Inter-American Development Bank (IDB): What it is, How it Works

What Is the Inter-American Development Bank (IDB)?

The Inter-American Development Bank (IDB) is a cooperative development bank founded in 1959 to accelerate the economic and social development of its Latin American and Caribbean member countries. It is owned by a total of 48 member countries, including the U.S. and some European nations. The bank provides financing in the form of loans and grants.

Understanding the Inter-American Development Bank (IDB)

The IDB assists Latin American and Caribbean countries in formulating development policies and provides financing and technical assistance to achieve environmentally sustainable economic growth, increase competitiveness, enhance social equity, fight poverty, modernize the state, and foster free trade and regional integration. The IBD supported 94 projects, lending $13.6 billion in 2021.

The funds that the Inter-American Development Bank lends to its member countries are raised in the bond market. The bonds are backed by the loans the IDB makes, which carry the guarantee of capital pledged by the bank's non-borrowing members. The bonds are triple-A rated and issued at market rates. The triple-A rating helps to keep borrowing costs for the member countries low. The U.S. is the IDB’s largest shareholder with a 30.01% stake. Brazil and Argentina each own 11.35%. Mexico comes in third with a 7.3% stake, and Japan owns 5%.

Special Considerations

As of October 2022, the Inter-American Development Bank has 601 projects, financing $56.1 billion. Past projects that have been completed in 2022 include projects to reform and modernize the state (Suriname, Guyana, Jamaica, and Barbados), social investment (Ecuador), energy (Mexico), and the environment (Columbia, Barbados). The bank’s current goals include focusing on social inclusion, economic integration, and innovation. As well, it’s interested in climate change, gender issues, and diversity.

When he was president of the IAB, Luis Alberto Moreno said the focus of the bank included tackling inequality and improving public services for the countries it serves. Change is needed, said Moreno, pointing to the various protests in the streets within the region during 2019. Moreno pointed out the lack of growth in Latin America since 2014—the end of the commodity boom. Since then, the region has experienced the worst economic growth in the world.

In September 2020, Mauricio J. Claver-Carone was elected President of the Inter-American Development Bank (IDB) during an electronic meeting of the Bank’s Board of Governors. Claver-Carone took office on October 1, 2020, for a five-year term. Previously, Claver-Carone was Deputy Assistant to the Former U.S. President Donald Trump and Senior Director for Western Hemisphere Affairs at the U.S. National Security Council. He has also served as Senior Advisor to the Under Secretary for International Affairs at the U.S. Department of the Treasury.