Submission of Inquiries
Any submission of an inquiry in response to IIC origination activities or a referral creates a record of customer needs. Before considering any project, the pertinent investment officer will ask the customer to provide detailed information on the company and its sponsors as well as a description of the project for which it is seeking financing. The customer will also need to provide historical financial data—audited financial statements in most cases—and an investment plan.
Once an IIC investment officer determines that a project proposal has real potential to develop into an actual project, he or she will open an internal project review process involving the construction of a financial model and development of an investment and financial plan. This information is then used for an internal credit check to clear the project for consideration and an appraisal or field mission to assess its operational elements and risks.
The end result of this process is a credit proposal document, containing final information for internal approval and authorizing the team to submit the operation to the Board of Executive Directors.
Board Review and Approval
In preparation for approval by the IIC Board of Executive Directors, the IIC investment officer prepares a public disclosure document containing: (i) an investment summary and review of environmental issues; (ii) the client’s no-objection letter; and (iii) an internal clearance memo. These documents are then posted to the IIC website.
The IIC’s Disclosure of Information Policy (CII/GN-129-7) requires public disclosure of a summary investment proposal for all loans, equity investments, guarantees, or other financing operations at least 30 days prior to IIC Board approval (120 days in the case of projects classified in Category IV of the IIC’s environmental classification system).
The next step is to prepare a report for the IIC Board of Directors, which is to include a full description of and rationale for the project, and its expected development impact.
A “no-objection letter” for governments is sent to the appropriate authorities in the country in question to ascertain whether there is any objection to the provision of funding for the project.
Upon approval by the Board of Executive Directors, the attorney assigned to the project will begin drafting all the associated legal documentation, establish a date for signature of the loan agreement, and set a tentative date and schedule for the disbursement of funds.
Responsibility for the project is transferred to supervision officers attached to the IIC Portfolio Management and Supervision Unit upon its internal approval and the first disbursement of project funding.
Supervision officers monitor all projects in the implementation phase, keeping track of repayments and reporting on their performance as the basis for an ex-post evaluation of their development outcomes, which are then reported to the IIC Board of Executive Directors.
Each year, the IIC, in consultation with the IDB’s Office of Evaluation and Oversight (OVE), selects projects that have reached early operating maturity (approximately five years after approval) for the preparation of Expanded Annual Supervision Reports (XASRs). Accordingly, the IIC uses the findings of XASRs to extract lessons learned, with a view to improving the selection and conduct of future operations. XASRs and associated indicators assess whether project outcomes are in keeping with the IIC’s mission to promote sustainable private sector development in the Latin American and Caribbean region. XASRs also evaluate a project’s impact on IIC financial sustainability and the extent to which the IIC’s work has enhanced project outcomes.