The IDB is the leading multilateral source of development financing for Latin America and the Caribbean. It aims to alleviate poverty, reduce inequality and promote sustainable economic development in the region. As an active member of the IDB Board of Governors, Switzerland implements development projects in consultation with the governors.
Inter-American Development Bank (IDB)
The IDB is the main source of multilateral funding, especially for small and vulnerable countries in Latin America and the Caribbean. The IDB supports countries by providing loans, grants, expertise and technical assistance.
The IDB at a glance
- Year established: 1959
- Headquarters: Washington DC, USA
- President: Luis Alberto Moreno (Colombia)
- Member countries: 48, divided into 14 constituencies
- Borrowing countries: 26 (LAC countries)
- Capital: USD 178 billion (2017)
- Annual lending and guarantees: USD 13 billion (2017)
- Switzerland became a member: 1975
- Swiss representation: member of a constituency, along with six other countries, serving on the Board of Governors.
The IDB Group (IDBG) is composed of the following organisations which focus on private sector development:
- IDB Invest (formerly known as the Inter-American Investment Corporation): supports small and medium-sized enterprises.
- IDB Lab: the innovation laboratory of the IDB Group tests new, risky models to inspire the private sector (micro and small enterprises) and solve economic development problems in the LAC region.
Latin America and the Caribbean have always been important regions for Switzerland. Switzerland has a multifaceted relationship with the region, which includes economic, social and cultural ties. The region is an important partner in achieving the 2030 Agenda both at international level and through trilateral cooperation.
The region suffers from major income disparities both within and between countries. It is essential to global sustainable development that this region works to reduce such disparities and shifts to a more inclusive pattern of growth on the back of its extensive commitment to democracy, respect for human rights, and liberal market economy.
As home to the Amazon, the region also has a crucial role to play in mitigating climate change and reducing disaster risks in the Caribbean.
As a development bank, the IDB underpins key aspects of Switzerland's bilateral engagement in the region's poorest countries. In promoting regional integration, the IDB enables development initiatives in advanced countries to be used in poorer countries. The IDB funds government and private sector development projects for which no other funding is available on the market. By way of backup, it also provides technical support, assists in defining policy and helps to build implementation capacity. It also promotes innovation and the requisite technological advances by mobilising the knowledge and expertise of its non-regional members. Such initiatives make services and infrastructure more effective and efficient and make them more competitive on international markets.
Objectives of the IDB
Reducing poverty and social inequality, addressing the needs of small and fragile countries, fostering development through the private sector, promoting renewable energy and environmental sustainability to combat climate change, and promoting regional cooperation and integration.
Improving water supply and wastewater systems
Switzerland has contributed over USD 18 million to the AquaFund, making it the fund's largest donor. This is the IDB's main vehicle for facilitating investment to improve sustainable access to water and wastewater infrastructure. The fund also helps its priority countries to address the new challenges presented by climate change, the rapid decline of freshwater ecosystems and increasing water insecurity (SDG 6). Current investments supported by the AquaFund will give over a million households access to new or improved water supplies, wastewater systems, wastewater treatment and waste disposal sites (solid waste). Switzerland’s long-standing financial and technical contributions have helped establish the AquaFund within the IDB as a model for supervision, reporting and governance. The project has also facilitated the involvement of Swiss consultants and companies.
Switzerland’s involvement in the IDB
The IDB is a key partner for Switzerland in its efforts to alleviate poverty and promote environmentally friendly, sustainable growth in Latin America and the Caribbean. Together with Belgium, China, Germany, Israel, Italy and the Netherlands, Switzerland forms part of a constituency represented on the IDB Board of Governors. In line with the priorities set out below, Switzerland actively participates in the debates and decisions of the Board of Governors, exercising its supervisory function as a shareholder.
Switzerland's priorities for cooperation with the IDB
In addition to serving on the Board of Governors and cooperating with the IDB at institutional level, Switzerland and the IDB also work together operationally. Switzerland focuses on the following goals in particular:
- Strengthening IDB capacity in relation to water and urbanisation (SDG 6, 11).
- Supporting IDB capacity in relation to reducing poverty, with a particular emphasis on inequality, fragility and gender issues (SDG 1, 5, 10).
- Supporting economic and social development by strengthening the private sector (SDG 8, 9).
In the medium term, Switzerland will pursue its efforts to make the bank a more results-oriented and effective institution based on the following objectives:
- Improving quality and sustainability and promoting good governance in IDB operations and policies.
- Maintaining sound financial management with a view to ensuring that the IDBG retains its AAA credit rating.
- Improving implementation and measurement of growth, including for the poorest communities.
- Supporting climate-resilient development (SDG 13).
- Promoting private sector development in IDB operations.
Switzerland's involvement in the IDB enables it to achieve results in Latin America that could not be achieved through bilateral cooperation alone. IDB membership also provides greater insight into the region's development and facilitates contact with decision-makers in the relevant countries which can then be used to advance Switzerland's priorities at international level. Switzerland has successfully put forward its priorities to the IDB based on its extensive experience in development cooperation within the region and its recognised strengths in the areas of politics, the economy, society and environmental protection in Switzerland.