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FORMS
OF BANK FINANCING AND ASSISTANCE FOR THE MOBILIZATION OF FINANCIAL RESOURCES
GENERAL
POLICY
The
Bank is authorized to assist in the financing of development projects
in its regional developing member countries by means of the following
types of operations:
- Loans;
- Technical
cooperation;
- Assistance
in obtaining additional external financing to meet project needs;
- Guarantees
extended by the IDB for loans from other sources.
The
Bank will not finance a project in a member country if the government
of the country objects to same.
LENDING
OPERATIONS
Using
its own resources and funds that it administers, the Bank participates
in the financing of lending operations in the developing member countries
as described below:
- Loans
for Specific Projects are designed to finance one or more specific
projects or subprojects that are wholly defined at the time the Bank's
loan is approved.
- Loans
for Multiple Works Programs are designed to finance groups of
similar works which are physically independent of each other and whose
feasibility does not depend on the execution of any given number of
the works projects.
- Global
Credit Loans are granted to intermediary financial institutions
(IFIs) or similar agencies in the borrowing countries to enable them
to onlend to end-borrowers (subborrowers) for the financing of multisector
projects.
- Sector
Adjustment Loans provide flexible support for institutional and
policy changes on the sector or subsector level, through fast-disbursing
funds. At the request of the borrower, a sector adjustment loan may
include an investment component, in which case it becomes a Hybrid
Loan.
- Time
Slice Operations are investment loans in which the investment
program for a sector or subsector is adjusted from time to time within
the general criteria and global objectives agreed upon with the Bank
for a project.
- The
Project Preparation Facility provides funding for supplementary
activities necessary to prepare a project. The basic objective is
to strengthen the project preparation stage and shorten the time required,
thus facilitating Bank approval of the loan and execution of the project.
- Small
Projects Financing is intended to make credit available to individuals
and groups that generally do not have access to commercial or development
loans on regular market terms. In these cases, the Bank finances operations
through intermediary institutions which then channel the funds to
the final beneficiaries.
- Direct
Lending to the Private Sector, without sovereign guarantees, in
each instance with the concurrence of the government of the member
country. At the outset, this financing would be targeted exclusively
towards infrastructure and public utility projects providing services
usually performed by the public sector.
- The
Emergency Reconstruction Facility has the objective to make available
resources to the country stricken by catastrophic disaster to cover
the immediate expenses of restoring basic services to the population,
It is important to understand that what drives the utilization of
this facility is the urgency of having resources of the ground in
the first few hours after the disaster take place.
TECHNICAL
COOPERATION
The
Bank finances technical cooperation activities to transfer technical
know-how and expertise for the purpose of supplementing and strengthening
the technical capacity of entities in the developing member countries.
The financing is determined largely on the basis of the field of activity
into which a project falls and the relative development status of the
region, country, or countries involved. It may take one of the following
forms:
- Technical
cooperation with Non-Reimbursable Funding, which is a subsidy
granted by the Bank to a developing member country to finance technical
cooperation activities. This cooperation is particularly targeted
to the least-developed countries of the region and/or those which
have insufficient markets.
- Technical
cooperation with Contingent-Recovery Resources, whereby the
Bank finances technical cooperation activities where there exists
a reasonable possibility of a loan either from the Bank or another
lending institution. If the beneficiary should obtain a loan from
any source for the project for which the technical cooperation was
provided, the borrower is obligated to reimburse the funding received
from the Bank.
- Technical
cooperation with Reimbursable Resources, which is a loan financed
by the Bank to carry out technical cooperation activities.
ASSISTANCE
FOR THE MOBILIZATION OF OTHER FINANCIAL RESOURCES
The
Bank considers that as a complement to the financing it provides out
of its own resources and the funds it administers, it is called upon
to act as a Catalyst in the mobilization of additional funds
from external sources for financing specific projects in its regional
developing member countries. To this end the Bank encourages and cooperates
with the borrowers in securing additional external financing from different
sources. The principal forms of mobilizing additional resources are:
- Export
Credit. At the request of borrowing institutions, the Bank furnishes
advisory assistance and cooperates with them in arranging for credits
from specialized agencies in the advanced industrialized countries
to finance the procurement of goods and services required for projects
for which the Bank has made loans.
- Parallel
Credit from Other Public Financial Institutions, in which the
Bank coordinates its activities with national and international public
financial institutions with an interest in offering financing for
projects or programs in the regional developing member countries.
To facilitate COFINANCING for such projects, the Bank is prepared
to perform studies and undertake missions in conjunction with other
organizations for project identification and evaluation and to enter
into agreements with those organizations to administer financing granted
by them on their behalf.
- Other
Parallel Credits, in which at the request of borrowers, the Bank
cooperates with them in obtaining parallel loans from banks or institutional
investors of other countries.
BANK'S
GUARANTEES
According
to the Agreement Establishing the Bank, and to promote the investment
in the borrowing countries, the Bank can guarantee loans made by private
financial sources to public and private sectors.
The
Bank can provide guarantees with or without counter-guarantees of the
borrowing country's government. Guarantees to private sector lenders
without government counter-guarantee of the borrowing country, in whose
territory the project is to be carried out, will not exceed 25% of the
total cost of the project or $75 million, whichever is less.
The
guarantees could be used for any kind of investment project, although
the initial emphasis in guarantee operations will be on infrastructure
projects.
OTHER
FINANCING
- Export
Financing, in which the Bank grants national agencies in the borrowing
countries a revolving line of credit to finance intra-regional exports
of nontraditional goods.
- The
Bank may carry out other forms of financing with Funds Under Administration
that it manages on behalf of third parties, in accordance with the
terms of the contracts they have signed for the administration of
said funds, for example, loans for the purchase of shares and direct
equity investments.
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Prevailing
Reference Documents:
GP85,
July 1979
GP88, August 1979
AB1378, May 1989
AT8615, September 1991
AB1704, August 1994
GN-1860-1, GN-1860-2, GN-1860-3, May, June, October 1995 respectively
GN-1860-6, October 1997
GN-1858-2, July 1995
GN-2038-2, December 1998
GP-92-15, December 1998
*
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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