Special Development Lending

The SDL is a budget support lending instrument aimed at contributing to address the effects of a macroeconomic crisis on a country’s economic and social progress, recognizing that macroeconomic stability is essential for achieving poverty reduction and inclusive growth.
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SDL is extended to countries with lending arrangements approved by the IMF as part of an international support package, which may also involve other Multilateral Development Banks (MDBs), bilateral donors, and private lenders or investors.
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The SDL may: ​
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(i) prevent policy reversals or strengthen reforms in social and institutional areas; ​
(ii) safeguard funding for social programs benefiting the poor; ​
(iii) support efforts to mitigate the crisis’s impact on vulnerable groups; ​
(iv) protect infrastructure spending; and ​
(v) improve access to credit for small and medium enterprises.​
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Limit of fresh funds per country:  The lesser of $500 million, or 2% of a country’s GDP. In the case of countries eligible for concessional financing, the maximum limit per country) will be 20% of the biennial allocation approved by the IDB´s Board of Executive Directors.​
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Additional funding mechanism: In addition to the limit of fresh funds per country, resources to fund SDL loans could also come from the redirection of a portion of undisbursed loan balances. Such redirection is capped to ensure that no less than 60% of a country’s remaining undisbursed balances continue to be allocated to investment loans. This mechanism is subject to internal considerations, guidelines and safeguards to preserve development effectiveness.
 
Examples: Provides additional financing to countries that request IMF support when hit by Balance of Payment, financial or fiscal crises.