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General Policy
Pursuant to the provisions of the Agreement Establishing the Inter-American Development Bank, Article III, "Operations", the Bank may make loans or provide loan guarantees to any member country, any political subdivision or government organization unit thereof, any independent agency, semipublic enterprise, or private enterprise in the territory of a member country, regional organizations composed of member countries, and to the Caribbean Development Bank.
Public Sector
The political subdivisions of a country include states, provinces, and municipalities, and decentralized government organizations such as State banks, development corporations, public utility companies, universities, and the like, that are legally empowered to enter into loan contracts with the Bank. Any company in which the government has a proprietary interest of more than 50% is considered to be a public sector company.
Private Sector
The Bank may make loans to private enterprises, whatever their form of organization, provided they have the legal capacity to enter into loan contracts with the Bank. Among the private undertakings that may be eligible to become borrowers from the Bank are corporations, other commercial companies, cooperatives, foundations, and the like.
Eligibility Criteria
The following is a list of minimum general criteria for deciding whether an entity is eligible to borrow directly from the Bank or whether it may only act as executing agency with the principal and general liability to be assumed by the respective member country.
Legal Requirements
Member countries that assume liability on their own general responsibility, as well as their political subdivisions, such as states, provinces, municipalities, and the like, which require a member-country guarantee before a loan proposal may be submitted to the Board of Executive Directors for consideration, must demonstrate that they meet the following requirements:
- They have the authority to enter into external borrowing agreements. Specifically, the executive branch of the government of the member country or the pertinent authorities of other organizations must have the authority necessary to negotiate the loan. There are no impediments for submission to arbitration as set forth in the loan contracts of the Bank. They have the authority to assume and discharge financial obligations deriving from loan contracts, particularly obligations for receiving, maintaining, and managing funds in foreign currency, providing for payments, and servicing loans including the payment of interest and fees in foreign exchange. They have the authority to take on the performance obligations stipulated in the loan contracts of the Bank. They have the legal capacity to make changes in organization and structure as might be needed for the project or program. They have the legal capacity to set rates for public utility services. For political subdivisions or decentralized organizations that do not have the legal capacity to set rates, the guarantee of the member country in that regard shall be require, as a direct obligation of the latter.
- In addition to the requisites mentioned above, political subdivisions and decentralized public-law institutions of the State shall demonstrate that they possess: juridical personality; and their own assets and capital.
- Private sector institutions established under private law shall demonstrate that: They have been legally constituted in accordance with the applicable legal formalities and are duly registered. They have juridical personality. They have their own assets and capital. They are domiciled in the respective member country. They are empowered to enter into external borrowing agreements. They have the authority to submit to the Bank's arbitration procedure. They shall also demonstrate that judgements or awards made as a consequence of arbitration are enforceable in their country of domicile. They shall demonstrate that their capital stock and management conform to national legislation and/or to international conventions to which the country is a signatory that qualify them as a national entity. They have the authority to assume and discharge financial obligations deriving from the Bank's loan contracts, including obligations for receiving, maintaining, and managing funds in foreign currency, providing for payments, and servicing loans, including the payment of interest and fees in foreign currency. They have the authority to take on the performance obligations stipulated in the loan contracts of the Bank. They shall demonstrate that the respective member country does not object to the financing.
- International entities shall demonstrate that:
They have international juridical personality. They have their own capital and assets. They are domiciled in a member country. They have the authority to enter into international borrowing agreements. They have the authority to take on the performance obligations stipulated in the loan contracts of the Bank. They have the authority to assume and discharge financial obligations deriving from the Bank's loan contracts, including obligations for receiving, maintaining, and managing funds in foreign currency, providing for payments, and servicing loans, including the payment of interest and fees in foreign currency. They have the authority to establish procurement procedures that are compatible with the requirements of the Bank. They have the authority to submit to the arbitration procedure prescribed in the Bank's loan contracts. They have the legal capacity to make such changes in organization and structure as might be needed for the project or program.
Institutional Requirements
The basic organization of the borrower and the executing agency shall be appropriate for the purposes of the operation.
Financial Requirements
With the exception of the member countries and their central banks, all potential borrowers shall demonstrate that:
They are endowed with and currently have adequate assets and financial resources. This conclusion might be supported by a financial analysis. They are assured of adequate local counterpart contributions for the project or program in the amounts and at the times required. They have the capacity to punctually pay service on their debts, particularly on the prospective IDB loan. This shall be confirmed by a financial analysis.
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Prevailing Reference Documents:
GP141,March 1974,
GP20 to GP2019, May 1974 to December 1975,
GP251 to GP2523, October 1974 to May 1975.