Overview of the IDB

The Inter-American Development Bank is separate and distinct from the International Bank for Reconstruction and Development (IBRD, known as the World Bank). 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 the region.

Most IDB loans are made at interest rates linked to the cost of raising resources in capital markets. This differentiates the IDB from national foreign aid programs such as the U.S. Agency for International Development, Germany’s GTZ, or the Japan Bank for International Cooperation, all of which primarily provide concessional financing. Unlike funding from many national agencies, IDB financing from its own funds is not tied to procurement of works, goods and consulting services from a particular country. Indeed, with the exception of certain trust funds (see below), firms and individuals from any IDB member country may not be excluded from participating in any bidding involving IDB resources.

The financial resources of the IDB consist of the Ordinary Capital account—comprised of subscribed capital, reserves and funds raised through borrowing—and Funds in Administration, comprised of contributions by member countries. The IDB also has a Fund for Special Operations for lending on concessional terms in countries classified as less developed. Member country subscriptions to the Bank’s Ordinary Capital consist of both paid-in and callable capital. Paid-in capital in the form of cash or notes represents 4.3 percent of total subscriptions. The major part of member subscriptions is for callable capital, which may be drawn on only to service the IDB’s borrowings and guarantees.

The IDB has borrowed funds for its operations from the capital markets of Europe, Japan and the United States. The Bank’s debt is AAA-rated by the three main rating agencies in the United States and is accorded equivalent status in the other major capital markets.