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1 1 (February 6, 2018)

handle is hein.crs/govebah0001 and id is 1 raw text is: Congressional Research Service T nform the egia vedeat since The North American Development Bank Introduction The North American Development Bank (NADB) is a binational financial institution created and funded by Mexico and the United States. The NADB provides loans and grants to public and private entities for environmental and infrastructure projects on both sides of the U.S.-Mexico border. Modeled after the multilateral development banks (MDBs), such as the World Bank, the NADB is the only development bank that also finances projects in the United States. Origins and Mandate The NADB was created under the auspices of the North American Free Trade Agreement (NAFTA) in 1994, through a binational side agreement between the United States and Mexico. It was created to address some policymakers' concerns that NAFTA could worsen environmental conditions in the border region by increasing economic activity there. The NADB's financing activities initially focused on projects related to water supply, wastewater treatment, and municipal solid waste disposal. In recent years, the NADB expanded its financing activities to include air quality, such as financing the development of wind farms for the generation of electricity. NADB eligible projects must be located within 100 kilometers (about 62 miles) north of the U.S.-Mexico international boundary in the U.S. states of Texas, New Mexico, Arizona and California or within 300 kilometers (about 186 miles) south of the border in the Mexican states of Tamaulipas, Nuevo Leon, Coahuia, Chihuahua, and Sonora. Projects beyond these limits may be deemed eligible under certain conditions and subject to approval by the NADB's Board of Directors. Funding As of the end of FY 2016, the NADB had $2.77 billion in total capital. Of that amount, $415 million is paid directly to NADB (paid-in capital) and $2.35 billion is a guarantee from donor governments to the Bank (callable capital). Like the MDBs, callable capital may be called if and when required to meet the Bank's debt or guarantee obligations, subject to certain procedural requirements, and may not be used to make loans. The NADB leverages its financial position by issuing debt in international capital markets in accordance with a debt limit policy that total debt outstanding may not exceed the Bank's callable capital account plus the minimum liquidity level required under the Bank's liquidity policy. The Bank borrowed a total of $2.22 million in 2016 compared to Updated February 6, 2018 $133.23 million in 2015, which increased gross outstanding debt to a total of $1.19 billion. Lending During the Bank's early years, much of its lending capacity went underutilized. In the Bank's first decade (1994-2004), outstanding loans remained below $100 million. In 2000, the NADB Board expanded the range of projects that the NADB could invest in beyond water and solid-waste management into a wide range of environmental infrastructure projects. In 2004, President Bush signed legislation (P.L. 108-215), that authorized NADB to expand its geographic jurisdiction and make grants and non-market rate loans out of its paid-in capital resources with the approval of the Board. Since 2011, NADB loans have increased sharply (Figure 1). During 2016, new loans totaling $96.88 million were approved for four projects. As of the end of 2016, the outstanding loan balance was $1.41 billion, an increase of 6.5% over the balance at the end of 2015 ($1.32 billion). Figure I. NADB Outstanding Loans: Over Time and By Sector Dollarsin US. millions Outstanding loans, 2008-2016 U.S. U Mexico 51,186s ' $470 $428 2186 2008 2009 2010 2011 2012 2013 2014 2 Source: Created by CRS from NADB Annual Reports. In recent years, the Bank's portfolio has become concentrated in wind and solar energy projects. In 2016, wind and solar loans accounted for over 70% of the NADB's outstanding loan portfolio. In addition, the NADB invested heavily in 2016 in public transportation, which grew from $3.69 million in 2015 to $31.87 billion in 2016. While the NADB provides loans to nine of the ten states allowed by its mandate, the top three states in which it lends, Texas, California, and the Mexican state of ttps://crsreports.cong ress.gc

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