(Washington, DC) – As the Inter-American Development Bank’s governors arrive for special meetings in Washington DC next week, the proposal to increase the Bank’s callable capital by 200 percent appears to be in jeopardy, several non-governmental organizations said today.
“There appears to be no consensus between the Bank’s management and donors around the recapitalization,” said Vince McElhinny, IDB specialist at the Bank Information Center. “IDB Management has had a year to justify its proposal since it announced the 200% proposed capital increase in Medellin and it still has not convinced key stakeholders.”
On Tuesday, March 2nd, the IDB’s Board of Governors will be meeting at the Bank’s headquarters in Washington, D.C. to review the Bank’s 9th General Capital Increase (GCI-9) proposal. This meeting will precede a vote at the Annual Meeting of the Board of Governors slated for March 19-23 in Cancun, Mexico. Initially touted by the IDB to be over $180 billion, heavy criticism has reportedly pushed the Bank’s GCI request to less than a third of that amount. The legislatures of donor countries would have to eventually approve their share of the capital increase commitment as public debt.
“Failure to make greater progress on advancing policy reforms or charting new strategies to meet the region’s pressing needs has exhausted the confidence in the Bank’s capacity to reform itself. Facing a difficult re-election in July, 2010, this can only be interpreted as a blow to the confidence in President Moreno’s leadership,” stated McElhinny.
A growing number of civil society organizations from throughout the hemisphere are challenging the IDB recapitalization request. Following an insufficient consultation process carried out by the IDB from October of 2009 into early January of 2010, civil society groups are looking to their Governors – typically the finance and planning ministers from each IDB member country – for answers. The IDB has so far refused to make public a current draft of its recapitalization proposal or to provide responses to recommended reforms.
“The capital increase consultation process carried out to date with civil society has been inadequate.” said Andrew Miller of Amazon Watch. “We need to know if any of our recommendations for needed reforms have been incorporated into the current proposal and are looking to our Governors for their position on key reforms.”
In an open letter sent to the IDB Board of Governors on February 17, over 100 civil society organizations from 20 countries urged governors to require the implementation of concrete recommendations in the areas of management for results and transparency, sustainable integration, climate change, and anti-corruption, among others. Civil society groups and NGOs including the Bank Information Center, Amazon Watch, Centro de Análisis e Investigación FUNDAR (Mexico), Instituto de Servicios Legales Alternativos (ILSA, Colombia), and Derecho, Ambiente, and Recursos Naturales (DAR, Peru), among others, are requesting that their governors respond to the letter in advance of the Annual Meeting in Cancun.
For the full text of letter, see: http://www.amazonwatch.org/newsroom/view_news.php?id=2011.
One positive development is the recent approval of a new accountability mechanism for the IDB, which gives people and communities harmed by bank’s lending a means of bringing forth complaints. On February 17, the Board of Directors approved the Independent Consultation and Investigation Mechanism (ICIM). This new mechanism replaces the previous Independent Investigation Mechanism, which had languished since its establishment after the Bank’s 8th GCI in 1994.
“Reforming the accountability mechanism is an important step forward,” said Kris Genovese, senior attorney at the Center for International Environmental Law, “But only when the first complaint arrives, will we know how serious the IDB really is about being held accountable.” Genovese, an expert on multilateral bank accountability mechanisms, continued, “Is the Bank’s management sufficiently committed to accountability that they are going to address any revealed non-compliance of their policies or systemic level issues?” Experts point to a positive example at the World Bank, in which the President suspended investments in the palm oil sector as a result of a case brought to the Compliance Advisor Ombudsman of the International Finance Corporation, the Bank’s private sector arm.
