IDB ends annual meeting with historic agreement

Apr 24, 2010 News

– Bank to advance with internal reforms

The Inter-American Development Bank yesterday closed the annual meeting of its Board of Governors with a historic agreement on a capital increase and an unprecedented package of financial aid for Haiti.
According to the Board of Governors, the IDB’s top decision-making body, issued a declaration on the agreement reached by the 48-member countries to boost the Bank’s ordinary capital by $70 billion, raising it to more than $170 billion.
The capital increase, the largest in the IDB’s history, will allow it to double its lending capacity to $12 billion a year.
IDB President, Luis Alberto Moreno, said that the Bank will press ahead with its internal reforms to improve its efficiency, increase its transparency and strengthen risk management.
“It was clear, this week, that the Bank enjoys solid support from its members, for which we are very grateful and even more motivated to go forward,” Moreno said in his closing remarks. “For the IDB, the message is evident: keep working hard.”
The new chairman of the Board of Governors, Mexico Finance Secretary Ernesto Cordero, said that with this capital increase, Latin America and the Caribbean will be able to rely on a “strong and efficient Bank for years to come”. Cordero also underscored that the IDB maintains its triple-A credit rating.
The Governors – most of whom are Finance Ministers or central bank Presidents— also agreed to forgive Haiti’s debt to the IDB and to provide more than $2 billion in grants over the next 10 years to help the Caribbean nation recover from the January 12 earthquake.
In his speech to the Board of Governors, Haiti Finance Minister, Ronald Baudin, said that his country is due to present an ambitious reconstruction plan emphasising decentralisation at a March 31 donors’ conference in New York. He urged the IDB to continue with the investment projects it was financing in regions beyond Port-au-Prince.
“I would like to invite you…to turn Haiti into a model to demonstrate how our Bank can help a member country get back on its feet and rebuild after such a devastating blow,” he said. “By doing so, you would have helped us build a stronger Haiti out of the rubble of Port-au-Prince.”
The Board of Governors also agreed on a full replenishment to ensure the liquidity of the Fund for Special Operations, the IDB window for concessional lending for Bolivia, Guyana, Honduras and Nicaragua.
Governors also set priority areas for the IDB work, such as providing more support to the smaller and more vulnerable countries and to programmes to reduce poverty, which still affects some 200 million people in the region, about one-third of its population.
Governors also underscored the importance of expanding private sector access to credit, particularly for small and medium-size enterprises, which make up a huge majority of businesses in the region.
The IDB must also intensify its efforts to assist borrowing countries in mitigating the effects of climate change. Half of the cities in Latin America with more than five million inhabitants are in coastal areas that could be threatened by rising sea levels.
In 2009, the IDB reached record levels of approvals and disbursements, playing a counter-cyclical role to help countries deal with the impact of the global economic crisis. New loans and credit guarantees rose to $15.5 billion, while disbursements totaled $11.8 billion.
However, without the capital increase agreed in Cancún, in coming years the IDB would have had to scale back its operations drastically.

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