PUNTA CANA, Dominican Republic, CMC – The Boards of Governors of the Inter-American Development Bank (IDB) and IDB Invest ended their meetings here on Sunday, approving three transformative changes to increase the impact and scale of the IDB Group’s development work in Latin America and the Caribbean (LAC).
This includes a new institutional strategy and a US$3.5 billion capital increase to support a new business model for IDB Invest, the Group’s private-sector arm.
The IDB Board of Governors also approved US$400 million more resources and a more scalable, catalytic, and sustainable business model for IDB Lab, the Group’s innovation and venture capital arm.
The IDB said that the new institutional strategy puts impact and scale at the forefront of the IDB Group’s work for 2024-2030.
It aims to boost the Group’s results and impact through a series of measures, including developing a results-based, programmatic approach in working with member countries, upgrading lending tools and measurement metrics, investing more in knowledge capacity, and enhancing a culture of impact and meritocracy across the IDB, IDB Invest and IDB Lab.
The governors, the top economic and financial authorities of the IDB Group’s 48 member countries, approved the reforms after the 64th annual meeting of the IDB Board of Governors and the 38th annual meeting of the IDB Invest Board of Governors.
“These meetings have been genuinely historic. For the first time in our institution’s 65 years, our Boards of Governors have simultaneously approved three transformative changes that will make the IDB Group a bigger, better, and more agile institution.
“These changes will significantly boost our ability to support Latin America and the Caribbean in addressing its challenges and unlocking its potential to ignite a development turning point – all to improve lives with greater impact and at greater scale,” said IDB President Ilan Goldfajn.
“Our region faces a triple structural challenge of rising social demands, scarce fiscal resources, and low growth, with the additional major effects of climate change. But at the same time, there is a great opportunity for the region to become part of the solution to shared global challenges. This could be an inflection point not just for the IDB Group but also for the region,” he added.
The IDB said that the new institutional strategy has three core objectives: reduce poverty and inequality, address climate change, and bolster sustainable regional growth.
The IDB Group said it will work through seven operational focus areas to achieve these goals. Three of these are cross-cutting across all sectors:
- Biodiversity, natural capital, and climate action
- Gender equality and inclusion of diverse population groups
- Institutional capacity, the rule of law, and citizen security
The other four focus areas are:
- Social protection and human capital development.
- Productive development and innovation through the private sector.
- Sustainable, resilient, and inclusive infrastructure.
- Regional integration.
To meet its objectives, the IDB Group will bolster its financial capacity.
The capitalization of US$3.5 billion and the new business model would allow IDB Invest to scale its ability to channel resources to the region from approximately eight billion US dollars per year to around $19 billion.
The new IDB Invest business model will allow it to shift toward an impact-driven originate-to-share approach. It can take on more risk, expand its field presence, and deploy innovative products to deliver better results at the project and portfolio levels.
To ensure that the IDB Group further leverages innovation to drive social inclusion, climate action, and productivity in the region, the IDB and IDB Invest Boards of Governors approved a proposal for IDB Lab to enhance its operating model and become an innovation hub for development. This approval allows IDB Lab to seek $400 million in new funding, which would be deployed in 2026-2032.
The hub model, which builds upon unique features of IDB Lab, including its higher risk appetite, grassroots network, and agility in deploying financing, aims to triple the entity’s resource mobilization per dollar deployed and to scale up 40 percent of its projects. The new model will also help ensure that all IDB Lab projects benefit poor and vulnerable populations.
The institutional strategy also calls for the IDB Group to work with other multilateral development banks (MDBs) as part of an integrated system,
“The IDB Group will intensify its work to develop innovative financial instruments to mobilize more resources for addressing development gaps and tackling climate change. The IDB Group has pioneered innovative solutions, including debt-for-nature swaps; climate-resilient debt clauses, which pause payments for countries hit by natural disasters; currency hedge platforms; and new ways to reward borrowers that achieve nature and climate objectives, as our BID Clima, among others.”
The new strategy, along with the new business model and capital increase for IDB Invest and the new model for IDB Lab, will increase the scale of the Group’s work by placing financial innovation and mobilization of private-sector resources front and center of each investment decision, strengthening selectivity and crowding in private investors at scale.
The IDB said that taking together the reforms and efforts by each institution to optimize their balance sheets will enable the IDB Group to increase its financing capacity to up to US$112 billion over the next ten years.
Among the reforms set out in the new strategy, the IDB Group will ensure that impact and development effectiveness are woven into its structure, operations, and organizational culture.
A new impact framework will include a set of measurable indicators to translate the institutional priorities into clear metrics. It will be the primary tool for measuring the IDB Group’s performance.
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