Inter-American Development Bank
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The Inter-American Development Bank (IADB or IDB, although the latter abbreviation is also used for the Islamic Development Bank) is an international organization established and headquartered in Washington, D.C., United States, in 1959 to support Latin American and Caribbean economic and social development and regional integration by lending mainly to governments and government agencies, including State corporations. The current president of the Bank is Luis Alberto Moreno, a Colombian diplomat who was elected to succeed Enrique V. Iglesias on July 27, 2005 (See www.iadb.org)
After Haiti's 2010 earthquake, President Preval gave the Inter-American Development Bank, the mandate to work with the Education Ministry and the National Commission preparing a major reform of the Education System in a 5 year plan.[1]
The IDB has four official languages: English, French, Portuguese, and Spanish. Its official names in the other three languages are as follows:
| Language | Name |
|---|---|
| French | Banque interaméricaine de développement; |
| Portuguese | Banco Interamericano de Desenvolvimento |
| Spanish | Banco Interamericano de Desarrollo |
In all three other languages the Bank uses the acronym "BID".
Member states
The Bank is owned by 48 sovereign states, which are its shareholders and members. Of these, 26 are eligible to receive loans from the Bank and 22 are not.
- Borrowing: Argentina, The Bahamas, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Suriname, Trinidad and Tobago, Uruguay, Venezuela
- Non-borrowing: Austria, Belgium, Canada, China, Croatia, Denmark, Finland, France, Germany, Israel, Italy, Japan, The Netherlands, Norway, Portugal, Republic of Korea, Slovenia, Spain, Sweden, Switzerland, United Kingdom, United States
Policy
The IDB is the largest multilateral source of financing for the Latin America and the Caribbean region.[2] The IDB makes loans to the governments of its borrowing member countries at standard commercial rates of interest, and has preferred creditor status, meaning that borrowers will repay loans to the IDB before repaying other obligations to other lenders such as commercial banks.
The funds that the IDB lends are raised by selling bonds to institutional investors at standard commercial rates of interest. The bonds are backed by (a) the sum of the capital subscriptions actually paid in by the Bank's 47 member countries, plus (b) the sum of the callable capital subscriptions pledged by the Bank's 22 non-borrowing member countries. Together these constitute the Bank's ordinary capital, some US$101 billion. Of this amount, 4.3 percent is paid in, while the remaining 95.7 percent is callable.
Governance at the IDB resides in its Board of Governors, a 48-member body who regularly meets once a year. In March 2010, reunited in Cancun, Mexico, the Board of Governors of the Bank agreed on a $70 billion capital increase, along with full debt forgiveness for Haiti, its poorest member country, devastated by an earthquake that had destroyed its capital,Port-au-Prince, two months before.
The callable capital pledged by the 22 non-borrowing members, which include the world's wealthiest developed countries, therefore functions as a guarantee for the bonds that the IDB sells. This arrangement ensures that the IDB maintains a triple-A credit rating, and as a result can make loans to its borrowing member countries at rates of interest similar to those that commercial banks charge their largest corporate borrowers. At the same time, the 21 non-borrowing countries are only putting up guarantees – not actual funds – so their support of the IDB's lending operations has a minimal impact on their national budgets.
In contrast with the World Bank and other development banks, the developing countries that borrow from the IDB are the majority shareholders, and therefore control the majority of the decision-making bodies of the Bank. Each member's voting power is determined by its shareholding: its subscription to the Bank's ordinary capital. The United States holds 30 percent of the Bank's shares, while the countries of Latin America and the Caribbean combined hold 50.02 percent.[3] This arrangement is unique in that the developing member countries, as a group, are the majority shareholders. Though this arrangement was first viewed as risky, it is believed by some that strict peer pressure prevents the borrowers from defaulting, even when under severe economic pressure. However, Argentina did default in 2001; this was publicly announced in 2002.
Aside from its lending activities for its member countries, the IDB also has lending operations with private sector companies, both directly and by means of the Inter-American Investment Corporation (IIC), a multilateral lender created by the IDB member countries to help develop small and medium-sized companies in Latin America and the Caribbean. An affiliate of the IDB, the Multilateral Investment Fund (FOMIN), uses loans, grants and equity investments to support private projects seeking to bring innovation, boost entrepreneurship, or expand access to financing throughout the region. The Bank, the Corporation and the Fund constitute the IDB Group.
United Nations Development Business
The United Nations launched Development Business in 1978 with the support of the Inter-American Development Bank, the World Bank, and many other major development banks from around the world. Today, Development Business is the primary publication for all major multilateral development banks, United Nations agencies, and several national governments, many of whom have made the publication of their tenders and contracts in Development Business a mandatory requirement.[4]
Criticism
There are claims that operations funded by the IDB may have adverse impacts on local environments and indigenous peoples. According to the Bank Information Center (BIC), "civil society groups have long been concerned about the negative impacts the IDB's operations have on the environment and on indigenous and traditional peoples, as well as on the prospects for genuine economic and democratic reform in the region." The BIC cites environmental and social damage funded by the IDB as adversely impacting local economies, contrary to IDB's stated goal of fostering social and economic prosperity.[2]
See also
- Inter-American Foundation
- Inter-American Institute for Global Change Research
- Argentine economic crisis (1999–2002)
References
- ^ http://www.iadb.org/news-releases/2010-05/english/haiti-gives-idb-mandate-to-promote-major-education-reform-7150.html
- ^ a b "Inter-American Development Bank". Bank Information Center. Retrieved 2008-12-14.
- ^ Data as of 2005.
- ^ United Nations Development Business' website