Best Practices

General Operational Policies*

MODALITIES AND FORMS OF FINANCING

Modalities

ADVISORY. Advisory assistance comprises the provision of specialized consulting services.

RESEARCH. Support for research activities conducted primarily by:

• Universities and national research organizations.

• International, regional, and subregional organizations composed of member countries of the Bank.

TRAINING. Includes courses, seminars, symposia, technical meetings, and in-service training. Study grants may be provided for such activities. The Bank gives priority to training projects designed to prepare personnel or train instructors to perform work in connection with its lending program such as training for the performance of one or more of the following tasks:

• Identification, preparation, analysis, administration, and evaluation of investment and preinvestment projects and programs, and technical cooperation activities.

• Performance of studies to modernize the administration of project or program executing agencies.

• Performance of research on and transfers of technologies.

• Course planning and implementation.

PROMOTION. The Bank considers the following to be promotional activities:

• The holding of conferences, seminars, and meetings. For the Bank to fund activities of this kind, it must have participated in conceiving and organizing an event, so that it can sponsor the meeting technically.

• The publication of papers resulting from technical assistance operations.

• The distribution of publications to institutional libraries in the member countries to disseminate information on the Bank's activities.

Character of the Technical Cooperation Financing

NONREIMBURSABLE FUNDING (ATN). As a general rule, nonreimbursable financing is used for:

• Operations for the benefit of Group C or D countries which appear in the Bank's 1993 Annual Report as having a per capita GDP of under US$1,600, with priority to the poorest countries.

• Technical assistance operations that should preferably be conducted at the regional level in support of the priorities of the Eighth Increase in the Resources of the Bank.

• Special Operations as are governed by rules and/or procedures allowing the exceptions: Short Term Missions, Intrarregional Technical Cooperation Program (CT/INTRA), Technical Cooperation in Emergencies derived from Natural Disasters, Ad-hoc Training Program, Training of Public Officials, Social Progress Trust Fund Special Program (SPTF), Project Preparation Special Facility financing for the Bank, CT/Funds Program.

CONTINGENT RECOVERY FUNDING (ATC). The Bank finances contingent-recovery technical assistance activities when a reasonable possibility exists that they will lead to a loan from either the Bank or another external lending institution. If none is forthcoming, the operation becomes nonreimbursable. Should a loan be approved, the technical cooperation funds are included in the loan and the Bank is reimbursed out of the first disbursement. In that event, the operation becomes reimbursable. Beneficiaries also undertake to reimburse the Bank should they obtain funding from another financial institution for the project for which the technical cooperation was provided.

REIMBURSABLE FUNDING (ATP - operations that are part of a loan; ATR - loans for specific preinvestment operations; ATL - loans for global preinvestment programs). Reimbursable technical assistance forms part of lending operations and, as such, is governed by the rules and procedures on lending described in the Operations Administration Manual.

In general, reimbursable funding is used for:

• Operations to benefit countries in Groups A, B, C, and D.

• Technical assistance to support execution of a project funded by a Bank loan, and therefore it is included in the loan.

• Preinvestment or institution­strengthening operations that could not be financed as nonreimbursable operations on account of the requirements and availability of technical assistance funds.

Special Rules

For operations in certain fields of activity, the following special rules shall apply in conjunction with the general rules set forth above:

• Prefeasibility and feasibility studies and final designs for Group C and D countries are financed with contingent-recovery funds. As an exception to this rule, social projects and projects that qualify for financing from the Fund for Special Operations may be financed with nonreimbursable funds.

• Investment operations are normally financed with reimbursable resources. As an exception to this rule, the following projects may be financed with nonreimbursable resources:

a) In Group C or D countries with the lowest per capita income,
social projects and projects that qualify for financing from the
Fund for Special Operations.

b) In regional projects, if no resources are available in preinvestment
funds and such an arrangement is desirable for the Bank from an
operational standpoint.

Beneficiary Contribution

Beneficiaries participate in financing technical assistance operations by defraying all or part of the local costs.

Generally, the beneficiary's contribution is used to finance necessary expenses for an operation such as the hiring of staff, rental of premises, procurement of office supplies, and domestic transport for personnel.

Sources of Funds

Funding for the Bank's technical assistance may be drawn from:

• the Ordinary Capital (OC)

• the Fund for Special Operations, (FSO)

• the Technical Cooperation Fund (FONTEC)

The Bank also may fund technical cooperation activities from the trust funds it administers ("Funds under Administration" - see OP­904).
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Prevailing Reference Documents:
AT­80­10, March 1974
* AB-1704 and AB-1704-2, August 1995
* Resolution AG-8/95.

* 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.