The IDB is the main source of multilateral financing for economic, social and institutional development in Latin America and the Caribbean as well as for regional integration. It provides loans, grants, guarantees, policy advice and technical assistance to the public and private sectors in its Latin American and Caribbean borrowing member countries. Fulfilling a longstanding Latin American aspiration, the IDB was established in 1959 with bold mandates and novel tools that made it a model for other regional development banks.

How the IDB Differs from Other Organizations

The IDB was created within the Inter-American System in 1959. It is a separate and different institution from the International Monetary Fund (IMF), which provides financing and technical assistance to countries with external payments difficulties, and from the International Bank for Reconstruction and Development (IBRD, commonly known as the World Bank), which is an international development institution. Created at the Bretton Woods Conference in 1944, the IMF and the World Bank are part of the United Nations system. Their international membership only partly overlaps with that of the IDB, and the majority of their capital and voting power belongs to the most developed countries.

The IDB concentrates a larger portion of its resources than does the World Bank on the smaller economies of Latin America and the Caribbean and is the largest source of multilateral financing for Central America and the Caribbean.

Most IDB loans are made at interest rates linked to the cost of raising resources in capital markets. This differentiates it from national foreign aid programs such as the U.S. Agency for International Development, the German Technical Cooperation Society, or the Japan Bank for International Cooperation and the Japan International Cooperation Agency, all of which primarily provide concessional financing. The IDB’s objectives and beneficiaries also are different from those of bilateral export credit agencies, such as the Export-Import Bank of the United States or the Japan Bank for International Cooperation. Unlike funding from many national agencies, IDB financing from its ordinary capital and Fund for Special Operations is not tied to procurement of goods and services from a particular country.

Cooperation with Other Institutions

The IDB cooperates with the IMF on a case-by-case basis to strengthen macroeconomic stability in Latin America and the Caribbean. The IDB and the World Bank often cofinance policy reforms, projects and programs, and cooperate in a variety of technical areas in Latin America and the Caribbean. The IDB and the International Finance Corporation cofinance private sector projects. Other cofinancing is undertaken with subregional institutions, including the Andean Development Corporation, Caribbean Development Bank and Central American Bank for Economic Integration. The IDB has agreements to collaborate in various areas of economic, social and institutional development with a number of national and international entities. These include the Organization of American States and its Inter-American Institute for Cooperation on Agriculture, the United Nations - in particular its Economic Commission for Latin America and the Caribbean - and the Pan-American Health Organization

Reasons for IDB Membership for Nonborrowing Countries

The development of Latin America and the Caribbean enhances opportunities for trade and investment for all IDB member countries and for participation in the region’s economic and social dialogue. Membership in the Bank offers a channel for nonborrowing member countries to transmit concerns and priorities on development issues. Companies and consultants from all member countries are eligible to bid on procurement opportunities arising from all IDB financed loan projects, without exception. Only suppliers from member states can provide goods and services for IDB-financed projects, and the Bank only employs citizens from these countries.

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