Inter-American Development BankThe Inter-American Development Bank (IDB) was established in 1959 to help accelerate economic and social development in Latin America and the Caribbean. Based in Washington, DC, the IDB counts 28 regional and 18 non-regional countries as members. A Multilateral Investment Fund (MIF) was established to assist governments in improving market economies. The MIF promotes technical cooperation, human resource development and small enterprises in conjunction with non-governmental organizations (NGOs) and other private and public sector bodies. The Inter-American Investment Corporation (IIC) was established in 1989 to support the private sector - preferably small or medium scale enterprises. It makes direct investments such as equity participation and loans and also provides technical, financial and managerial assistance. The IDB also administers important trust funds on behalf of donors for technical cooperation activities.
Lending and technical cooperation activity
As of 2001 the IDB approved US$106 billion in loans contributing to total investment costs estimated at US$263 billion. Twenty nine percent concerned the productive sectors (including forestry) and 23% for social sectors (including the environment). IDB¿s technical cooperation activities help borrowing countries prepare, finance and carry out national or regional development plans and projects and train development specialists. It is available to public institutions and private enterprises eligible for bank loans, as well as regional and subregional organizations and NGOs. Technical cooperation is provided through grants, reimbursable loans or contingent-recovery funds. Contingent-recovery technical cooperation is repayable only when it leads to a loan from the bank or another financial institution to execute a project. As of 1995, the Bank had committed US$2 4 billion for technical cooperation out of which US$1 3 billion was as a grant or on contingent recovery basis and US$1 1 billion was on loan basis. The multilateral investment fund has approved 73 projects for a total of US$157 million. As of 1995 it approved 131 projects totalling US$536 million.
Strategic objectives and priorities
In the past, IDB lending emphasized the productive sectors of agriculture and industry, the physical infrastructure and the social sectors. Since 1990, the Bank has broadened its support to the informal sector and to sector reform loans and debt reduction programmes. In 1995, it began lending up to 5% of ordinary capital resources directly to the private sector, without government guarantees. The IDB is intensifying its involvement in social reform and poverty reduction, modernization and economic integration, and environmental protection (including sustainable forestry). Low-income groups are targeted through investments in basic education, maternal and child health, and development of microenterprises. To complement ongoing public sector reforms, the bank is supporting modernization of infrastructure and production techniques, initiatives to strengthen the private sector, and subregional trade agreements. Reform of legislative, judicial and fiscal institutions is also a priority, as are efforts to strengthen NGOs as well as environmental regulations and institutions and improving environmental conditions in metropolitan areas.
Loans from funds under IDB administration are made under conditions stipulated in the agreements between respective donor countries and the bank. IDB finances up to 50% of the project cost for the more economically developed countries and up to 80% for projects in poorer countries. The level of IDB financing can be increased by 10% for projects in which at least half of the net benefits accrue to low-income beneficiaries.
Priorities related to the forestry sector
In 1994, IDB went through a process of reorganization; strengthening its capacity to respond to various environmental problems, social and sustainable development issues. The general principles currently guiding bank policy for forestry development should be understood within the framework of other important IDB strategies and priorities:
- Poverty alleviation strategy
Half of IDB operations must directly support social reform and poverty reduction programmes. Since the 1990s, IDB has been refining its approach to social lending by focusing on family welfare, women and youth, nutrition, and labour training.
- Environment strategy
In the 1990s, the IDB greatly strengthened its environmental programme. It reviews the environmental impact and sustainability of all its projects. In 1995, the bank approved eight environmental loans totalling US$605 million, with a focus on urban areas, national environmental programmes, soil conservation and agroforestry. The bank's environment division focuses on the sustainable use of forests.
- Strategy towards women
The IDB promotes equitable social and economic roles for women.
- Technology transfer
All IDB projects aim to promote low-cost technology and a strengthening of national capacities to develop and apply technologies and support research and extension for low-income groups. The IDB also brings together regional companies with research institutions for possible joint ventures.
- Institutional strengthening strategy
The IDB recognizes that sustained growth in Latin America requires strengthening of the institutions responsible for a country's economic and social development. The IDB supports modernization, decentralization and training that improves the efficiency and effectiveness of these institutions. By providing opportunities for the poor, women and young people, a growing number of bank projects carried out by NGOs are drawing a broader cross-section of society into the economic mainstream.
Forestry sector strategy
The bank will finance forestry investments only when a clear commitment to sustainable forest management exists on the part of the borrowing country's government and where it can have an impact on poverty reduction. IDB wants to help countries identify new ways to solve major environmental problems like deforestation. The IDB will support activities aimed at improving the legal framework (such as land tenure) and institutional capacity, mitigating adverse project impacts through environmental assessment, and developing inter-institutional cooperation or participation by local public/private organizations and individuals in decision-making processes. Forest biomass as a source of energy for poor people remains a concern for the bank and the forestry dimension is seen as a key element to be addressed in all rural development programmes. Concerning moist tropical forests, the IDB does not finance commercial logging but will support operations that enhance sustainable management. The main areas of action that can be financed by the bank are:
- soil conservation and reforestation to rehabilitate degraded areas including agroforestry;
- watershed management particularly in mountainous areas and upper watersheds;
- natural forest management (including non-wood forest products);
- conservation of ecosystems and biodiversity through protected areas and buffer zones management;
- conservation and management of coastal and island resources including ecotourism;
- urban environmental management through afforestation and expansion of parks and green areas.
The project cycle
Programming and identification missions are undertaken by IDB specialists together with local officials and experts. Detailed formulation and evaluation comprise a number of analyses: institutional analysis, technical evaluation, socioeconomic evaluation, potential environmental impact, financial analysis, and legal evaluation. The IDB provides technical cooperation for feasibility studies and preparation of loan applications and projects.
The 1994 reorganization gave greater responsibility to three regional operations departments. These departments have full responsibility for carrying out the entire project cycle; 26 country offices are provided with multidisciplinary teams involved in programming, preparing sector studies, formulating investment strategies, and identifying and preparing projects. The country offices prepare annual country portfolio assessments identifying issues affecting project implementation and steps which should be taken to resolve outstanding problems.
How to present a request
To be considered, a project proposal should fit into the IDB's strategic objectives and policies. Direct contact should be made with IDB officials at country offices for general information and a first screening; at headquarters with the responsible country officers in the regional operational departments for queries concerning programming of loans and projects; and with specialists in the three environment and natural resources divisions for specific queries related to forestry.
Inter-American Development Bank
1300 New York Avenue, N.W.
Washington DC 20577
Tel: (202) 623-1000
Fax: (202) 623-3096
Web site: http://www.iadb.org