CANCUN, Mar 23 – The governing board of the Inter-American Development Bank (IDB) has agreed to boost its capital by 70 billion dollars, almost doubling its capacity to make loans to countries in the region.
At a meeting in the Mexican beach resort of Cancun, which will wrap up on Tuesday, top banking and finance officials also agreed to cancel Haiti\’s 470 million dollar debt in the wake of January\’s devastating earthquake.
The increase will allow the institution to "double our capacity to lend to some 12 billion dollars a year, on average," said IDB President Luis Alberto Moreno.
"Not only is this the largest increase in the history of the institution, but it will allow us to strengthen our position as the top source of multilateral resources for the region," he added.
The bank\’s 48 member countries, including several finance ministers and central bank chiefs, are attending the official gathering to discuss the institution\’s future operations and development challenges facing Latin America and the Caribbean.
Moreno said earlier this month that the bank was under pressure to expand its capital because its lending capacity will start to significantly fall off next year.
But the capital increase was not as large as some delegations had hoped.
"This is the result for the next three years. But demand continues to grow… and I don\’t rule out the possibility that in four years we\’ll be returning to talk about a new increase in capital," said Brazil\’s Minister of Planning Paulo Bernardo.
"We were left with a bitter taste in our mouths because while it is an good increase, it is not the size that Argentina and other countries in the region wanted," said Argentine Economics Minister Amado Boudou.
But the United States praised the decision, saying "there could be no better vote of confidence than a consensus vote on a capital injection of this size."
Last year, after the global financial crisis increased demands for development lending, the IDB approved record financing of 15.5 billion dollars — an increase of 38 percent from the previous year.
The IDB comprises 48 member countries — 26 borrowers in Latin America and the Caribbean and 22 non-borrowing countries, including main shareholder the United States, China, Japan and 16 European countries.