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ELIGIBLE
BORROWERS
General
Policy
Pursuant to the provisions of the Agreement Establishing the Inter-American
Development Bank, Article III, "Operations", the Bank may
make loans or provide loan guarantees to any member country, any political
subdivision or government organization unit thereof, any independent
agency, semipublic enterprise, or private enterprise in the territory
of a member country, regional organizations composed of member countries,
and to the Caribbean Development Bank.
Public
Sector
The political subdivisions of a country include states, provinces, and
municipalities, and decentralized government organizations such as State
banks, development corporations, public utility companies, universities,
and the like, that are legally empowered to enter into loan contracts
with the Bank. Any company in which the government has a proprietary
interest of more than 50% is considered to be a public sector company.
Private
Sector
The Bank may make loans to private enterprises, whatever their form
of organization, provided they have the legal capacity to enter into
loan contracts with the Bank. Among the private undertakings that may
be eligible to become borrowers from the Bank are corporations, other
commercial companies, cooperatives, foundations, and the like.
Eligibility
Criteria
The following is a list of minimum general criteria for deciding whether
an entity is eligible to borrow directly from the Bank or whether it
may only act as executing agency with the principal and general liability
to be assumed by the respective member country.
Legal
Requirements
1. Member countries that assume liability on their own general responsibility,
as well as their political subdivisions, such as states, provinces,
municipalities, and the like, which require a member-country guarantee
before a loan proposal may be submitted to the Board of Executive Directors
for consideration, must demonstrate that they meet the following requirements:
- They have the authority to
enter into external borrowing
agreements.
Specifically, the executive branch
of the government of the member
country or the pertinent authorities
of other organizations must
have
the authority necessary to negotiate
the loan.
- There are no impediments for
submission to arbitration as
set forth
in the loan contracts of the
Bank.
- They have the authority to
assume and discharge financial
obligations
deriving from loan contracts,
particularly obligations for
receiving, maintaining, and
managing funds in foreign currency,
providing for
payments, and servicing loans
including the payment of interest
and fees in foreign exchange.
- They have the authority to
take on the performance obligations
stipulated
in the loan contracts of the
Bank.
- They have the legal capacity
to make changes in organization
and structure
as might be needed for the project
or program.
- They have the legal capacity
to set rates for public utility
services.
For political subdivisions or
decentralized organizations
that do not have the legal
capacity to set rates, the
guarantee of the member
country in that regard shall
be require, as a direct obligation
of the latter.
2.
In addition to the requisites mentioned above, political subdivisions
and decentralized public-law institutions of the State shall demonstrate
that they possess:
- juridical personality; and
- their own assets and capital.
3.
Private sector institutions established under private law shall demonstrate
that:
- They have been legally constituted
in accordance with the applicable
legal formalities and are duly
registered.
- They have juridical personality.
- They have their own assets
and capital.
- They are domiciled in the respective
member country.
- They are empowered to enter
into external borrowing agreements.
- They have the authority to
submit to the Bank's arbitration
procedure.
They shall also demonstrate that
judgements or awards made as
a consequence of arbitration
are enforceable in their country
of domicile.
- They shall demonstrate that
their capital stock and management
conform
to national legislation and/or
to international conventions
to which the country is a signatory
that qualify them as a national
entity.
- They have the authority to
assume and discharge financial
obligations
deriving from the Bank's loan
contracts, including obligations
for receiving, maintaining,
and managing funds in foreign
currency, providing
for payments, and servicing loans,
including the payment of interest
and fees in foreign currency.
- They have the authority to
take on the performance obligations
stipulated
in the loan contracts of the
Bank.
- They shall demonstrate that
the respective member country
does not
object to the financing.
4.
International entities shall demonstrate that:
- They have international juridical
personality.
- They have their own capital
and assets.
- They are domiciled in a member
country.
- They have the authority to
enter into international borrowing
agreements.
- They
have the authority to take
on the performance obligations
stipulated
in the loan contracts of the
Bank.
- They have the authority to
assume and discharge financial
obligations
deriving from the Bank's loan
contracts, including obligations
for receiving, maintaining,
and managing funds in foreign
currency, providing
for payments, and servicing loans,
including the payment of interest
and fees in foreign currency.
- They have the authority to
establish procurement procedures
that are
compatible with the requirements
of the Bank.
- They have the authority to
submit to the arbitration procedure
prescribed
in the Bank's loan contracts.
- They have the legal capacity
to make such changes in organization
and structure as might be needed
for the project or program.
Institutional
Requirements
The basic organization of the borrower and the executing agency shall
be appropriate for the purposes of the operation.
Financial
Requirements
With the exception of the member countries and their central banks,
all potential borrowers shall demonstrate that:
1.
They are endowed with and currently have adequate assets and financial
resources. This conclusion might be supported by a financial analysis.
2.
They are assured of adequate local counterpart contributions for the
project or program in the amounts and at the times required.
3.
They have the capacity to punctually pay service on their debts, particularly
on the prospective IDB loan. This shall be confirmed by a financial
analysis.
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Prevailing
Reference Documents:
GP141,March 1974,
GP20 to GP2019, May 1974 to December 1975,
GP251 to GP2523, October 1974 to May 1975.
*
The operational policies of the Inter-American Development Bank are
intended to provide operational guidance to staff in assisting the Bank's
borrowing member countries. Over the course of the Bank's more than 40 years of
operations, the approach to developing operational policies has taken
various forms, ranging from the preparation of detailed guidelines to
broad statements of principle and intent. Many policies have not been
updated since they were originally issued, and a few reflect emphases
and approaches of earlier years which have been superseded by specific
mandates of the Bank's Governors, the most recent being the
Eighth Replenishment mandates of 1994.
In
accordance with the Bank's information disclosure policy, the Bank is
making all of its operational policies available to the public through
the Public Information Center. Users please note that the Bank's operational
policies are under a process of continuous review. This review process
includes preparation of best practice papers summarizing experience
at the Bank and other similar institutions, and sector strategy papers.
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2007 Inter-American Development Bank. All rights reserved. Terms
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