The Inter-American Development Bank (IDB) was established in 1959, to promote economic development throughout Latin America. Currently, the IDB has 46 member countries, including donor nations in Europe, North America, and Japan. Today, the IDB is the world’s largest regional development bank, lending more than US $9 billion annually, making it the largest source of multilateral financing for economic, social and institutional development projects in Latin America and the Caribbean. In pursuing its main objectives, poverty reduction, social equity, and environmentally sustainable growth, the IDB works in four priority areas: fostering competition to increase the potential for development in an open global economy, modernizing the State by strengthening the efficiency and transparency of public institutions, investing in social programs that expand opportunities for the poor, and promoting regional integration.
The IDB is headed by a Board of Governors composed of representatives from each member country government, generally the Minister of Finance or the President of the Central Bank. Much of the power is delegated to the Board of Executive Directors, who are authorized by the Board of Governors to establish operational policies, approve loans, set interest rates, authorize borrowings in capital markets, and approve the organization’s budget. The Board of Governors elects a president for a five-year term, who, along with the Executive Vice-President, oversees the organizations’ operations. The president presides over Board meetings but does not have voting power. Each country’s Executive Director maintains an office at the IDB’s Washington, DC headquarters. Voting power within the IDB is based on each country’s subscription to the IDB's ordinary capital. As of 2002, the division of subscriptions is approximately: Latin America and the Caribbean, 50 percent; United States, 30 percent; Japan, 5 percent; Canada, 4 percent; and other non-borrowing members, 11 percent. The IDB Group also includes the Inter-American Investment Corporation (IIC) and the Multilateral Investment Fund (MIF).
Within the IDB, projects and thus IDB staff are divided into Region I (Bolivia, Brazil, Argentina, Chile, Paraguay, and Uruguay; Region II (Mexico, Central America, the Dominican Republic, and Haiti); and Region III (the English-speaking Caribbean, Colombia, Ecuador, Peru, and Venezuela). Each region has a team that prepares project loans, evaluates, and implements projects.
Other Important departments within the IDB include:
- The Private Sector Department (PRI) oversees loans to the private sector throughout the region. The PRI primarily makes loans for transportation, energy, water and sanitation, communications, and capital markets. The PRI also contains an Environmental and Social unit that works to ensure that all PRI projects are designed and implemented in accordance with environmental, social, health and safety, and labor concerns. However, many PRI projects, such as the Cana Brava dam project in Brazil have failed to meet minimum environmental and social standards, resulting in environmental destruction, forced displacement without sufficient compensation, and highly inadequate civil society consultation.
- The Sustainable Development Department (SDS) deals with a wide range of social and environmental issues. SDS contains the Committee on Environment and Social Impact (CESI), which is responsible for evaluating all IDB operations to address their environmental and social impact and to advise project teams and country governments on preventive and “mitigatory” strategies.
The IDB makes several types of loans:
- Investment loans for specific projects in sectors, such as agriculture, credit, education, energy, environment, health, planning and reform, pre-investment, sanitation, social programs, transportation, and urban development.
- Structural adjustment loans to support the liberalization of a country’s economy in order to adapt it to the free market and neo-liberal macroeconomic policies.
- Sectoral adjustment loans address the microeconomic details of structural adjustment loans, leading to the privatization of public services and the reform of public sector operations.
In order to ensure that each project is carried out in accordance with the stated project objectives, that finances are properly used, to verify compliance by borrowers, beneficiaries, and executing agencies, and to maintain an effective information system on loan operations, each IDB-funded project must undergo the following procedures as detailed in the IDB Operations Processing Manual and Operations Administration Manual:
- Programming and Pre-investment: IDB staff review the country's development plans and investment programs and help identify potential projects. Often, technical cooperation is provided by the IDB for feasibility studies and for preparation of loan applications and projects. Following negotiations between the IDB and the country government, a loan document is presented to the IDB Board of Directors.
- Review of the Loan Application: Loan applications are analyzed to determine if the borrower has the capacity to complete the project and whether the project plans and costs are viable and sustainable. Consultations with communities that will be affected by the projects are used to assess potential impact, cost, benefit, and environmental impacts.
- Project Execution and Disbursement: The borrower provides the Bank with a schedule of project investment expenditures. IDB Country Offices oversee the administration and disbursement of loans and monitor project progress.
- Evaluation: IDB strategies, policies, and procedures are examined by the IDB’s Office of Evaluation and Oversight to ensure that they comply with IDB objectives and mandates. In addition, this office evaluates all projects to assess their impact, and upon project completion, all projects undergo a project completion report prepared by the executing agency.
Participation at the IDB
The IDB is financed by public funds from its member countries and thus, as a public institution, civil society participation is key if the IDB is to play an effective role in implementing programs of sustainable development. The IDB has acknowledged the importance of civil society participation and has taken some steps towards implementing this acknowledgment.
- One of the most important means for participation is through obtaining information on IDB projects, policies, and procedures. The first place to look for such information is the IDB’s website, which contains materials in both English and Spanish.
- In addition, the Public Information Center (PIC) provides hard copies of various documents to the public under the terms of the IDB’s Access to Information policy. Each country office, as well as the IDB offices in Washington, Paris, and Tokyo should have a PIC.
- The IDB’s Information Disclosure policy, adopted in 1995, provides for the public dissemination of project documents, operational policies, and evaluation reports. Only project documents dated post-1995 are eligible for immediate release. Projects dated prior to 1995 may be obtained only upon formal request. Despite the existence of such a policy, it can be difficult to obtain some documents.
- In 1994, an Independent Investigation Mechanism was established allowing affected groups within a member country to request an independent investigation of a Bank-financed program that is allegedly in violation of IDB procedures and guidelines. It is important to note, however, that to date only one project, the Yacyreta dam project in Argentina has ever been fully inspected. In addition, the IDB has two offices that conduct internal evaluations of its projects and policies. The Office of Evaluation and Oversight carries out independent reviews of IDB strategies, policies, and programs. CESI, as mentioned above, investigates IDB policies related to environmental and social impact.
- In 1999 IDB President Enrique Iglesias issued a memo outlining follow-up initiatives that the IDB pledged to implement in order to facilitate civil society participation. Each Country Office was to designate a civil society liaison, who would be available to meet with local organizations and respond to information requests. In addition, each country would establish Advisory Boards composed of members of civil society organizations to serve as a civil society network. Finally, each country office was to prepare a Civil Society Action Plan to institutionalize mechanisms for dialogue, resource allocation, and quality control of communication with civil society.