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Borrowing members in green, non-borrowing members in red


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.marker, United Statesmarker, in 1959 to support Latin American and Caribbeanmarker 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)

The IDB has four official languages: English, French, Portuguese, and Spanish. Its official names in the other three languages are as follows:
  • 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 member countries Argentinamarker, The Bahamasmarker, Barbadosmarker, Belizemarker, Boliviamarker, Brazilmarker, Chilemarker, Colombiamarker, Costa Ricamarker, Dominican Republicmarker, Ecuadormarker, El Salvadormarker, Guatemalamarker, Guyanamarker, Haitimarker, Hondurasmarker, Jamaicamarker, Mexicomarker, Nicaraguamarker, Panamamarker, Paraguaymarker, Perumarker, Surinamemarker, Trinidad and Tobagomarker, Uruguaymarker, and Venezuelamarker
Non-borrowing member countries Austriamarker, Belgiummarker, Canadamarker, Chinamarker, Croatiamarker, Denmarkmarker, Finlandmarker, Francemarker, Germanymarker, Israelmarker, Italymarker, Japanmarker, The Netherlandsmarker, Norwaymarker, Portugalmarker, Republic of Koreamarker, Sloveniamarker, Spainmarker, Swedenmarker, Switzerlandmarker, United Kingdommarker and the United Statesmarker


How the IDB works

The IDB is the largest multilateral source of financing for the Latin America and the Caribbean region. 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.

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 Caribbeanmarker combined hold 50.02 percent. 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 its affiliate the Inter-American Investment Corporation (abbreviated "IIC"). The Bank and the Corporation constitute the IDB Group.

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.

References

  1. Data as of 2005.


See also



External links




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