The IDB is the most important multilateral source of development financing for Latin America and the Caribbean. It aims to reduce poverty and inequality and to promote sustainable economic development in the region. Switzerland is an active member of the IDB Board of Directors and as such, contributes to IDB’s development agenda.
Inter-American Development Bank – IDB
The IDB, as the main multilateral source of financing in Latin America and the Caribbean (LAC), offers support to countries in the region through credit lines or non-repayable grants. Policy dialogue with partner governments and expertise-sharing are additional instruments of the IDB.
The IDB Group as a whole also includes the following institutions:
- IDB Invest (formerly known as the Inter-American Investment Corporation, IIC) – supports for small and medium-sized enterprises in particular.
- IDB Lab – promotion of new, innovative approaches in small and medium-sized enterprises that can be extended to the entire IDB Group.
Latin America and the Caribbean is a region of global importance. It has significant economic potential and natural resources. At the same time, the countries of the region are marked by political developments that have on many occasions led to national-level conflicts and thus to fragility. After the reduction of poverty before COVID-19, the pandemic resulted in setbacks in 2020–21 in basic education, the labour market and access to services. Climate change and the associated natural disasters pose risks that must be taken seriously. Last but not least, the region is characterised by large migration flows, which create enormous challenges for the host countries.
Goals of the IDB Group
- reduce poverty and social inequality
- promote economic and social development by engaging the public and private sectors
- help address climate change by promoting renewable energy, environmental sustainability and biodiversity.
Significance of the IDB
The low-cost loans of a development bank are particularly sought after in countries with low incomes and high debt. The IDB Group uses dialogue with national or local authorities and expertise-sharing to co-shape national policies and regional implementation. This allows, for example, services and infrastructure to be developed and expanded for the benefit of all communities.
The IDB at a glance
Established in: 1959
Head office: Washington, D.C.
President: Ilan Goldfajn (citizen of Brazil and Israel)
Member countries: 48, divided into 14 voting groups
Borrowing countries: 26 (Latin American and Caribbean countries)
Switzerland's accession: 1975
Swiss representation: member of a voting group made up of 7 countries with a seat on the Board of Governors
Switzerland's involvement in the IDB
Switzerland holds shares in the IDB and is part of the voting group that includes Belgium, China, Germany, Israel, Italy and the Netherlands. As a member country, it plays an active role in the Board of Director’s decision-making, thereby carrying out its supervisory duty as a shareholder. Switzerland works to ensure that the IDB's development projects are sustainable and of high quality, and attaches importance to making sure that the bank's financial footing is solid.
In addition to serving on the Board of Directors and cooperating with the IDB at institutional level, Switzerland and the IDB also work together operationally. Switzerland focuses on the following goals in particular:
- Supporting economic and social development by strengthening the private sector (SDG 8, 9), e.g., by engaging in one of the IDB's vocational education initiatives
- Supporting regional initiatives, e.g., in the area of migration or in the protection of ecosystems in the Amazon basin (SDG 8, 12, 13, 14)
- Assisting the IDB Group's efforts to reduce poverty, with a particular emphasis on inequality, fragility and gender issues (SDG 1, 5, 10).
Switzerland's International Cooperation Strategy 2020–24 foresees phasing out intergovernmental (bilateral) cooperation in the LAC region in order to refocus the SDC's financial resources on promoting work in other parts of the world where the need for development efforts is greater.
This makes multilateral cooperation with development banks such as the IDB or the World Bank all the more important. These banks supplement development programmes implemented by donor countries, NGOs or other multilateral organisations or programmes. The latter include, in particular, UN funds and programmes.
In the wake of the COVID-19 crisis, greater efforts are needed in the LAC region to reduce inequalities, enable social and economic development benefitting disadvantaged communities, and support the private sector. The pressing problems of climate change compel all stakeholders to make comprehensive efforts to enable climate-resilient development (SDG 13).