Technical Note: Policy-Based Lending at the IDB

This note presents findings and insights from different sources and constitutes the first building block for the Office of Evaluation and Oversights (OVE) policy-based lending evaluation. Prior evaluation work by OVE and the evaluation departments of other Multilateral Development Banks (MDBs), as well as Inter-American Development Bank's (IDB) project databases, provide a rich source of information on the use and characteristics of policy-based lending. This paper synthesizes findings and insights from: (i) OVE's 2015 review of the design and use of policy-based lending (document RE-485-6); (ii) OVE's 2020 Lending instruments study (document RE-549); (iii) OVE's review of the demand and performance of policy-based lending in its country products (Country Program Evaluations or CPEs, Extended Country Program Evaluations or XCPE, and Independent Country Program Reviews or ICPR); (iv) OVE's validations of IDB's self evaluations of completed operations (project completion report or PCR); (v) the proceedings of a 2020 conference describing the experience with policy-based lending at the Asian Development Bank (ADB), African Development Bank (AfDB), and the World Bank (WB); and (vi) a portfolio analysis of policy-based operations approved up to December 2022.