Technical cooperation contributes significant added value to the Bank's competitiveness and ability yo respond effectively to client demand and to fullfill is mission to reduce poverty and inequality, support modernization of the state, institutional strengthening, capacity building, transfer of knowledge and research, including diagnostic, pre-investment and sector studies that support project design and preparation. The programs can be aimed at projects specific to a single country or for trade, integration or regional initiatives.
Technical cooperation programs can be nonreimbursable (grants), reimbursable (loans), or contingent-recovery (reimbursable if the program is financed by another lending institution).
Countries with relatively low per capita incomes are eligible to receive financing from the Fund for Special Operations (FSO), the Bank's soft-lending window. The FSO was established in 1960 to provide loans on concessional terms for special circumstances in certain countries and for specific projects. The Bank also administers about 40 trust funds that finance technical cooperation grants. Each fund has its own eligibility criteria.
Types of Technical Cooperation Programs
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 is a subsidy granted by the Bank to all borrowing member countries to finance technical cooperation activities. This cooperation is particularly targeted to the least-developped countries of the region and to those that have insufficient financial markets.
- Technical cooperation with Contingent-Recovery Resources, 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 consists of an IDB-financed non-soverign guaranteed loans to carry out technical cooperation activities.