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The IDB, a partner of Colombia in development
Since the mid-1990s the Inter-American Development Bank (IDB) has been the leading source of multilateral financing for Colombia. Over the last 50 years, the IDB has approved more than US$14.8 billion in loans and non-refundable technical cooperation projects for Colombia.

Throughout its history, the IDB has supported the Colombian government and private sector in key development areas such as infrastructure, state modernization and reform, small and medium enterprise, agriculture, energy, climate change and environmental protection.

One of the most evident results of the IDB’s financing and expertise has been the marked improvement in access to drinking water and sanitation in Colombia, which today reaches over 93% of the population. Though access in urban areas nears 100%, there is still work to be done to provide full access in rural areas.

The IDB has been a partner of Colombia in the development of solid and efficient public utility companies with strong private-sector participation. One notable example of this is Empresas Públicas de Medellín (EPM), one of Latin America’s most successful public companies. As the IDB celebrates its 50th Annual Meeting and anniversary in Medellín, it is noteworthy that the first IDB loan approval in Colombia was precisely for EPM, in April of 1961. Moreover, the Bank’s most recent and largest loan approval in Colombia (US$450 million) will help EPM complete its historic river clean-up and wastewater treatment, turning Medellín into one of Latin America’s cleanest river-cities.

During the 1960s, the IDB approved loans and technical cooperation projects totaling over US$335.4 million, directed mainly to water and sanitation projects, low income housing and agricultural development. This period also began the Bank’s support for the development of small and medium enterprise projects in Colombia.

Taking into account the large flows of rural migration into urban areas, as well as Colombia’s huge renewable energy potential--mainly in the form of hydroelectric power--the IDB during the 1970s provided financing for urban development, hydroelectric plants, dams and electric interconnection projects. Physical infrastructure development also continued during this period with loans directed to transport (ports, roads and river navigation) and water and sanitation infrastructure. Rural telephony and industrial credit operations also occupied a significant portion of the IDB’s portfolio in Colombia, which between 1970 and 1979 increased by US$540 million  to US$875.3 million.

During the 1980s the largest share of IDB’s total portfolio of US$2.6 billion in Colombia was directed to hydroelectric power generation and electric interconnection and distribution, as well as water and sanitation. Moreover, an increasing amount of projects were approved in scientific research and development, environmental protection, urban infrastructure development and rural and industrial credit programs.

As a result of the debt crisis of the 1980s, the Bank placed increasing emphasis on supporting the process of policy and institutional change.  Since the Seventh Replenishment (1990-1993), policy-based loans (PBLs) were incorporated as an instrument to provide fast disbursing funds in exchange for the adoption of policy reforms, initially as sector loans co-financed with the World Bank, and then independently as PBLs.  Since 2005, Programmatic PBLs have been a powerful tool in the Bank’s support to Colombia, especially in the areas of social development, equity and competitiveness.  These loans provide resources in recognition of a policy effort carried out with support from the Bank.  

The IDB has also increased its support to the private sector through the Multilateral Investment Fund (MIF), the Inter-American Investment Corporation (IIC), the Opportunities for the Majority (OM) Initiative and the Structured and Corporate Finance Department, all today under the IDB Vice President for Private Sector and Non-Sovereign Guaranteed Operations.

In the decade of the 1990s the IDB’s total loans and technical cooperation programs increased to nearly US$4 billion. About a quarter of the loans approved were directed to sector investment programs, as well as fiscal and public sector reform projects. Other areas benefiting from loans upwards of US$200 million were social inclusion, energy, environmental protection and transport development

From 2000 until the present, the total portfolio of IDB projects in Colombia has reached approximately US$7 billion, and the scope and depth of the Bank’s involvement has also increased in the development of social capital and the reduction of poverty, as well as state reform and modernization, all of which make an integral part of the Bank’s Country Strategy for Colombia (2007-2010). The strategy is the result of a close dialogue and consultation with the government and key sectors of Colombian society. It has a three-pronged approach:

-Competitiveness: The IDB’s strategy in this area is to support business development to create new employment opportunities and to promote growth. The strategy will focus on improving productive chains and promoting the development of small and medium-sized companies. Likewise, the IDB will support the integration of corporate social responsibility practices as an indispensable pre-requisite for an effective insertion of Colombian businesses in the world market.

-Social Development: The IDB will support the development of conditions, capacities and opportunities so that the poor can improve their living conditions and contribute to Colombia’s growth. Specifically, the Bank will provide financing for investment in early child development, the improvement of the quality of life, efficient social services and the expansion of social protection programs.

-Governance and State Reform: The Bank’s support in this area will be oriented toward the strengthening governance, efficiency in public administration and the process of decentralization. Concretely, the strategy will support the capacity of the State in the delivery of services, strengthening of the State’s fiscal and control entities, efficiency in public spending and the government’s regulatory capacity.