- Three major reforms are transforming how the IDB Group operates, enabling it to deliver more financing, offer faster and more flexible solutions, and generate greater development impact.
- First, the IDB is now using its existing capital more efficiently, expanding its lending capacity without requiring additional contributions from shareholders.
- Second, the Group has strengthened its ability to mobilize investment for development by modernizing lending instruments for public-sector projects and adopting an originate-to-share model at IDB Invest to scale private-sector financing.
- Third, the IDB Group is enhancing how it designs, monitors, and measures results, shifting the focus from project outputs to the outcomes that matter most for people and communities in Latin America and the Caribbean.
Latin America and the Caribbean are at a critical crossroads. Much of the region remains caught in middle-income trap dynamics, with low productivity constraining growth, challenges compounded by rising debt that is crowding out social spending and investment. At the same time, a once-in-a-generation regional value-chain integration opportunity is within reach, one that could help reshape the region’s development path, but seizing it will require major investments in infrastructure, skills, and institutions that governments cannot finance alone.
Therefore, the mandate that the G20 has placed on multilateral development banks (MDBs) — to lend more, mobilize more private capital, and deliver more impact per dollar — has landed on the Inter-American Development Bank (IDB) Group at a very critical moment.
That recognition shaped the IDB Group's new institutional strategy in 2024 and subsequent reform agenda. The objective was clear but ambitious: transform how the IDB Group works so that it delivers more financing, faster and more flexible solutions, and demonstrably better results. In what follows I focus on the three reforms that, in my view, are more effectively reshaping the institution and the value it delivers to its shareholders and borrowing member countries.
More Financing with Balance Sheet Optimization
To increase financing for public-sector projects, the IDB has implemented reforms that enable the Bank to use its existing capital more efficiently and expand lending without requiring new shareholder contributions.
In practice, this meant three changes. First, the Bank modernized its capital adequacy framework in line with G20 recommendations. Second, it expanded the use of risk-sharing and exposure-transfer mechanisms to reduce concentration risk and free up capital. Third, and crucially, it integrated concessional resources into the Bank’s capital — a structural shift that strengthens the IDB’s financial base while preserving the development purpose for those resources.
Together with disciplined long-term financial planning and close engagement with credit rating agencies and other MDBs, these reforms have raised the IDB's biennial lending capacity for public sector projects from $25 billion in 2021-22 to $38 billion for 2025-26; an increase of approximately 52% achieved without a capital increase.
That outcome required navigating real trade-offs in capital headroom and single-borrower concentration. The approach to address such challenges was deliberate, designed to maximize the Bank’s impact, and was enabled by close coordination with the broader MDB community and shareholders.
Better Financial Solutions and Greater Private Investment Mobilization
Beyond additional lending volume, the Bank has modernized its lending instrument toolbox to better respond to the needs of borrowing member countries.
In practice, that means making the financing of public-sector projects more flexible, faster, and more programmatic. Our operations now combine more robust policy-based loans, investment lending, guarantees, and contingent instruments to support reforms, protect against shocks such as natural disasters and health emergencies, and deliver results at scale.
These changes — reflected in our new Unified Investment Lending Policy and Policy-Based Financing Policy — are designed to help countries respond more quickly to crises and to plan and implement a sequence of operations over the medium term, aligning financing more closely with priorities such as resilience, productivity, and long-term inclusive growth.
On the private sector side, IDB Invest was the first development finance institution (DFI) to adopt originate-to-share as its core business model. Under this approach, IDB Invest originates and structures private-sector projects with the explicit intention of sharing a sizable portion of the risk and financing with other investors, rather than holding the full exposure on its own balance sheet.
It retains a meaningful stake in each transaction to ensure strong development standards, while using risk-mitigation tools to make projects investable for institutional capital that has historically not flowed to parts of the region at scale.
The logic is simple but powerful: by distributing parts of its portfolio with institutional and private investors, IDB Invest recycles capital, finances new projects, and crowds in additional investment for development. Coupled with the IDB's balance sheet optimization, the integration of public and private operations across IDB, IDB Invest and IDB Lab gives the Group a meaningfully larger footprint than the sum of its parts.
Other DFIs are now exploring variants of this model — a positive sign that originate-to-share is becoming part of the new default architecture for development finance.
Deepening Our Impact
More financing and greater mobilization are necessary but not sufficient. The harder and, in many ways, more important task is delivering more development impact for every dollar invested. This is where I see the most substantial leap forward in the institution.
We are transforming how we design, monitor, and measure our projects, shifting the focus further from outputs to outcomes. At the design stage, we are moving toward a more programmatic and results-based approach, concentrating resources where they can deliver the greatest development impact, anchored in stronger diagnostics and an explicit theory of change that links interventions to measurable outcomes from the outset.
The more consequential change, however, comes during implementation. We are no longer solely focused on financial and procurement performance: we are actively assessing, on a regular cadence, the likelihood that each project will achieve its intended development outcomes.
This type of assessment carries real consequences for how we manage and adapt our operations, establishing a new operating discipline that goes beyond what we and other MDBs have practiced in the past. It changes the conversation with country counterparts, with project teams, and with our Board, allowing us to credibly show that scaling lending capacity delivers increased impact rather than solely more disbursement.
This shift sits within the broader agenda that the Independent Expert Group convened by the G20 and other stakeholders has pressed on the MDB system: scale, impact, and financial innovation working together rather than in sequence. The IDB has chosen to advance all three simultaneously, with development effectiveness reform as the anchor that holds them together.
Moving Ahead
2026 has been and will remain a demanding year for the IDB. Embedding these reforms across the institution requires upgrading internal monitoring systems, aligning operational practice with new policies, and strengthening institutional capacity at every level.
It will mark the first year in which the new development effectiveness framework begins producing results that can be rigorously assessed, and the first full cycle in which originate-to-share evolves from a pioneering business model into standard practice across IDB Invest's portfolio.
These reforms are laying the foundation for a culture that embraces transparency, accountability, and evidence-based decision-making, a vision that IDB Group President Ilan Goldfajn has championed since taking the helm in late 2022.
This is the kind of culture that enables a development bank to respond faster, act smarter, and deliver greater impact for Latin America and the Caribbean. The work is far from finished, but the trajectory is clear, and the IDB Group intends to be measured by it.