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Box 11 • The New Bank

For nearly half a century the Inter-American Development Bank has served Latin America and the Caribbean by financing infrastructure, health, education, housing, financial institutions and reform of the state. It has helped to build highways, schools and electricity networks, created environmental protection systems, and contributed emergency loans to tide countries over during financial crises.

During this period the region’s countries made impressive gains in virtually all development indicators. Most recently, a combination of sound economic policy and booming global demand for raw materials has created conditions that should enable governments to sharply accelerate the pace of progress. Despite these achievements, Latin America remains the world’s most unequal region—with 70 percent of the population living on less than $3,000 a year—and it faces daunting shortfalls in areas such as basic services, competitiveness and the quality of education.

While these problems have persisted, the options for addressing them have expanded dramatically. Today the region’s governments can tap a wide range of private and sovereign sources of funding in addition to that provided by development banks. International consulting, technology and engineering firms have moved aggressively into the developing world, offering a huge range of products and services that were not available even a decade ago.

In order to continue fulfilling its mission and to compete effectively in this new environment, in mid-2007 the Bank launched a major realignment of its structure and operational procedures. The goal is to create a more agile and responsive institution that is completely attuned to the varied demands of its clients.

The IDB’s structure has been consolidated under five vice presidencies. The Executive Vice President, as the institution’s chief operating officer, is responsible for the operation of the Bank. The new structure reflects a matrix organization, in which staff with particular skills are temporarily pooled to carry out specific assignments, thereby facilitating knowledge sharing and synergies. The new Vice Presidency for Sectors and Knowledge houses experts in areas such as infrastructure, finance and education. These experts are being incorporated into field operations to a much greater extent than in the past.

The Office of the Vice President for Countries is responsible for leading the dialogue and relationship of the Bank with all 26 borrowing member countries, assisted by four operations departments, 26 Country Offices and the Operations Procurement Office.

The realigned Bank structure strengthens private sector operations by grouping the Department of Structured and Corporate Finance, the Inter-American Investment Corporation and the Multilateral Investment Fund under one roof— a separate Vice Presidency for Private Sector and Non-Sovereign Guaranteed Operations. Under this structure, the Bank can also lend to subnational entities (be they states or provinces) without a national guarantee, an alternative that a growing number of countries has been demanding.

Finally, the Vice President for Finance and Administration is responsible for mobilizing and managing the Bank’s resources and for providing support services, ensuring effective, efficient performance by the financial, legal and administrative staff.

Most of the senior management and division chief positions required by this new structure were filled during 2007. Throughout 2008 the Bank will recruit up to 300 additional professionals to help deepen its talent pool in priority areas such as infrastructure, renewable energy, education and water and sanitation.

Creating a more agile and responsive institution with a sharper country focus has required changing more than the Bank’s structure. Under the new business model and matrix structure, authority for project preparation has been delegated to supervisors best attuned to day-to-day work in specific sectors and countries. To increase accountability in operations, these supervisors will focus on risk management and results instead of merely controlling processes.

The number of steps involved in project approval has been minimized in order to shorten response times. Under the previous system, headquarters was in charge of project preparation and the Country Offices of monitoring execution, leading to an overemphasis on design and approvals. Under the new project cycle, the project team leader is the person ultimately responsible for an operation, vested with the primary authority for decisions on project management. In keeping with the principle that decisions should be made at the level closest to the client, team leaders are expected to be based increasingly in the Country Offices.

The new Opportunities for the Majority department will identify, design and implement investment projects—both private and public-private partnerships— to benefit segments of the region’s population that are not benefiting as they should from economic growth. These projects will be designed to have a demonstration and a multiplier effect, and to mobilize and enhance existing assets to create more wealth.

The IDB Representative in each Country Office is the Bank’s principal client manager, charged with determining operational priorities. Representatives will have decision-making authority involving the Bank’s relationships with client counties.

In short, the new Bank has a consolidated, matrixstyle management structure, a stronger presence in the field, a more flexible and faster lending structure, an improved capacity to apply new financial technologies and to place greater emphasis on environmental protection and private sector development—all with a focus on ensuring that IDB operations lead to greater opportunities for the majority of the population in Latin America and the Caribbean.