An IDB investment guarantee is a financial instrument through which the Bank commits to cover, in full or in part, specific payment obligations of a government or public entity toward private lenders or investors, in the event of a default. In exchange, the borrowing country provides a sovereign counter-guarantee to the IDB. Unlike a loan where the goal is to provide financing for the borrower, the goal of a guarantee is to reduce risk for the lender. It therefore does not disburse upfront but rather mobilizes third-party financing by reducing the risk that private financiers face when supporting public investment projects.
In an investment guarantee operation, the government or public entity assumes financial commitments related to an underlying investment project (for example, debt service obligations to private lenders, or contractual payment obligations arising from public-private partnerships or infrastructure contracts). The IDB agrees to cover a defined portion of those obligations if the government fails to meet them. If a default occurs, the IDB disburses directly to the private party. The government then reimburses the IDB under the counter-guarantee agreement.
Investment guarantees are a flexible instrument and can be designed to mitigate any risk associated with an underlying investment project that could lead to a payment default. This includes risks related to the financing of the project (for example, debt service on loans or bonds) as well as risks arising from government payment obligations under infrastructure or service delivery contracts.
Investment guarantees can be used to support project finance and infrastructure development, improve financing terms for government borrowing (such as longer maturities or lower costs), enable liability management operations that generate fiscal savings for reinvestment in development, and crowd in private capital in sectors where government payment commitments are central to project viability.
Examples
Partial Credit Guarantee for bonds and loans (financial sector): Ecuador - Financing Low-Income Housing ( EC-U0001)
Partial Credit Guarantee for infrastructure (real sector): Ecuador – Non-conventional Renewable Energy Projects (EC-U0006)
Partial Credit Guarantee for PPPs (real sector): Brazil – Public-Private Partnership for the Regional Hospital of Mato Grosso do Sull (BR-U0003)
Political Risk Guarantee: Brazil - Concession Project for the Ecological Restoration of the Triunfo do Xingu Recovery Unit Altamira Pará (BR-U0002)
Based on the principle of net income neutrality with loans, i.e. no cross-subsidies between loans and guarantees:
Period: Max. 25 years.
Weighted Average Life (WAL) of underlying guaranteed obligation: Max. 15.25 years.
Fees:
Guarantee fee: Same as the IDB’s Ordinary Capital (OC) lending spread (80bps for 2026).
Stand-by fee: Same as the commitment fee rate (50 bps for 2026). Charged on the difference between the maximum guarantee amount and the actual guaranteed exposure amount.
Reimbursement of claim: Payable upon demand unless otherwise determined by the Bank on a case-by-case basis.
Post-disaster response activities
Immediate Response Facility for Emergencies caused by disasters
(IRF)
Risk of investment projects
Partial Credit Guarantees
(PCG)
Sovereign non-performance risks leading to debt default
Political Risk Guarantees
(PRG)
Investments with defined objectives and scopes
Specific Investment Loans
(ESP)
Contingent credit line for immediate response after a disaster
Contingent Credit Facility for Natural Disaster and Public Health Emergencies
(CCF)
Results of an existing or new government program
Results-Based Loans
(LBR)
Small independent investment projects
Multiple Works Financing
(GOM)
Loans to small and medium-size enterprises
Global Credit Financing
(GCR)
Transfer of technical know-how
Reimbursable Technical Cooperation
(TCR)
Project's preparation and start of activities
Projects Preparation, Execution and Evaluation Facility
(PROPEF)
Credit line with a framework for a series of operations
Conditional Credit Line for Integrated Projects
(CCLIP)
Investment Financing with Deferred Drawdown Option
Investment Financing with Deferred Drawdown Option
(IF-DDO)
Investment Guarantee
Investment Guarantee
(GUA)