Includes how major projects are financed and gives examples where relevant. Explains activities of the multilateral development banks in and other aid-funded projects where procurement is open to U.S. bidders.

Project financing is at the heart of what the IDB does. Each year the IDB provides lending valued at more than $11 billion. Most of the projects are co-financed with borrowing governments themselves, other multilateral institutions, commercial banks, export credit agencies, and private sector investors. However, the Bank only assists those projects for which the required capital is not available from other sources on reasonable terms. The Bank also facilitates financing through trust fund partnerships with bilateral and multilateral donors.

With regards specifically to the breakdown of IDB financing, the IDB lends about $10-12 billion a year (USD 11 billion in 2017), of which between $3 and $5 billion corresponds to the financing of traditional infrastructure (e.g. Bridges, power plants, roads, hospitals, telecom networks etc.). The remainder corresponds to non-sovereign guaranteed operations, policy-based lending, cash transfers, and other operations not directly related to project procurement. Assuming a leverage ratio of 3-4, IDB, therefore, contributes to financing project procurement valued at $9-20 billion a year, representing 1-3% of the total value of Latin American/Caribbean public procurement activity estimated at $800 billion per year.

While small in the overall scheme, IDB lending is significant as it selects for financing emblematic projects that have high visibility in the borrowing countries. These projects are often showcases for new technology and quality implementation and the contractors that work on the projects share in that positive association and can expect to improve their standing in the market at large by participating in an IDB-financed project.

Trust Funds and Grants allow scaling up of activities, notably in fragile and crisis-affected situations; enable the IDB to provide support when an ability to lend is limited; provide immediate assistance in response to natural disasters and other emergencies; and pilot innovations that are later mainstreamed into Bank operations. Trust Funds allow non-borrowing members of the Bank a channel for providing additional monies to the Bank outside of the calls for General Capital Increases. These monies can be destined for certain causes of particular interest of the country.

There is no presumption, or requirement, that the monies be spent on resources or contractors located in the donor country. They are subject to the same procurement rules as any IDB-supported operation. See Trust Funds for more information about current funds in operation and related activities.

Corporate Procurement 
The IDB Group itself procures consulting and advisory services, often in relation to IDB, MIF and/or IDB Invest funded projects. When it does so, it draws from the same funding sources, subject to the same rules, as for project procurement.

Private Sector Solutions
Private sector activities in partnership with IDB Invest, the private sector lending window of the IDB involve a number of different financial vehicles, including loans, equity investments, venture capital positions, and others. The IDB Invest operates much like a commercial lender and is required to do similar due-diligence and economic analysis to determine viability of the project. IDB Invest must also apply IDB mission of economic development and human health and safety to the project to ensure that it obtains approval of the IDB’s Board of Directors.  U.S. companies are invited to approach the IDB Invest to solicit debt or in some cases equity financing for projects located in the Latin American/Caribbean region.

U.S. Government trade Financing Instruments
Several U.S. Government entities offer trade financing instruments to help American exporters engage in challenging overseas markets with increased confidence. The Export-Import Bank of the United States (EXIM) offers short-, medium-, and long-term export credit, finance and insurance products to American exporters. The Overseas Private Investment Corporation (OPIC) offers loans, guarantees, and political risk insurance for American exporters. The U.S Trade & Development Agency promotes economic growth in emerging economies by facilitating the participation of U.S. businesses in the planning and execution of priority development projects in host countries. The Millennium Challenge Corporation offers development assistance grants to countries committed to good governance, economic freedom and investments in their citizens. Products, services and programs of these organizations are available in many IDB borrowing member countries. American firms participating in IDB funded projects should familiarize themselves with these programs, and which are available in each country of interest.

U.S. Commercial Service Liaison Offices at the Multilateral Development Banks
The World Bank often co-finances projects with other multilateral development banks. The Commercial Service maintains Commercial Liaison Offices in each of the main Multilateral Development Banks: the World Bank, the Inter-American Development Bank, the African Development Bank, the Asian Development Bank, and the European Bank for Reconstruction and Development. These institutions lend billions of dollars in developing countries on projects aimed at accelerating economic growth and social development by reducing poverty and inequality, improving health and education, and advancing infrastructure development. The Commercial Liaison Offices help American businesses learn how to get involved in bank-funded projects, and advocate on behalf of American bidders. Learn more by contacting the Commercial Liaison Office to the World Bank, the Inter-American Development Bank, the African Development Bank, the Asian Development Bank, and the European Bank for Reconstruction and Development.
 

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.