U.S. State Department Geographic Bureaus: Latin America Bureau

FACT SHEET: THE INTER-AMERICAN DEVELOPMENT BANK
PUBLISHED BY THE BUREAU OF PUBLIC AFFAIRS
U.S. DEPARTMENT OF STATE

NOVEMBER 22, 1994

The Inter-American Development Bank

The Inter-American Development Bank (IDB) will play a major role in funding activities resulting from the Summit of the Americas, which will be held in Miami, Florida, December 9-11, 1994.

It was founded in 1959 as a hemispheric organization with 19 members. The bank opened to non-regional donors in 1976 and now has 46 member countries, 28 in the Western Hemisphere, 16 in Europe, plus Israel and Japan. Of the bank's membership, 26 are borrowing country members, and 20 are non-borrowing members.

The Board of Governors, which meets annually to review IDB operations and to make major policy decisions, is the bank's highest authority. The Board of Executive Directors conducts IDB operations. The bank's president is chosen by the governors for a five-year term. President Enrique V. Iglesias, of Uruguay, was elected in 1988 and re-elected in 1993. The current U.S. Governor is Treasury Secretary Lloyd Bentsen. The Alternate Governor is the Under Secretary of State for Economic, Business, and Agricultural Affairs Joan E. Spero. L. Ronald Scheman is the U.S. Executive Director. The United States receives a large share of IDB-related foreign procurement--about 44% in 1993, totaling $936 million.

The IDB fosters the economic and social development of its member countries in Latin America and the Caribbean. It is funded by ordinary capital resources--paid-in and callable capital contributions, reserves, and funds raised through borrowings--and trust funds established through voluntary contributions by individual member countries.

Fund for Special Operations (FSO)

The Fund for Special Operations is the IDB's concessional lending window and offers low-interest loans to less developed member countries. It is funded by separate paid-in capital contributions. Currently, only five countries may borrow from these funds: Bolivia, Dominican Republic, Haiti, Honduras, and Nicaragua.

Inter-American Investment Corporation (IIC)

The Inter-American Investment Corporation, an autonomous IDB affiliate, was created in 1989 to stimulate small and medium-scale private enterprise via loans, guarantees, equity investments, and advisory services. It is funded by paid-in capital contributions, reserves, and funds raised through borrowings. It has 34 members. The United States is actively involved in negotiations on the future of the IIC, which requires new funds to continue its lending program.

Multilateral Investment Fund (MIF)

The IDB also administers the Multilateral Investment Fund for Latin America and the Caribbean, which was launched in 1993 to promote investment reform in the region via small-scale loans and grants. It is funded by paid-in contributions and is intended as a five-year program.

The MIF's basic agreements were signed in 1992 by 13 Latin American and eight industrialized countries. Since then, another eight Latin American and Caribbean countries have joined this fund.

Financing

From 1961 to 1993, the Inter-American Development Bank has approved loans totaling $63 billion for projects representing a total investment of $170 billion in energy, agriculture and fisheries, transportation and communications, industry and mining, environment and public health, economic reform, urban development, education, science and technology, export financing, tourism, and microenterprises.

During this period, FSO accounted for $11.8 billion of all approved loans. In addition, the IDB provided $1.1 billion in grants for technical cooperation over this same period.

In 1993, the IDB approved more than $6 billion in new loans--$423 million under the FSO--and disbursed $3.7 billion. That year, 21% of the approved loan amount was used for energy projects, 21% for environment and public health, and 20% for transportation and communications. Major projects approved in 1993 ranged from improving road systems in Argentina and Mexico, through promoting hydroelectric power in Colombia and Venezuela, to strengthening health services in Peru.

During 1989-93, the IIC approved 93 projects in 22 countries for a total of $384 million in loans and equity operations. In 1993, the IIC approved 31 operations, for a total of $124 million in new investments, and disbursed $88 million.

In 1993, the MIF approved its first three operations, totaling $7 million.

The Eighth Replenishment

Members pledged $41 billion in new capital at the bank's eighth capital increase, or replenishment, completed in April 1994. This raises the IDB's total capital to more than $110 billion, making it the largest of the regional development banks. The replenishment will allow the bank to sustain annual lending of $6-$7 billion.

The replenishment also broke new ground in lending priorities. The bank will commit 40% of its funds--50% of total projects--to social sector- and poverty-alleviation programs. Members also authorized up to 5% of the IDB's lending to the private sector, without a government guarantee. Other priorities will be the environment, government modernization, and development of economic reform and regional integration.

Under the eighth replenishment, the relative voting shares set out in the IDB Charter were amended to allow greater participation by non- regional members. The U.S. share dropped from 34.5% to 30% but remains the largest of any country in any multilateral development bank. Regional borrowers reduced their share to 50%. Canada retained a 4% voting share, and Japan increased its share to 5%. The remaining 11% is divided among 17 non-regional members.

IDB Members in the Western Hemisphere

Argentina
Bahamas
Barbados
Belize
Bolivia
Brazil
Canada
Chile
Colombia
Costa Rica
Dominican Republic
Ecuador
El Salvador
Guatemala
Guyana
Haiti
Honduras
Jamaica
Mexico
Nicaragua
Panama
Paraguay
Peru
Suriname
Trinidad and Tobago
United States
Uruguay
Venezuela

[EDITOR'S NOTE: See paper copy for chart titled "Cumulative Total Cost of IDB Projects: 1961-1993"]

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