There are at least three countries interested in joining the IDB, and they would make great additions, IDB president Alberto Moreno said yesterday but only a miniscule number of shares are available for new members.
Russia has made overtures to join the bank, sending a high-level delegation to the 2008 annual governors meeting in Miami. India and Singapore have expressed interest more recently.
Moreno told Emerging Markets that India and Singapore are very attractive possibilities and we would love to have them in the IDB family.
Moreno and others in the bank, however, acknowledge that having new countries join China which formally took a seat on the bank in January with $350 million capital contribution is going to be very tough. The bank has less than one-half a share available from Bosnia Herzegovina.
To increase shares, you need shares. And we dont have shares, Moreno said.
Latin American countries hold slightly more than 50% of the IDBs shares. The rest are divided between the US, with 30%, several European nations, Israel, China, Japan and South Korea.
Shares could be redistributed during the recapitalization process that has been proposed. That happened during the last recapitalization in 1995, when the US ceded some shares but it is unlikely to do so this time, as it would lose its veto power if its share dropped below 30%. Latin American countries are also unlikely to give up shares, as the region would lose its majority.
Moreno said shareholders not only have the capacity to move the bank toward a capital increase, but could also look for new ways to for us to find more resources.
Venezuelan finance minister Ali Rodriguez said the bank should look for ways to enable other would-be members follow Chinas example. It would be extraordinary to have a nation like India in the IDB. We should look for ways to make this happen.
That opinion is shared by Enrique Iglesias, who headed the bank for 17 years before stepping down in 2005. He said the bank should take seriously every request for admittance.
Personally, I think we need to review case by case countries that want to enter, like Russia. Countries with such important capacities that want to work with Latin America should be admitted, he told Emerging Markets.
Russia, India and Singapore are relatively small trading partners with Latin America, particularly when compared to Chinas $140 billion trade flows with the region in 2008. By contrast, Indias were slightly more than $16 billion, Russias were $15 billion and Singapores $12 billion.
Sources at the IDB meeting in Medellin reported that, while countries outside the region seek membership, Brazil is in discussions to join the Asia Development Bank, which has 17 non-regional members that hold 36.6% of its shares. The last country to join was Ireland, which holds 0.34% of the shares. Brazil would not confirm the report.