effectively and rapidly to the changing needs of its borrowing member countries in Latin America and the Caribbean.
The new Bank strategy, jointly crafted by the Bank’s management and board of executive directors, consists of a series of financial products to expedite design and execution of economic and social development programs in the region.
The new products, which include innovation and multiphase loans, sector facilities, and a project preparation and execution facility, will be offered to governments that wish to finance modernization and growth programs.
Innovation Loans
The Bank will have a rapid processing and approval procedure for loans of up to $10 million for innovative operations with a 30-month maximum execution period. The available resources, with an overall cap of $150 million, will finance pilot programs and will help to build consensus on reform programs to facilitate learning and capacity building in priority areas. The results of these operations will provide feedback for preparation of future larger-scale programs.
Multiphase Loans
This modality will be applicable to large investment programs in all sectors, to provide longer-term support for programs longer than 5 years, with independent loan contract and financial commitment for each specific stage.
The Bank’s board will approve the overall concept of the program and the loan for the first phase. The following phases will also be approved by the board by a simplified procedure, subject to compliance with agreed-upon parameters and review and reporting mechanisms. The phase-based adjustment mechanism will increase flexibility in project execution.
Sector Facilities
The Bank will have a sector facility of up to $150 million geared to finance low-cost, low-risk and high-impact activities in specific sectors. Initially this fast-track modality will support concrete activities in three sectors: education, health and commerce. This simplified procedure will allow the Bank’s administration to directly approve individual operations of up to $5 million, providing for monitoring and rapid execution. This facility will foster modernization and growth, particularly in the social sectors. Other sectors will be incorprated in the future.
Project Preparation and Execution Facility
This modality will expand the scope of the existing project preparation facility and will include additional activities related to project start-up. The Bank’s administration will be able to directly approve individual operations of up to $5 million, of which up to $1.5 million may go to the preparation component and 3.5 million for start-up activities. This facility is linked to an overall country line of credit and will promote institutional capacity building towards sustainable project implementation.
The new strategies will allow the IDB to diversify the assistance the Bank offers to member borrowing countries in Latin America and the Caribbean, as well as to improve project preparation and execution processes to foster economic and social development programs sustainability.
For more information about IDB’s new lending instruments please visit our website at
www.iadb.org or contact Camille Gaskin-Reyes at e-mail camilleg@iadb.org
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