The Inter-American Development Bank (IDB) is carrying out studies to determine the magnitude of what will be its first capitalization since 1995, aimed at coping with Latin America’s future financing needs, the development bank’s president Luis Alberto Moreno told [news agency] BNamericas.
The entity has tasked an advisory group led by former Peruvian prime minister Pedro Pablo Kuczynski to come up with a proposal at its next annual meeting, to be held in March in Medellín, Colombia.
[...] While declining to give a figure for the planned capitalization, Moreno said it would be substantial. The 26 Latin American and Caribbean borrowing nations own 50.01% of IDB. The US holds 30% of the bank’s shares. [In January 2009], China formally joined IDB and became the bank’s 48th member nation.
[...] IDB has faced recent pressure to replenish its capital both from the region’s political side as well as from increased demand for lending prompted by the global financial crisis and economic downturn.
The entity increased loan, credit guarantee and grant approvals by 18% to US$11.2bn in 2008. The bank has said it will lend up to US$18bn this year , including a US$6bn emergency liquidity facility.
Earlier [in February 2009], the multilateral said it was expecting to book close to US$1bn in losses on its investment portfolio in 2008. Moreno said that most of that figure comes from unrealized losses, which will have no effect on the bank’s lending or operational capacity and that the planned capitalization is in no way related to the issue.
The IDB’s Water and Sanitation Initiative (2007-2011) includes special financing products such as the AquaFund and the Water and Sanitation Spanish Fund for Latin America and the Caribbean.
Source: Jorge Porter, BNamericas [subscription site], 25 Feb 2009