Caribbean Development Bank
The Caribbean Development Bank (CDB) is a regional multilateral financial institution founded to accelerate economic growth, integration, and cooperation among Caribbean countries through targeted financing and technical support.[1]
Established by an agreement signed on October 18, 1969, in Kingston, Jamaica, and commencing operations in 1970, the Bank prioritizes the development needs of less economically advanced members while mobilizing internal and external resources for public and private sector investments.[1][2]
Headquartered in St. Michael, Barbados, the CDB serves 19 borrowing member countries eligible for its loans and grants, alongside 9 non-borrowing members comprising 4 regional (Brazil, Colombia, Mexico, Venezuela) and 5 extra-regional contributors (Canada, China, Germany, Italy, United Kingdom), totaling 28 members with voting rights in governance bodies.[3][4][5] The Bank's core functions include optimizing resource use in borrowing members, fostering trade expansion, developing capital markets, and providing expertise to strengthen regional financial institutions, with a strategic emphasis on reducing extreme poverty by 2030 through resilient, inclusive initiatives in sectors like infrastructure, renewable energy, education, and health.[2][6] In 2023, it disbursed over $400 million to advance these goals, earning high sovereign-equivalent credit ratings—Aa1 from Moody's and AA+ from S&P and Fitch—reflecting prudent financial management.[2][6]
While the CDB has supported key regional advancements in economic stability and climate adaptation, it enforces rigorous sanctions against fraud, corruption, and collusion in its operations, underscoring a commitment to accountability amid broader challenges like de-risking in correspondent banking and vulnerability to external shocks.[7][8]
History
Establishment and Founding
The Agreement establishing the Caribbean Development Bank was signed on October 18, 1969, during a Plenipotentiary Conference in Kingston, Jamaica, by representatives of 18 states and territories, primarily from the English-speaking Caribbean.[9][10] This founding document aimed to address the economic development needs of newly independent or decolonizing Caribbean nations by mobilizing financial resources for infrastructure, production expansion, and regional integration, recognizing the limitations of individual small economies in attracting private investment.[11] The agreement's preamble emphasized accelerating economic growth, improving living standards, and fostering cooperation among members, with a focus on less developed countries.[11] The agreement entered into force on January 26, 1970, following ratification by 15 of the 18 signatories, enabling the bank's operational launch.[11] Initial membership comprised 16 regional members—such as Barbados, Jamaica, Trinidad and Tobago, Guyana, and Belize—alongside non-regional founding members Canada and the United Kingdom, which provided additional capital and expertise to support lending to borrowing members.[12][13] The bank's authorized capital stock was set at $50 million, divided into paid-in and callable shares to finance development projects and technical assistance.[11] Headquarters were established in Bridgetown, Barbados, selected for its central location and stability.[13] Sir W. Arthur Lewis, a St. Lucian economist and Nobel laureate in 1979 for his work on development economics, was appointed as the bank's first president, serving from 1970 to 1973.[14][15] The inauguration ceremony involved Barbados Prime Minister Errol Barrow, underscoring the regional commitment to self-reliant financing mechanisms amid post-colonial economic vulnerabilities.[1] The bank's charter provisions prioritized concessional lending to less developed members, with functions including project financing, investment promotion, and support for private sector initiatives to drive sustainable growth.[11]Early Operations and Growth
The Caribbean Development Bank commenced operations on January 26, 1970, following the entry into force of its establishing Agreement, with headquarters established in Bridgetown, Barbados.[1] Initial subscribed share capital stood at US$50 million, comprising US$25 million paid-up and US$25 million callable, supplemented by the creation of the Special Development Fund in the same year as the primary source of concessional resources for less developed borrowing members.[16] Early activities centered on mobilizing resources for economic and social development, with lending prioritized in infrastructure sectors such as transportation, power, and water supply, alongside agriculture, manufacturing, and human resource development.[16] In its formative years, the Bank approved financing for foundational projects, including feeder roads and fisheries under agriculture, and initiated a student loan program in 1973 totaling US$23.5 million to support human capital formation across member countries.[16] Regional integration efforts received targeted support, such as loans to the Leeward Islands Air Transport (LIAT) in 1974 and the West Indies Shipping Corporation (WISCO) to enhance connectivity and trade.[16] The establishment of the Basic Needs Trust Fund in 1976, funded by USAID, marked an early foray into targeted poverty alleviation and community-level interventions, reflecting the Bank's adaptation to address immediate developmental gaps in smaller economies.[16] By 1980, the Bank's total resources had expanded to US$503 million, incorporating US$237 million in subscribed capital and US$238 million from special funds, enabling a broadening of lending operations.[16] This growth facilitated cumulative project approvals reaching hundreds of millions by the mid-1980s, with over half directed toward agriculture, industry, tourism, and transport, underscoring the institution's role in catalyzing post-independence infrastructure buildup amid economic vulnerabilities like commodity dependence and natural disasters.[17]Evolution and Key Milestones
Following its entry into force on January 26, 1970, the Caribbean Development Bank initiated operations from its headquarters in Wildey, Barbados, prioritizing financing for infrastructure, agriculture, and economic integration projects among its initial borrowing member countries.[18] Early lending emphasized public sector investments to address post-independence development needs, with approvals accumulating steadily; for instance, between 1970 and 1994, the Bank approved 38 loans and one contingently recoverable loan to Jamaica, alongside nine technical assistance grants, reflecting targeted support for key regional economies.[16] A pivotal shift occurred in the late 1980s with the introduction of policy-based financing, as the Bank approved its first loan in 1987 to support a structural adjustment program in a borrowing member country, followed by larger interventions in the 1990s to stabilize economies amid fiscal pressures and external shocks.[19] Membership expanded over time from founding regional participants to 28 countries by the 2020s, comprising 19 borrowing member countries (BMCs), four regional non-borrowing members (Brazil, Colombia, Mexico, Venezuela), and five non-regional contributors, broadening resource mobilization and investor base.[5] In the 21st century, the Bank's mandate evolved to incorporate poverty reduction, human capital development, and vulnerability mitigation, culminating in the 2020–2024 Strategic Plan that targeted sustainable, resilient growth through enhanced private sector engagement and resource optimization.[20] This framework was updated in 2022 to prioritize resilience-building measures, including social protection, digital infrastructure, economic diversification, and knowledge generation, in response to recurrent hurricanes, the COVID-19 pandemic, and fiscal strains.[21] Complementing this, the 2023–2028 Private Sector Strategy deepened focus on MSME financing, energy efficiency, and climate-resilient agriculture to address financing gaps in smaller economies.[22] Financial robustness underpinned this progression, with the Bank sustaining an Aa1 rating from Moody's (stable outlook) through prudent capital management and high paid-in capital ratios, enabling scaled approvals such as US$66.7 million in emergency COVID-19 support across seven BMCs in 2020.[2] [23] Institutional adaptations included joining the 2X Global industry group in 2023 to integrate gender-lens investing and forging partnerships like the 2024 climate resilience collaboration with the European Investment Bank, enhancing blended financing for disaster-prone infrastructure.[24] [5] By its 50th anniversary in 2020, these developments had positioned the Bank as a key financier for regional transformation, with lending volumes reflecting adaptation to persistent challenges like small market sizes and external dependencies.[10]Mandate and Objectives
Core Purposes and Charter Provisions
The core purpose of the Caribbean Development Bank (CDB), as established in Article 1 of its founding Agreement, is "to contribute to the harmonious economic growth and development of the member countries in the Caribbean... and to promote economic co-operation and integration among them, having special and urgent regard to the needs of the less developed members of the region."[11] This mandate emphasizes financing and technical support targeted at reducing disparities, particularly in smaller or economically vulnerable territories, through regionally coordinated efforts rather than isolated national initiatives.[11] Article 2 delineates the Bank's primary functions to fulfill this purpose, including assisting member countries in coordinating their development programs and integrating their economies; mobilizing financial resources within and outside the region; financing specific projects and programs contributing to economic growth; providing technical assistance for project preparation and execution; encouraging public and private investment; cooperating with national, regional, and international organizations; and stimulating capital markets for regional development.[11] These functions enable operations across sectors such as infrastructure, agriculture, education, and tourism, with a focus on concessional lending to less developed members via special funds.[19] Charter provisions in Articles 11–13 outline operational modalities, restricting ordinary capital resources to loans, equity investments, and guarantees primarily for regional borrowing members, while special funds support grants and highly concessional terms for the poorest countries.[11] Membership criteria under Article 3 prioritize regional states and territories but extend to non-regional contributors, ensuring broad resource mobilization without diluting focus on Caribbean priorities. Governance structures in Articles 25–34, including a Board of Governors and Directors, enforce these provisions by delegating powers to approve loans and policies aligned with the Bank's developmental objectives.[11] The Agreement, adopted on October 18, 1969, in Kingston, Jamaica, and entering force on January 26, 1970, has been amended to adapt to evolving regional needs, such as enhanced private sector engagement.[11]Strategic Frameworks and Priorities
The Caribbean Development Bank (CDB) outlines its strategic direction through the Strategic Plan 2020-2024, which establishes three core objectives aimed at fostering resilience across social, economic, and environmental dimensions to reduce poverty and promote inclusive development in its Borrowing Member Countries (BMCs).[25] These objectives—building social resilience, economic resilience, and environmental resilience—are explicitly aligned with the United Nations Sustainable Development Goals (SDGs), emphasizing sustainable, resilient, and inclusive growth amid regional vulnerabilities such as natural disasters and economic shocks.[25] Operational priorities under the original framework focus on enhancing programme design and execution, bolstering national-level implementation capacity, and accelerating disbursements to achieve measurable outcomes, with cross-cutting emphases on institutional strengthening, membership expansion, and product innovation.[25] In response to the COVID-19 pandemic and persistent shocks, the CDB approved a Strategic Plan Update (SPU) in December 2021 for 2022-2024, repositioning the institution toward "resilience" through a broadened framework incorporating five pillars: social, environmental, production, financial, and institutional resilience, facilitated by knowledge creation and innovation.[26][21] Key priorities in the updated framework include advancing transformational education via student-centered learning and ICT integration; expanding social protection mechanisms such as cash transfers and unemployment insurance; promoting digitalisation across infrastructure, education, health, and micro-, small-, and medium-sized enterprises (MSMEs); and driving economic diversification through private sector development and innovation diagnostics.[26] Environmental efforts target 25-30% of financing for climate adaptation and mitigation by 2024, up from 15% in the prior period, alongside disaster risk management and renewable energy goals aiming for 47% regional capacity by 2027.[26] Financial and institutional priorities emphasize public financial management reforms, maintaining a risk-adjusted capital adequacy ratio of at least 24%, and enhancing implementation via governance improvements, partnerships, and tools like the Resident Implementation Officer programme.[26] Cross-cutting themes integrate gender equality—through policies targeting gender-based violence and women's economic empowerment—regional cooperation, and evidence-based decision-making via a dedicated knowledge hub for regional data.[26] These elements reflect the CDB's adaptation to evolving challenges, prioritizing sectors like education, energy, infrastructure, and private sector engagement to build long-term regional capacity against recurrent vulnerabilities.[21]Organizational Structure
Governance Mechanisms
The Board of Governors serves as the supreme governing authority of the Caribbean Development Bank (CDB), vesting all institutional powers therein, with the capacity to delegate most functions to the Board of Directors while reserving specific decisions such as admitting new members, altering subscribed capital stock, electing the Board of Directors and President, amending the Bank's Charter, and authorizing termination of operations.[27][28] Each member country appoints one Governor and one Alternate Governor, treating British overseas territories (Anguilla, British Virgin Islands, Cayman Islands, Montserrat, and Turks and Caicos Islands) as a single entity for representation purposes.[27] The Board convenes annually in a member country to review operational progress and strategic directions, with voting rights allocated according to each member's representation rather than weighted by capital subscription.[27] The Board of Directors, comprising 19 members—14 representing regional borrowing members and 5 representing non-regional members—oversees the Bank's day-to-day policy implementation and operational direction, including approvals for loans, guarantees, investments, borrowing programs, technical assistance, and the administrative budget, as well as submission of annual accounts to the Board of Governors.[29] Each Director designates an Alternate and serves renewable two-year terms.[29] The Board also establishes the Oversight and Assurance Committee, consisting of five members appointed for two-year renewable terms, to enhance internal controls.[29] The President, as Chief Executive Officer, chairs the Board of Directors and directs daily management under its guidance, with Daniel Best elected as the seventh President on December 5, 2024, by the Board of Governors.[30] Supporting these structures, CDB's corporate governance framework emphasizes transparency, responsibility, fairness, and accountability through independent mechanisms including the Office of Integrity, Compliance, and Accountability for prohibiting fraud and corruption; the Office of Risk Management; the Internal Audit Division for oversight; and a whistleblower policy enabling secure reporting of misconduct.[31][32]Leadership and Executive Roles
The President of the Caribbean Development Bank (CDB) serves as Chairman of the Board of Directors and Chief Executive Officer, with primary responsibility for directing the Bank's operations, implementing policies set by the Board of Governors, and overseeing strategic initiatives to fulfill the Bank's mandate of poverty reduction and economic development in the Caribbean region.[30] The position is appointed by the Board of Governors for a five-year term, renewable once, and reports directly to that body on key matters such as lending approvals exceeding specified thresholds and annual budgets.[30] Daniel M. Best, a Barbadian national and former Director of the Projects Department at CDB, assumed the role of seventh President in February 2025, succeeding Hyginus 'Gene' Leon whose term ended in 2024, followed by a brief acting tenure by Isaac Solomon from January 2024 to January 2025.[4][33] Under Best's leadership, the Bank has emphasized accelerating project implementation to address poverty, enhancing regional resilience to climate risks, and mobilizing resources for sustainable infrastructure, as articulated in his vision presented at the 55th Annual Meeting in June 2025.[34] The executive team includes two Vice Presidents who support the President in operational and administrative functions. The Vice-President (Operations) leads the Economics and Projects Departments, focusing on project appraisal, lending operations, economic analysis, and technical assistance programs across member countries.[30] Isaac Solomon holds this position, having previously acted as President during the transition period.[4] The Vice-President (Finance and Corporate Services) manages financial planning, treasury operations, information technology, human resources, communications, and risk management, ensuring fiscal sustainability and institutional efficiency.[30] This role is currently filled on an acting basis by Ian Durant.[4] Executive leadership operates under the oversight of the Board of Directors, which consists of 14 representatives from regional borrowing members and 5 from non-regional members, elected by the Board of Governors for two-year renewable terms to supervise day-to-day policies and approve loans.[29] The ultimate authority resides with the Board of Governors, comprising one Governor (typically a finance minister) and one alternate from each of the 26 member countries, convening annually to set high-level directions.[27]Membership
Regional Borrowing Members
The regional borrowing members of the Caribbean Development Bank (CDB) consist of 19 Caribbean countries and territories that are eligible to borrow resources from the institution for financing development projects, including infrastructure, climate resilience, and human capital initiatives.[4] These members, often referred to as borrowing member countries (BMCs), represent the core clientele of the CDB, benefiting from its Ordinary Capital Resources for market-rate loans and Special Funds for concessional financing targeted at low-income economies.[4] Eligibility is determined by regional location and developmental needs, with the CDB prioritizing support for small, vulnerable island states facing challenges such as natural disasters and fiscal constraints.[35] The full list of regional borrowing members, as of the latest available data, is as follows:| Country/Territory | Notes |
|---|---|
| Anguilla | British Overseas Territory |
| Antigua and Barbuda | Independent nation |
| The Bahamas | Independent nation |
| Barbados | Independent nation |
| Belize | Independent nation |
| British Virgin Islands | British Overseas Territory |
| Cayman Islands | British Overseas Territory |
| Dominica | Independent nation |
| Grenada | Independent nation |
| Guyana | Independent nation |
| Haiti | Independent nation |
| Jamaica | Independent nation |
| Montserrat | British Overseas Territory |
| Saint Kitts and Nevis | Independent nation |
| Saint Lucia | Independent nation |
| Saint Vincent and the Grenadines | Independent nation |
| Suriname | Independent nation |
| Trinidad and Tobago | Independent nation |
| Turks and Caicos Islands | British Overseas Territory |
Contributing and Non-Regional Members
The Caribbean Development Bank (CDB) includes five non-regional contributing members: Canada, China, the Federal Republic of Germany, Italy, and the United Kingdom. These members, located outside the Caribbean region, subscribe to the Bank's ordinary capital resources without access to its borrowing facilities, thereby providing financial support to enable lending to regional borrowing members. Their subscriptions constitute a significant portion of the CDB's paid-in and callable capital, enhancing the Bank's lending capacity and creditworthiness.[4] These non-regional members collectively hold substantial influence in governance, with five dedicated seats on the Bank's Board of Directors, separate from the 14 seats allocated to regional members. This representation ensures their input on strategic decisions, including resource allocation and risk management. As of December 31, 2023, their subscribed capital shares in the ordinary resources are as follows:| Member Country | Subscription Share (%) |
|---|---|
| Canada | 9.31 |
| United Kingdom | 9.31 |
| China | 5.58 |
| Germany | 5.58 |
| Italy | 5.58 |
Financial Resources and Performance
Capital Structure and Funding Sources
The Caribbean Development Bank's ordinary capital resources are primarily derived from its subscribed capital stock, which consists of paid-in shares fully disbursed by members and callable shares available for drawdown in the event of liquidity needs. As of September 30, 2024, total subscribed capital amounted to $1,763.7 million, comprising $388.5 million in paid-in capital (approximately 22% of the total) and $1,375.2 million in callable capital.[37] Regional borrowing member countries (BMCs) account for over 50% of this subscribed capital, reflecting their dominant role in supporting the Bank's lending capacity. The Bank's capital base has evolved through general capital increases approved by its Board of Governors, including a 150% expansion that enhanced both paid-in and callable portions to meet growing financing demands in member states.[38] Originally established with an authorized capital of $50 million in 1970 under the Bank's founding Agreement, subsequent increases have aligned subscribed levels with operational needs without altering the share structure fundamentally. Funding for operations draws from multiple sources beyond equity. Ordinary capital resources are supplemented by borrowings, with outstanding debt reaching $1,041.1 million as of September 30, 2024, sourced from capital markets, lines of credit with institutions such as the European Investment Bank and Inter-American Development Bank, and other multilateral partners.[37] Retained earnings and investment income further bolster liquidity. The Special Development Fund (SDF), used for concessional lending to poorer members, relies on triennial replenishments from member contributions—totaling significant pledges in its 11th cycle as of July 2025—and grants from bilateral donors like the United Kingdom and Canada, enabling targeted poverty reduction without reliance on market-rate debt.[39] This diversified structure maintains the Bank's AAA credit rating while prioritizing self-sustainability through member commitments over external dependency.[4]Lending Portfolio and Financial Metrics
The Caribbean Development Bank (CDB) maintains a lending portfolio primarily comprising sovereign and guaranteed loans to its borrowing member countries (BMCs), with net outstanding loans totaling $1,445.5 million as of September 30, 2024, up from $1,426.1 million at December 31, 2023.[37][4] This portfolio reflects disbursements under ordinary capital resources and special funds, focused on infrastructure, climate resilience, and economic development projects, with exposures concentrated in higher-rated BMCs to manage risk.[37] The five largest borrowers accounted for approximately 61% of total banking exposures at end-September 2024.[40]| Key Lending Portfolio Metrics (as of September 30, 2024) | Amount (USD millions) |
|---|---|
| Net Loans Outstanding | 1,445.5 |
| Top Exposures: Bahamas | 17.1% |
| Top Exposures: Barbados | 14.5% |
| Top Exposures: Belize | 9.7% |
| Impaired Loans (as % of portfolio, end-2023 baseline) | 0.1% |
Credit Ratings and Risk Profile
The Caribbean Development Bank (CDB) maintains high credit ratings from major international agencies, reflecting its robust financial position and prudent management. Moody's Investors Service affirmed an Aa1 long-term issuer rating with a stable outlook on July 29, 2025, citing strong capital adequacy, high liquidity, shareholder support, and balance sheet optimization efforts, including a $450 million Exposure Exchange Agreement. Fitch Ratings affirmed an AA+ long-term issuer default rating with a stable outlook on February 18, 2025, emphasizing the bank's low credit risk profile, characterized by excellent loan performance and a non-performing loan ratio of 0.1%. S&P Global Ratings affirmed an AA+ long-term issuer credit rating and A-1+ short-term rating with a stable outlook on December 5, 2024, highlighting the bank's very strong enterprise risk profile and extremely strong financial risk profile.[45][41][46]| Rating Agency | Long-Term Rating | Short-Term Rating | Outlook | Affirmation Date |
|---|---|---|---|---|
| Moody's | Aa1 | - | Stable | July 29, 2025 |
| Fitch | AA+ | F1+ | Stable | February 18, 2025 |
| S&P Global | AA+ | A-1+ | Stable | December 5, 2024 |