The Inter-American Development Bank (IDB) and the World Bank have approved the Mutual Trust Framework (MTF), an innovative co-financing mechanism that will help streamline jointly funded development projects in Latin America and the Caribbean, according to an IDB press release dated July 8.
The Inter-American Development Bank (IDB) and the World Bank have approved the Mutual Trust Framework (MTF), an innovative co-financing mechanism that will help streamline jointly funded development projects in Latin America and the Caribbean, a statement from the IDB dated July 8 reports.
The statement says this framework responds to a long-standing request from stakeholders who wanted multilateral development banks (MDBs) to collaborate more effectively and maximize their development impact. Under the MTF, the IDB and the World Bank can rely on each other’s operational policies for co-financing eligible projects, which helps reduce duplication and simplifies project preparation and implementation.
The IDB and the World Bank consulted accountability mechanism experts and civil society organizations when developing this framework, which preserves access to accountability mechanisms and establishes coordination mechanisms between the institutions for handling complaints.
The CCM should reduce administrative complexity and transaction costs for borrowing countries, while allowing both institutions to pool their funding, expertise, and knowledge to support more ambitious and effective development initiatives.
This framework will apply to state-guaranteed operations across all sectors in Latin America and the Caribbean. Projects will be selected on a case-by-case basis based on the borrower’s needs, their strategic relevance, and the potential to maximize their development impact.The projects handled under this framework will be made public on the websites of both institutions, in line with their respective access-to-information policies.
Approval of the Development Finance Framework (FMRF) is an important step toward stronger collaboration between multilateral development banks and a more effective development financing system, one that delivers concrete results for the countries and communities of Latin America and the Caribbean, the IDB statement concludes.
