Operational Guidelines for Housing
By Michael Jacobs, Eduardo Rojas, William Savedoff (12/00, SOC-111, En, Es) See also Social Development
In 1995 the Board of Executive Directors of the Inter-American Development Bank approved an amendment to the Operational Policy for Urban Development (OP-751) lifting the restrictions that it imposed on housing finance. In 1985, the date of the previous revision of the Operational Policy, the Board had restricted Bank intervention in housing to the financing of sites and services operations. However, sites and services projects alone proved incapable of improving the housing conditions of low-income households. This led several countries to consider profound reforms to housing production and finance systems in order to facilitate access to housing for low-income households. The 1985 Operational Policy restricted the Bank's capacity to support these reforms leading the Administration to request a modification of the Operational Policy on Urban Development.
The text of the Bank's modified Policy reads:
?Housing: The Bank will support borrowing countries' efforts to improve the living conditions of the low-income population, encouraging governments to pursue policies to efficiently mobilize private and public resources to help households in solving their housing problems. Consequently, Bank activities in housing will have the following objectives:
a) Support policies and sustainable programs and projects directed to improve housing conditions for low-income households.
b) Improve public sector effectiveness both as a facilitator of private sector initiatives and in the management of public resources allocated to the sector.
c) Promote sector-wide allocative efficiency of housing markets and related markets such as land, financing and construction materials and services.
The Bank will provide financing for programs and projects that directly improve the housing conditions of the low-income population. Fields of activity include financing for new cost-efficient housing solutions (for instance, basic core housing and sites and services) or the upgrading of existing low-income settlements and housing. The Bank will finance subsidy schemes for housing when these can be demonstrated to be an efficient and equitable means of promoting improved housing conditions for the low-income population. Subsidies should always be transparent, well targeted and explicitly itemized in government budgets. There should also be sufficient evidence that the subsidies can be sustained until sector objectives concerning the low-income population are attained.
The Bank will provide policy advice; technical cooperation and financing for the design and implementation of sector-wide reforms aimed at removing constraints to the efficient and equitable allocation of resources in housing. Fields of activity include, but are no limited to, the improvement of the regulatory framework for housing production, the promotion of efficient urban land markets, the establishment of efficient and sustainable housing finance mechanisms, promotion of private investment in rental housing, and the development of an efficient and competitive building industry. Deficiencies in housing finance mechanisms will be addressed within the framework of sound financial sector policies.
Preparation of Bank housing programs will be based on an analysis of the causes of the relevant sector problems. Project identification will be based on an analysis of the relative merits of different types of solutions to the problems and issues identified. To ensure maximization of the impact of Bank involvement in housing, project selection and design will pay attention to the expected impact in relation to the scale of the relevant problem and to the sustainability of the solutions proposed.?
The present Operational Guides for Housing, supplement the Policy and provide orientation on the preferred approaches and methods to reach the objectives of the Policy. In case of doubt about the interpretation of any point in the Guides, the text of the Policy and its technical interpretation will prevail. There are other documents that provide insight into several aspects of the housing problem and can be used in conjunction with these Guidelines. These documents can be accessed from the Bank?s Internet site.
Last updated: 05/08/07
