IDB Board of Governors Approves the Transfer of the Net Assets of the Fund for Special Operations to the Resources of the Ordinary Capital to Strengthen and Sustain Concessional Assistance

The Inter-American Development Bank’s (IDB) Board of Governors has unanimously approved the transfer of the assets and liabilities of the Fund for Special Operations (FSO) to the resources of the Bank’s Ordinary Capital (OC), effective January 1, 2017, in order to strengthen the Bank’s concessional assistance to its poorest and most vulnerable member countries.

Since its establishment in 1959, the IDB has provided loans under concessional terms and conditions to assist the development of its poorest and smallest member countries, primarily through resources from the FSO. Bolivia, Guyana, Honduras and Nicaragua are currently eligible for concessional loans. Since the 2010 earthquake, Haiti has received grants rather than concessional loans. Despite economic and social gains as well as improved debt sustainability in these countries, there will be a continued need for concessional assistance for the foreseeable future.

The transfer of the FSO’s assets and liabilities to the resources of the OC will simultaneously allow the Bank to continue providing concessional lending as well as significantly strengthen the OC’s capital position in the short and medium terms. The boost to the OC’s capital position will come from a roughly 20 percent increase in the OC’s equity and the benefit of additional diversification of the sovereign-guaranteed loan portfolio. This will help to protect the Bank's AAA rating, strengthen capital buffers against economic downturns, and enhance the lending capacity of the Bank.

The incorporation of the FSO’s assets and liabilities into the OC balance sheet will not change the shareholding structure or voting power at the IDB, nor will it require any organizational restructuring or increase in staffing at the IDB.

In addition to the enhancements introduced to the Bank’s financial policy framework, the transfer represents the fifth step that the IDB has taken to optimize its balance sheet, following enactment of net income measures, increased capital efficiency, the execution exposure exchange agreements with other multilateral development banks, and strengthening capacity for non-sovereign operations by merging out the private sector operations into the Inter-American Investment Corporation (IIC).