The Boards of Governors of the Inter-American Development Bank and IDB Invest approved resolutions that will shape the future of IDB, IDB Invest, and IDB Lab – which together make up the IDB Group. The Governors also expressed support for the IDB new President’s vision and priorities.
Governors mandated the development of a capital increase proposal for IDB Invest to implement a new business model that would increase its development impact through the private sector.
The Governors approved the start of negotiations that could culminate in a new financing model for the IDB Lab.
The Board of Governors reiterated the importance of developing a new Institutional Strategy proposal for the IDB Group. The Institutional Strategy of the IDB Group serves as its core strategic guidance. The new strategy, expected to be approved in the next Annual Meeting in 2024, is expected to strengthen coordination within the IDB Group and determine the future work in key areas previously mandated by the Governors.
IDB President Ilan Goldfajn presented his priorities to Governors: social issues such as food security, poverty and inequality, health and education; climate change mitigation and adaptation including how to deal with increasingly frequent natural disasters; and sustainable digital and physical infrastructure, with emphasis in regional integration. He stressed the importance of preserving biodiversity through an Amazon Regional Program. Governors recognized the alignment of President Goldfajn’s priorities with the needs of the region.
According to President Goldfajn, transversal areas in all IDB Group activities, such as gender, diversity and inclusion, as well as climate should be proposed to be elevated at the organization.
New IDB Group Institutional Strategy
In his presentation to Governors, President Goldfajn pledged to work with the IDB and IDB Invest Boards of Executive Directors on the preparation of the New Institutional Strategy.
Governors instructed that key reforms previously mandated for the IDB shall be addressed through the process of developing the New Institutional Strategy to consider them together and take into account their complementarities.
New IDB Invest vision and business model
Governors expressed support for IDB Invest by mandating the development of a capitalization proposal to implement the new vision and business model that would allow the private sector-oriented institution of the IDB Group to scale its level of investment and impact across Latin America and the Caribbean. In addition to the capitalization proposal, IDB Invest is expected to prepare an implementation plan to be presented to the Board of Executive Directors during 2023.
With a capital increase, IDB Invest would expand its advisory services to ensure increased effectiveness of its interventions and to expand opportunities for the smaller economies in the region. IDB Invest would also strengthen and deepen synergies with the entire IDB Group to provide the region with a more holistic response to development challenges.
The new business model would provide IDB Invest with the tools to increase its capacity to invest in equity and in local currency instruments, as well as increase the volume of lending. The aim is to increase the institution’s ambition in relation to climate, gender, diversity and inclusion-related commitments, among others.
“The world has changed dramatically over the last few years, and the operating principles of the past are not enough to address today’s urgent challenges,” IDB Invest CEO James P. Scriven said. “Our new vision is very clear. We want to scale the impact that our projects have on people’s lives through greater focus, greater ambition, and more collaboration with partners through enhanced mobilization.”
IDB Invest has become a key development partner for Latin America and the Caribbean harnessing resources to bring development through the private sector.
IDB Lab future financing
On IDB Lab, the innovation laboratory of the IDB Group, Governors authorized the start of negotiations for its replenishment with new financing resources, aiming for a decision by April 2024.
Irene Arias, IDB Lab CEO said “the aim is to help strengthen the unique approach and client focus, as well as build a new funding model, where IDB Lab evolves from exclusive dependence on donors to a more sophisticated model of diversification of funds. We will bring a sharper focus on innovative solutions for inclusion, aimed at greater development effectiveness and the optimization of our financial instruments.”
IDB Lab’s differentiated capacity to take risk and to support entrepreneurial innovation, along with its complementarity with the rest of the IDB Group, makes it unique in the multilateral financial system.
President Goldfajn highlighted the need to see development effectiveness as a holistic process that includes targeting impact, measuring what matters, having good governance, learning and adjusting to gain knowledge, and effectiveness-based meritocracy. This will require the IDB Group to commit to a cultural transformation, one that places impact at the core of the Group.
Achieving impact is a shared responsibility. The IDB Group will need to strengthen its focus on capacity building to support countries to ensure sustainability of the impact achieved.
“What matters here is not the amount of loans we approve, or the size of our loans,” he added. “What is paramount is tangible, measurable development impact with concrete results delivered to citizens.”
President Goldfajn said it was important to address the structural and cultural issues that underpin the ability to deliver results. “We must transform the way we look at effectiveness,” he said.
More than 2,000 participants attended – the first in-person Annual Meeting in four years. With the aim of discussing and generating key development knowledge, six technical seminars took place. Experts and practitioners discussed topics that included reducing poverty and inequality; biodiversity and sustainable growth; sustainable and inclusive infrastructure and regional integration; food security and sustainable energy; public and private efforts to advance the gender and diversity agenda; and climate change.
The Boards of Governors, are the top decision-making bodies of IDB and IDB Invest, comprised of finance ministers and other top officials from the institutions’ 48 member countries.
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