The IDB, which is the principal source of multilateral financing in Latin America and the Caribbean, provides loans to qualifying member
countries from the following two windows:
- Ordinary capital To
finance this part of its lending activity, the IDB obtains resources in world
capital markets through bond issues. The size of its capital base, to which all
member countries have contributed according to their standing in the world
economy, has given the IDB a high credit rating, enabling it to borrow on very
good terms. The IDB provides loans to middle-income countries on the same low
terms, with the addition of a ½ point interest rate margin, which normally gives
a much lower lending rate than these countries would be able to obtain in the
capital markets. These loans are provided to national governments and to
lower-level governments and institutions with a government guarantee.
Loans 2004 (disbursed): 36,5 billion
Biggest borrowers (2004): Brazil, Colombia and Argentina
Norwegian share of capital base: 0.17 per cent
- The Fund for Special Operations (FSO) provides loans on concessional terms to
the poorest member countries, which are unable to meet the terms of ordinary
loans. Lending capital is contributed by the non-borrowing countries as
development assistance, through replenishments negotiated at three-year
intervals. FSO funds are lent at 1 per cent for the first ten years and two per
cent thereafter, with a 10-year period of grace and a repayment period of up to
40 years. These loans are provided to national governments and to lower-level
governments and institutions with a government guarantee.
Loans 2004 (disbursed): NOK 3,3 billion
Biggest borrowers (2004): Honduras, Guyana and Nicaragua
Norwegian share of contributions to FSO: 5 per cent
Lending profile: Most new loans granted in 2004 went to
the social sector followed by competitiveness and modernization of the state.
2. Ways and means
Involvement
on the Executive Board
The Board of
Executive Directors is the IDB’s executive authority and is responsible for
conducting Bank operations. The Nordic countries work closely together within
their constituency, holding weekly telephone conferences and sending joint
instructions to the constituency office. The active collaboration of the Nordic
countries gives Norway a greater opportunity to gain acceptance
for its views. According to the rotation scheme, Norway will not be represented in the Office
until 2006 then by a counsellor.
Replenishment
negotiations
The eighth
replenishment in 1994 was intended to be the last (the IDB was supposed to
become self-financing in the sense that repayments on loans would finance new
loans). Responding to the financial crises of recent years, the IDB has
provided short-term balance-of-payments support, which has eroded its capital
base. If the need for crisis lending continues, further replenishment may have
to be considered.
The eighth –
and so far the last – FSO replenishment was concluded in 1998 by converting
existing lending funds which had been paid back in local currencies in the
borrowing countries. There are no plans as yet for any further replenishment,
as only four countries (Honduras, Nicaragua, Guyana and Bolivia) qualify for this facility.
Co-financing
Our
co-financing involvement in the international development banks is a channel by
which we seek to influence these institutions according to Norwegian foreign
and development policy. Norway has contributed around NOK 12 – 15
million per year in recent years to the IDB, mainly to three priority areas:
gender mainstreaming and gender focussed programmes or projects,
microenterprises, innovative measures in the social sector and social inclusion
and finally ethics and development. We
have also supported individual projects, chiefly in democracy building,
strengthening civil society and peace efforts. Special initiatives such as an
international round table in Washington to discuss the regional dimension of the
UN’s International Conference on Financing for Development held in Monterrey, Mexico, have also received support. In future,
more long-term and strategic interventions will be given priority, preferably
in collaboration with other donors. Norway has initiated the Bank’s first multi
donor fund on Social Inclusion, which also United Kingdom has joined. The Fund builds on and
supports the implementation of IDB’s Action Plan and research, mainstreaming of
the perspective in the Bank’s regular work and capacity building constitute the
main activities. The second phase of the Ethics and Development Initiative
was initiated in the fall of 2004 with a focus on good governance,
anti-corruption and human rights. Support to the Bank’s implementation of its
Gender Mainstreaming Action Plan is part of the Gender Mainstreaming Fund.
3. Norwegian priorities
Through our
engagement in the IDB – our work under the Executive Board, negotiations,
co-financing and in other ways – we will promote central Norwegian development
policy objectives as they are formulated in the Action Plan for Combating
Poverty. Our contribution to the achievement of the Millennium Development
Goals, including their implementation at national and regional levels, is a
fundamental aspect of our international development policy, and our IDB
involvement reflects this. Coordination on all levels is an important element,
with the national development strategies and poverty-reduction strategies
(PRSs) given a central place. Coordination of efforts, standardization of procedures
and consolidation of resources are therefore essential in our efforts vis-à-vis
the international development banks, and is given priority. The banks have
become more result-oriented, and we support the increased focus on results and
development impact as formulated in IDBs Medium Term Action Plan for
Development Effectiveness, approved at the IDB Annual Meeting in Okinawa March 2005.
The IDB’s
extensive analysis and policy development efforts have has a major impact on
the formation of regional and national development policies and the IDB plays a
central role in coordinating assistance through its leadership of the
consultative group (CG) meetings.
Our
priorities in our work with the IDB is to:
- Integrate
poverty and social disparity issues in all phases of the IDB’s operative
efforts (policies, programmes, technical assistance and other activities). Strengthening
the poverty focus in private sector efforts is also an important objective of
our membership in the Inter-American Investment Corporation (ICC).
- Promote national ownership of projects and
programmes financed by the bank, and improve donor coordination, including
through active participation in the formulation and follow-up of national
development strategies and participation in SWAPs.
- Promote more systematic integration of
cross-cutting issues such as gender equality, good governance and environmental
sensitivity. Gender mainstreaming in particular will be given priority by the
Nordic countries through policy dialogue with the bank, monitoring of the
lending portfolio and co-financing funding for the women and development unit
and the operational departments/country offices for the purpose of
strengthening institutional capacity in this area.
- Strengthen the IDB’s capacity to manage by
results and evaluation capabilities by introducing a performance-based lending
system to apply to the full range of its lending activities (not just the FSO)
based on the willingness and ability of borrowing countries to implement
reforms.
- Promote further improvements in the IDB’s
internal management systems (more transparent personnel policies, upgrading the
role of country offices though competence building and delegation of
responsibility) continue and expand contact with civil society, greater
transparency and country-level participation.
- Urge the IDB to proactively target the
HIV/AIDS pandemic in its dialogue with borrowing countries, and include
HIV/AIDS components in its lending and technical assistance portfolio,
particularly in the health and education sector.
- Strengthen regional integration through
the development of regional lending instruments.
- Continuing and expanding cooperation on
the issue of ethics and development focussing on good governance and human
rights.
